Polish fertilizer and chemicals producer Grupa Azoty SA said it has signed waiver and amendment letters with 13 financing institutions whereby they agreed to waive certain covenants laid down in loan agreements to the group and its Zakłady Chemiczne “Police” SA subsidiary.
Azoty has been seeking covenant waivers from its lending institutions since June. After reporting a group net loss of Pln555 million (approximately $132.6 million at that time) for the first quarter of 2023 (GM May 19, p. 26), Azoty said it expected to breach its debt/EBITDA ratio covenants at the end of the second quarter.
Azoty’s debt stood at 4.77x EBITDA as at March 31, 2023, according to the group’s first-quarter financial report (GM May 26, p. 26). In an Aug. 31 statement, Azoty said the waiver letters were signed on Aug. 31, and consent was given to waive the net debt/EBITDA covenant as of the end of June 2023.
“The waiver letters underscore our resilience in the face of challenges, assuring that our long-term business prospects remain unaffected,” said Marek Wadowski, Vice President of the Management Board for Grupa Azoty.
Wadowski reiterated that Grupa Azoty anticipates a surge in fertilizer demand for the third quarter, which the group expects to translate into favorable financial outcomes. All along, Azoty had repeatedly stated that its liquidity was not threatened by the covenant breach risk.
Azoty signed a cooperation and non-disclosure agreement with Polish energy group Orlen SA (formerly PKN Orlen) in early June for the potential acquisition of its Zakłady Azotowe Puławy subsidiary (GM June 9, p. 1). The Puławy unit is Azoty’s most profitable, and its production includes ammonium nitrate and urea, as well as caprolactam and melamine.