Asseco is preparing changes to its shareholding structure

Asseco, whose share price is near an all-time high, plans to allocate PLN 1.19 billion to buy back shares – four times the amount that will be earmarked for dividends this year. At the same time, he does not exclude the possibility that the entire amount allocated for the buyback will be spent in one go, and the company will have to borrow money to finance the buyback.

– If a buyback of this magnitude takes place, we will have to finance ourselves with debt – rather in the form of a standard investment loan, but we are looking at other options. I do not exclude that we will need the entire amount at once, – says Karolina Rozuka Pajorek, Vice President and Chief Financial Officer at Asseco Poland.

custom moves

The IT group is known for its conservative approach to financial management and has always avoided taking on debt, so it may come as a surprise that it’s willing to do this to buy back its shares.

– As a base scenario, we assume that the debt will not be long-term and we will quickly return to the standard situation. We will manage it flexibly. If it turns out that we need the entire amount quickly, there are different scenarios. The draft resolution provides for the possibility of buying shares, for example for resale – if we sell them, we will pay off debts – says ACICO’s vice president.

The company’s debt necessity will affect the level of dividends.

– There is nothing to hide – if we receive permission to buy and access to leverage, we will have to adjust the dividend policy, – says Karolina Rzońca-Bajorek.

He confirms that the concentration is 20 percent. of the market (to the extent permitted by the draft resolution) that would mitigate the impact of a potential reduction in the pay-per-share.

Default but possible:

Representatives of Asseco Poland, headed by Adam Gural (pictured right), maintain that the planned buyback of private shares is just a tool in the event of a possible sale of shares by the shareholder. However, they point out that there is no certainty that this will happen. Cyfrowy Polsat, which is controlled by Zygmunt Solorz, is the IT company’s largest shareholder.

Marek Wisniewski

just in case

Here the obvious question arises: why these non-normative movements?

We are trying to insure ourselves against some dynamic situation. “The goal is not in itself to buy back or support the share price,” says Karolina Rzońca-Bajorek.

Asseco representatives confirm that there is no decision yet to launch the purchase.

“It’s a possibility. We want such a program to be open so that we can use it, but there is no decision to do so. We are treating it as a situation that could happen,” says Artur Wiza, Vice President of Asseco Poland.

Asked for examples of situations in which buying might be initiated, he first mentioned unforeseen events, such as the outbreak of war last year or the previous epidemic, in which the exchange rate behaved irrationally. There is also a second circumstance.

– If any of the shareholders wants to sell the shares, and the market situation is not conducive to finding a buyer for a larger share, then we can help. Especially since we want the shares not to go to investors who can change the strategic development of the company. Then we can respond – to buy for a while, to have time to find the right investor – says Artur Weiza.

profitable investment

Although the name is not mentioned, it is not difficult to guess what kind of investor he is talking about. It is known that the founder of Asseco, Adam Gural, has no plans to sell the shares. Asseco’s largest shareholder is Cyfrowy Polsat, which controls 22.95 percent. Involved. The intention of the potential sale of the package by the group controlled by Zygmunt Solorz can be seen in its updated strategy, which assumes investment in a new pillar – clean energy, and this requires financing.

We asked in the source if a sale of Asseco shares was being considered.

– We have nothing to say – reported PB Tomasz Matwiejczuk, spokesperson for the Zygmunt Solorz Group.

Cyfrowy Polsat announced a tender offer for Asseco shares in December 2019. It paid PLN 1.17 billion for 17.99 million shares. The value of the package is currently PLN 1.62 billion, so the media, communications and energy group has a profit of approximately PLN 0.5 billion. Added to this are PLN 250 million in profits received in recent years, including the payment planned for 2022.

But what kind of investor?

Asseco is a major provider of IT services, for example for general administration. It carries out important projects for ZUS, ARiMR, KRUS, the Ministry of Finance or the Border Guard, which is why not every strategic investor is welcome in the company. In addition, the package is approximately 23 percent off. Shares owned by Cyfrowy Polsat do not give control of the company, which also limits the pool of potential investors.

Information from sources close to Asseco indicates that the scenario under consideration assumes that many long-term financial investors, preferably foreign, are interested in this package. Potential transactions are expected no later than around the end of the year.

Analyst appointed

Four selling points

Konrad Kszeopolski

Executive Director of Haitong Bank

Four selling points

The decision to buy back at a time when the exchange rate is close to its maximum and the biggest market turmoil can have a negative impact on it seems irrational. Asseco decided not to do this either during the pandemic or after the outbreak of the war, and not a penny was spent of the half-billion repurchase budget approved 12 years ago aimed at stabilizing the exchange rate, despite the stock market turmoil. Therefore, it cannot be ruled out that one of the motives is preparation for a possible supply of Cyfrowy Polsat. Will the largest shareholder want to sell the shares? The energy business, which is a priority, requires expenses and, unlike the telecom business, does not generate cash. Cyfrowy Polsat has other assets for sale, such as real estate, but I can see at least four arguments for the possible sale of at least some of the shares: the price is close to the maximum, the investor has already got a lot, the company is public and liquid, so it is relatively easy and quick to sell, enough The smaller package to retain a seat on Cyfrowy Polsat’s operational oversight and control board. It should be remembered that Cyfrowy Polsat has recently refinanced its debt, and the net debt/EBITDA ratio, i.e. 3.3, is in the record high, although it’s not worrisome. Telecommunications is a well-established business, providing stable cash flows, allowing for a phase-out of indebtedness. On the other hand, the group will soon have additional expenses in the form of purchasing 5G frequencies at a price of at least PLN 450 million. In the event of Cyfrowy Polsat’s increased demand for cash, a sale of Asseco shares cannot be ruled out.

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