Warsaw team advises senior lenders of Gaz-System in connection with new PLN 1bn financing

Global law firm Norton Rose Fulbright advised the senior lenders of Operator Gazociągów Przesyłowych Gaz-System S.A. on intercreditor arrangements and amendments to its existing finance documentation in connection with a new PLN 1bn subordinated loan made available to it by Polish Development Fund (Polski Fundusz Rozwoju). These lenders included Alior Bank S.A., Bank Gospodarstwa Krajowego, Bank Millennium S.A., Bank of China (Luxembourg) S.A. Oddział w Polsce, BNP Paribas Bank Polska S.A., CaixaBank, S.A. (Spółka Akcyjna) Oddzial w Polsce, China Construction Bank (Europe) S.A. (Spółka Akcyjna) Oddział w Polsce, Credit Agricole Bank Polska S.A., mBank S.A. and Powszechna Kasa Oszczędności Bank Polski S.A.

The Warsaw team conducted complex intercreditor negotiations on behalf of senior lenders’ syndicate, with European Investment Bank as a pari passu senior creditor, Polish Development Fund as subordinated creditor and Gaz-System as a borrower.

Funds from the new loan will be used to finance Gaz-System investment projects, including: Baltic Pipe project, implementation Coal to Gas Program, location in the Gdansk area of a Floating Storage Regasification Unit (FSRU) capable of offloading LNG, in-process storage and regasification of LNG. The funding will also be used to finance a construction of a new cross-border gas pipeline which will connect the natural gas transmission systems of Poland and Lithuania and expansion of the LNG Terminal in Świnoujście. This list includes investments of particular importance for the improvement of security and diversification of natural gas supply in Europe.

The Warsaw team was led by counsel Jacek Smardzewski and included associate Igor Kondratowicz. The team worked under the supervision of partner Grzegorz Dyczkowski who heads the Warsaw office and the firm’s Warsaw banking and finance practice.

Gaz-System is a strategic company for the Polish economy. It is responsible for the transmission of natural gas, manages the most important gas pipelines in Poland and owns the LNG Terminal in Świnoujście. As part of the 2015-2025 investment programme, GAZ-SYSTEM is constructing over 2,000 km of new gas pipelines in the western, southern and eastern parts of Poland. The company is implementing one of the most important infrastructure projects in the country - the Baltic Pipe project, which involves the construction of a two-way offshore gas pipeline connecting Poland and Denmark, the expansion of the local transmission network and three gas compressor stations. The construction of interconnectors with Lithuania and Slovakia is also underway, as well as the design of onshore gas pipelines that will connect the planned FSRU floating terminal in the Gulf of Gdansk to the national transmission system. An expansion of the LNG Terminal in Świnoujście is also underway, which will increase the regasification capacity of the facility by more than a half.

In this complex transaction, Gaz-System was advised by Allen Overy Warsaw. Clifford Chance Warsaw advised European Investment Bank and Linklaters Warsaw advised Polish Development Fund.