Published: 7/24/1998

Polish Airlines LOT is in the process of creating LOT international B.V. in Holland. The new organisation will be 100% owned by the Polish national carrier and will be responsible for issuing US$100m of five-year bonds. The issue is planned most probably for early July and soon after, LOT's shares are to be put on the Luxembourg stock market. It is possible that some of the bonds will be offered to Polish economic organisations Figures from the Bank Austria Creditstalt suggest that the issue will be welcomed by the market, and potential investors will recognise LOT's share to be safe. This is happening even without the involvement of the Polish Government, which will not guarantee the issue. LOT wants to use the money raised for the planned reorganisation of its debts. Financial problems have been troubling LOT for the last three years when payments for its new fleet peaked. The last two years have been especially difficult and the company was not able to achieve a profit. The total of LOT's debts are estimated between US$200m and $250m, so the issue will strongly improve the company's short term financing situation and make recovery easier. Over three years ago, LOT made its first attempt to reduce its annual aircraft payments and to restructure the debts for its Boeing 767s. Those aircraft which had reached "mid-payment period" offered a very positive balance of their current value against remaining payments and a consortium of Japanese financial and economical organisations purchased the aircraft from the US owners. This stabilised LOT's position for some time. The situation at LOT has led to dramatic changes in the management. During the recent annual shareholders' meeting most of LOT's management was replaced, with only President Jan Litwinski retaining his position. The new team aims to lead the company through its privatisation process. Unfortunately, it should have started late-April or early-May but the government has made no final selection of a strategic adviser, as the results of the bid have not been finalised.(EE798.1) (MM)

Article ID: 233