No material events occurred in the period from the balance-sheet date until the date of these financial statements except for the following:
1. On January 2nd 2009, at the request of Grupa LOTOS S.A., Bank PKO BP S.A. issued a guarantee for PLN 1,500 thousand for the benefit of the Customs Office in Pruszków as excise security. The guarantee expires on June 30th 2009.
2. On January 2nd 2009, at the request of Grupa LOTOS S.A., Bank PKO BP S.A. issued a stand-by letter of credit for EUR 3,000 thousand (the equivalent of PLN 12,517 thousand, translated at the EUR/PLN mid-exchange rate quoted by the National Bank of Poland for January 2nd 2008) for the benefit of Umicore Precious Metals Refining, valid through October 15th 2009. The stand-by letter of credit was issued to secure lease payments under platinum lease agreement.
3. In order to secure the repayment of a loan, on January 15th 2009 LOTOS Exploration and Production Norge AS issued a blank promissory note with a “protest waived” clause and a promissory note declaration for the benefit of Petrobaltic S.A. The loan of USD 55m (the equivalent of PLN 177m, translated at the USD/PLN mid-exchange rate quoted by the National Bank of Poland for January 15th 2009) will be used to finance further implementation of the YME Production Project, and in particular the capital expenditure on the project implementation, along with the cost of capital, including interest on the loan. The loan will be paid in three instalments and the date of the last instalment is March 31st 2010.
4. On January 20th 2009, the Management Board of Petrobaltic S.A. resolved to commence the procedure for registration of another share capital increase at LOTOS Exploration and Production Norge AS and acquisition of the new shares by Petrobaltic S.A.
The share capital of LOTOS Exploration and Production Norge AS was increased from NOK 190m (the equivalent of PLN 90m, translated at the NOK/PLN mid-exchange rate quoted by the National Bank of Poland for January 20th 2009) to NOK 430m (the equivalent of PLN 203m, translated at the NOK/PLN mid-exchange rate quoted by the National Bank of Poland for January 20th 2009). The new shares comprising the increased share capital, whose aggregate par value amounts to NOK 240m (the equivalent of PLN 113m, translated at the NOK/PLN mid-exchange rate quoted by the National Bank of Poland for January 20th 2009) are equal and indivisible, and they are treated by Petrobaltic S.A. as a long-term equity investment.
Petrobaltic S.A. covered the 240 million new shares in LOTOS Exploration and Production Norge AS with cash. The purchase price for the shares was equal to their par value, i.e. NOK 240m (the equivalent of PLN 113m, translated at the NOK/PLN mid-exchange rate quoted by the National Bank of Poland for January 20th 2009) and was covered with Petrobaltic’s internally-generated funds.
On February 26th 2009, Norwegian companies registrar Bronnoysundregistrene registered the share capital increase at LOTOS Exploration and Production Norge AS described above.
5. On February 2nd 2009, at the request of Grupa LOTOS S.A., Deutsche Bank Polska S.A. issued a guarantee for USD 18,000 thousand (the equivalent of PLN 62,690 thousand, translated at the USD/PLN mid-exchange rate quoted by the National Bank of Poland for February 2nd 2009) for the benefit of TOTAL DEUTSCHLAND GmbH. The guarantee was issued to secure the payment of amounts due for the delivery of diesel oil and gasoline, and remains valid through July 31st 2009.
6. On January 30th 2009, LOTOS Jasło S.A. acquired 15 shares in PLASTEKOL Organizacja Odzysku S.A., representing 1.5% of the company’s share capital, from Krzysztof Boniecki, who conducts business activities under the business name of Przedsiębiorstwo Wielobranżowe ROBAC. Following the transaction, LOTOS Jasło S.A.’s holding in the share capital of PLASTEKOL Organizacja Odzysku S.A. increased from 83.5% to 85% (or, from 835 to 850 shares).
On February 13th 2009, LOTOS Jasło S.A. acquired 30 shares in PLASTEKOL Organizacja Odzysku S.A., representing 3.0% of the company’s share capital, from EKO-OPEN Sp. z o.o. Following the transaction, LOTOS Jasło S.A.’s holding in the share capital of PLASTEKOL Organizacja Odzysku S.A. increased from 85% to 88% (or, from 850 to 880 shares).
7. In view of the macroeconomic instability resulting from the current economic crisis and given the Company’s ongoing investment programmes, on February 11th 2009 the Management Board of Grupa LOTOS S.A. prepared and adopted a package of anti-crisis measures for the LOTOS Group. The primary objectives of the measures is to ensure the implementation of those investment programmes which are key to Grupa LOTOS S.A. and its future shareholder value, and to guarantee the Company’s liquidity in 2009.
The key elements of the package are cost savings of approximately PLN 170m in 2009 and suspension or abandonment of approx. PLN 220m of the investment expenditure planned for 2009, which in effect should improve the LOTOS Group’s cash flows by about PLN 390m.
