Net4Gas: pipeline firm completes new debt plan

Czech gas pipeline operator Net4Gas is in the final stages of overhauling its capital structure with equity financing, bonds and bank loans.

Investors Allianz and Borealis Infrastructure bought into the pipeline company last year, paying German utility RWE some €1.6 billion (US$ 2.15 billion), and have taken advantage of favourable debt markets to seek better terms for the company's capital structure.

Net4Gas said the new debt plan, which has raised concerns at the top energy regulator and among government officials, would not lead instability at an important infrastructure company.

"The new capital structure is based on conservative and prudent business assumptions and has been designed in a way to maintain full financial strength for executing our planned investments in the long-term development of the transmission system," Net4Gas Chief Executive Andreas Rau said in a company release late on Friday.

New structure

Under the new structure, Net4Gas will have 42.12 billion crowns (US$ 2.06 billion) of capital, of which 27.90 billion is from new issues of 6.5-, 7- and 12-year bonds completed this month along with a four-year, 8.25 billion crown bank credit. Shareholders will provide the rest of the capital.

Net4Gas said the new structure would not have any impact on customers' gas bills and that its gearing of two-thirds debt to one-third equity was in line with other European operators.

The company also plans investments totalling 10 billion crowns, it said, including a new pipeline with a large-scale connection to Poland.

Still, the new capital plan has raised worries, and company officials are due to meet with Industry Minister Jan Mladek.

The head of ERU energy regulator has expressed concerns that any economic instability at the firm could threaten the state's energy security, according to Czech media.

BBB rating

Fitch Ratings has assigned Net4Gas, s.r.o.'s Long-term Issuer Default Rating (IDR) of 'BBB' and its proposed notes expected senior unsecured rating of 'BBB(EXP)'. The outlook on the long-term IDR is positive.

Edited from various sources by Elizabeth Corner

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