PGNiG: tandard & Poor’s lowers PGNiG's credit rating from "BBB+" to "BBB"

The Management Board of Polskie Górnictwo Naftowe i Gazownictwo SA ("PGNiG", "Company") reports that on September 5th 2012 it was notified that the rating agency Standard & Poor's Financial Services ("Standard & Poor’s", "Agency") lowered PGNiG's credit rating from "BBB+" to "BBB" and placed it on CreditWatch with negative implications.
In its rationale for the downgrade, Standard & Poor’s stated that PGNiG's 2012 results would be below the Agency's previous expectations as Poland's regulatory framework appears to prevent PGNiG passing on the cost of imported natural gas to end-consumers on a full and timely basis, thereby threatening the Company's profitability. Should domestic gas tariffs not be allowed to increase materially, PGNiG will, in the Agency's view, likely post an operating loss for 2012.
At the same time, Standard & Poor’s found the Company's liquidity "adequate" in the context of its investment programme, thus recognising the available significant sources of financing.
The Management Board of PGNiG considers the Company's liquidity position secure, with the 2012 financing needs under the investment programme fully met. The Management Board underlines that a sound investment rating is a priority, particularly in the context of the ongoing investment projects designed to enhance the national energy security, as it facilitates better and less costly access to financing for the projects. In light of the foregoing, the Management Board expects that the right decisions on gas prices and launch of production from new gas fields will bolster the Company's financial ratios and provide rationale for an upgrade in credit ratings.
With a view to improving the Company's standing, the Management Board has also embarked on a restructuring process in the Group, with the efforts extending to cover among others Gas Trading Divisions and Production Branches, and has been engaged in arbitration proceedings against OAO Gazprom and OOO Gazprom Export since November 2011 seeking to change the pricing terms under a long-term gas supply contract.