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CEZ Has Successfully Increased Its Promissory Notes (P/Ns) Program

19. 4. 2000

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CEZ Has Successfully Increased Its Promissory Notes (P/Ns) Program

With the aim to provide for the largest in its history and, regarding the price, the most efficient resource of CEZ current financing, a P/Ns Program had been set up last March amounting to CZK five billion for the period of three years. Recently the P/Ns Program has been increased up to the total volume of CZK nine billion.

 

With the aim to provide for the largest in its history and, regarding the price, the most efficient resource of CEZ current financing, a P/Ns Program had been set up last March amounting to CZK five billion for the period of three years. Recently the P/Ns Program has been increased up to the total volume of CZK nine billion.

The original P/Ns Program had been prepared in cooperation with four banks (Ceska Sporitelna, CSOB, Citibank and ING Bank) as a so-called opened Program. In practice that means that pursuant to the legal documentation other banks may access the Program during its term, increasing its total volume. CEZ used this option and addressed at the beginning of this year four more banks Societe Generale, ABN AMRO, Komercni Banka and Investicni a Postovni Banka. Intensive negotiations with representatives of all eight banks and their attorneys concerning the form and conditions of CEZ new P/Ns Program were completed with a consensus of all 8 banks to participate in new Program amounting to CZK nine billion.

Each of the banks act within the Program as a broker selling P/Ns drawn by CEZ and as an administrator of P/Ns trades providing for safe-deposition of bills of exchange in the bank and administration of trades including all payments. All eight banks simultaneously sign a multilateral contract which defines the common rules for the process of crediting through this Program. Simultaneously, all banks execute with CEZ the so-called back up facility contract for a fixed, favorable price totaling to CZK 7.5 billion (so-called committed volume) in case the volume of P/Ns bought by banks does not fully cover the volume required by CEZ.

For CEZ the execution of this agreement is a great success such a volume of highly liquid funds has not yet been achieved by any other company. The Program guaranties that CEZ can receive money in three days from giving an inquiry to banks and under a very competitive price determined in the form of the so-called Dutch auction of bids presented by the eight banks. The cost of borrowing using P/Ns Program has ranged around PRIBOR value in the past (the price for which banks borrow money each other).

The agreement between CEZ and the eight banks will considerably support the development of the capital market in the Czech Republic.

 

Ladislav Kriz, press, spokesman of CEZ