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Gaz-System secures new US$220 million subordinated loan
Polish LNG pipeline operator will use funding to support rapidly changing gas infrastructure in Europe
Michael Marray 16 Nov 2022

Senior lenders to Polish pipelines and liquefied natural gas (LNG) terminals operator Gaz-System have agreed to amend intercreditor arrangements and existing finance documentation in connection with a new 1 billion zloty (US$220 million) subordinated loan made available to it by the Polish Development Fund.

The existing senior lenders include Alior Bank, Bank Gospodarstwa Krajowego, Bank Millennium, Bank of China (Luxembourg), Oddział w Polsce, BNP Paribas Bank Polska, CaixaBank, China Construction Bank (Europe), Crédit Agricole Bank Polska, mBank, and PKO Bank Polski.

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

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

Funds from the new loan will be used to finance Gaz-System’s investment projects, including the Baltic Pipe project, implementation of a coal-to-gas programme, and the location in the Gdansk area of a floating storage regasification unit (FSRU) which will be capable of offloading, in-process storage and regasification of LNG.

The funding will also be used for the construction of a new cross-border gas pipeline which will connect the natural gas transmission systems of Poland and Lithuania and expansion of its LNG terminal in Świnoujście.

The transaction is the latest financing to support the rapidly changing gas infrastructure in Europe, in the wake of EU sanctions on Russia and the damage to the Nordstream pipelines running from Russia to Germany.

Gaz-System 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.

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