39.2 Bonds issued

The bonds issued by the Company are unsecured coupon bonds. The bonds were issued at the par value, except for Eurobonds with the issue price accounting for 99.44% of the par value. The Eurobonds were admitted to trading on the regulated market of the London Stock Exchange. Bonds subscribed by the European Investment Bank (“EIB”) are subordinated, which means that they have priority of satisfaction only before the amounts due to the Company’s shareholders in the event of its bankruptcy or liquidation. This in turn positively affects Company’s financial stability, since the bonds are excluded from the net debt / EBITDA ratio calculation, a covenant in some financing agreements concluded by the Company. Additionally, 50% of the subordinated bond amount has been classified by the rating agency as equity in the rating model, which has had a beneficial effect on the rating of the TAURON Group.

There are two financing periods for bonds subscribed for by the EIB. The Company cannot early buy-back the bonds in the first (non-call) period, nor can EIB early sell them to third parties (in both cases except for cases indicated in the subscription agreement). In this period, the interest rate is fixed, while after the non-call period, it is floating and is linked to the underlying rate (WIBOR for bonds issued in PLN and EURIBOR for bonds issued in EUR) increased by an agreed margin. In the case of bonds issued in PLN, the maturity date was set at 12 years from the issue date, i.e. 17 and 19 December 2030, with the first financing period defined as 7 years and the next one as 5 years in accordance with the characteristics of hybrid financing. In the case of bonds issued in EUR, the maturity date is set at 18 years from the issue date, i.e 16 December 2034, with the first financing period defined as 8 years and the next one as 10 years in accordance with the characteristics of hybrid financing.

The bonds issued under the agreement of 6 September 2017 concluded with Bank Gospodarstwa Krajowego with a par value of PLN 400 000 thousand are also of a subordinated nature. For these bonds, two periods are also distinguished. The Company cannot early buy-back the bonds in the first 7-year-period (non-call period), nor can BGK early sell them to third parties (in both cases except for cases indicated in the documentation). The interest rate is variable based on WIBOR 6M increased by a fixed margin, with the margin being further increased after a 7-year financing period.

Establishment of a bond issue scheme (A series bonds – TPE1025)

On 6 February 2020, TAURON Polska Energia S.A. entered into the Scheme Agreement with Santander Bank Polska S.A. under which the Bond Issue Scheme (the “Scheme”) up to PLN 2 000 000 thousand was established. Funds from the bond issue will support the implementation of the Group’s energy transformation, including increasing the share of low- and zero-carbon sources in its generation structure.

On 30 October 2020, under the Scheme, the Company issued bonds in the total nominal amount of PLN 1 000 000 thousand. The bonds are unsecured bearer securities, denominated in PLN, with a maturity of 5 years. The Bonds have been listed in the alternative trading system Catalyst operated by the Warsaw Stock Exchange (Giełda Papierów Wartościowych w Warszawie S.A.) since 19 January 2021.

The terms and conditions of the bond issue include sustainability indicators in the form of the CO2 emission reduction rate and a RES capacity expansion rate, the achievement of which determined the level of the bond margin.

New subordinated bond issue scheme

After the balance sheet date, on 11 March 2021 TAURON Polska Energia S.A. concluded the agreement with Bank Gospodarstwa Krajowego on the issue scheme of subordinated bonds up to PLN 450,000 thousand which is discussed in more detail in Note 60 to these consolidated financial statements.