Polimex overextended itself when taking part in the Euro 2012 infrastructure boom Shutterstock

The Polish state has thrown a lifeline to debt-laden Polish construction firm Polimex-Mostostal by offering to buy a controlling stake in the beleaguered builder.

The state-owned Industrial Development Agency (ARP) has agreed to purchase new shares comprising a stake of up to 33 percent, for a maximum of zł.250 million. A stake sized around 33 percent would give the ARP control of the company.

The Agency will pay up to zł.0.50 per share for Polimex. Moreover, a proposal has also been made that will allow the company’s bondholders to convert the debt they hold into shares in the company. Polimex shareholders are due to vote on the proposals this week.

“We are thinking about taking a controlling stake in Polimex,” Mikołaj Budza-nowski, Poland’s treasury minister, told Rzeczpospolita.

“The thing is to be able to oversee the restructuring process and to be able to join in discussions with banks. That is why we are sending our representative to the board. Today, the most important is for the company to straighten out, sell off non-essential holdings and sign new energy contracts.”

The state is keen to keep Polimex afloat because the company has the engineering expertise needed to undertake a zł.6.3 billion scheme to expand the Kozienice power plant and another zł.9.3 billion power plant project in Opole.

Russian offer

However, the waters have been muddied somewhat by the Russian VIS Construction Group, which itself has placed an offer to purchase a 33 percent stake in Polimex, Parkiet wrote, citing unnamed sources.

The price per share proposed by the Russian entity is reportedly higher than that due to be offered by the ARP.

According to Parkiet’s sources, however, funds with shares in Polimex won’t allow the Russian company to take control of the Polish builder.

Government lends a hand

In recent weeks the government has helped negotiate a standstill agreement concerning zł.2.5 billion owed by Polimex to banks and other creditors, buying time for the firm to restructure its debt. Polimex has run up a large pile of debt due to its involvement in the Euro 2012 infrastructure building boom.

Eurometal, a subcontractor of Polimex, looked to have thrown a spanner in the works last week when it demanded the payment of zł.600,000 in unpaid fees and filed a request for Polimex to be declared bankrupt. Eurometal has been forced to lay off half of its staff and reduce salaries across the board due to financial problems related to the fact that it hasn’t been paid.

Nevertheless, should ARP take control of the company, the difficulties posed by Eurometal are likely to be dealt with.

“Eurometal is only one of many contractors and suppliers to Polimex,” said Tomasz Duda, an analyst at Ipopema Securities. “Given that the government is stepping in, the firm’s liquidity situation has been shored up a bit – it will help them pay off Eurometal,” he added.