Given the uncertain market situation and limited possibilities to raise financing, the Management Board of Grupa LOTOS S.A. decided to suspend the implementation of the investment projects provided for in the Group’s strategy for 2006–2012, with the capex totalling approximately PLN 2.1bn. The limitations will not affect the key ongoing investment projects under the 10+ Programme, the development of the YME field on the Norwegian Continental Shelf, or the expenditure on the development of the B8 and B23 fields on the Baltic Sea, planned as part of the development programme for Petrobaltic S.A.
The limitations mean an over 25% reduction of the LOTOS Group’s total capex planned for 2009-2012, and a nearly 40% capex reduction if the Company’s investment commitments connected with the 10+ Programme and the development of the YME field are taken into account. This objective will be achieved by postponing the implementation of certain projects.
The Company’s Management Board will be closely monitoring the market situation and in the event of any significant changes will revise the plans described above.
8. On February 10th 2009, LOTOS Oil S.A. issued a promissory note for the amount of PLN 5,000 thousand, along with a promissory note declaration, for the benefit of the Customs Office in order to secure an excise tax liability related to the transit of excise goods. The promissory note is valid from March 1st 2009 to February 28th 2011.
9. On February 26th 2009, at the request of LOTOS Asfalt Sp. z o.o., BRE Bank S.A. issued a documentary letter of credit for EUR 500 thousand (the equivalent of PLN 2,353 thousand, translated using the EUR/PLN mid-exchange rate quoted by the National Bank of Poland for February 26th 2009) for the benefit of NARDINI S.p.A. The validity term of the letter of credit expires on June 30th 2009. The letter of credit was issued to secure the performance of a contract related to the construction of a tarpaper production plant.
10. On February 27th 2009, Grupa LOTOS S.A. issued a blank promissory note for the amount of up to PLN 400,000 thousand for the benefit of the Customs Office in Gdańsk to secure the Company’s tax liability in connection with the suspended excise tax collection procedure. The blank promissory note is valid through January 13th 2011.
11. On February 27th 2009, Lotos Jasło S.A. signed an annex to the loan agreement, under which the amount of funds available under an existing credit line was decreased. As a result, the amount of security for the company’s current account loan contracted at Bank PKO BP S.A. o/Krosno, made in the form of a blank promissory note, decreased from PLN 18,000 thousand to PLN 10,000. The promissory note is valid through July 29th 2011 (see Note 42).
12. In order to secure the repayment of a loan, on March 9th 2009 LOTOS Exploration and Production Norge AS issed a blank promissory note with a “protest waived” clause and a promissory note declaration for the benefit of Petrobaltic S.A. The loan of USD 7.5m (the equivalent of PLN 28m, translated at the USD/PLN mid-exchange rate quoted by the National Bank of Poland for March 9th 2009) will be used to finance further implementation of the YME Production Project. The principal amount is to be repayed by January 29th 2010.
13. On April 1st 2009, the validity term of the documentary letter of credit for the benefit of CB&I LUMMUS GmbH issued by Bank PKO BP S.A. at the request of Grupa LOTOS S.A. on January 3rd 2007 was extended until May 31st 2009 (see Note 42, item 6).
14. On April 1st 2009, the validity term of the documentary letter of credit for the benefit of CB&I LUMMUS GmbH issued by Bank PKO BP S.A. at the request of Grupa LOTOS S.A. on June 2nd 2008 was extended until May 31st 2009 (Note 42, item 13).
15. In order to secure the repayment of a loan, on April 1st 2009 LOTOS Exploration and Production Norge AS issed a blank promissory note with a “protest waived” clause and a promissory note declaration for the benefit of Petrobaltic S.A. The loan of USD 2.5m (the equivalent of PLN 8.8m, translated at the USD/PLN mid-exchange rate quoted by the National Bank of Poland for April 1st 2009) will be used to finance further implementation of the YME Production Project. The principal amount is to be repayed by June 30th 2010.
16. On April 6th 2009, LOTOS Jasło S.A. acquired 30 shares in PLASTEKOL Organizacja Odzysku S.A., representing 3% of the company’s share capital, from Jan B. Tylisz, who conducts business activity under the business name of Przedsiębiorstwo Handlowo - Usługowe TYL-OIL. Following the transaction, LOTOS Jasło S.A.’s stake in PLASTEKOL Organizacja Odzysku S.A. increased from 88% to 91% (or from 880 to 910 shares).
17. In order to secure the payment of excise tax liability, on April 15th 2009 LOTOS Biopaliwa Sp. z o.o. issued (and filed with the Customs Office in Bielsko-Biała) a blank promissory note for up to PLN 18,820 thousand, guaranteed by LOTOS Czechowice S.A., along with a promissory note declaration. The promissory note is valid through June 30th 2010.