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DZP advises on another Polish Development Fund investment in Tarnobrzeskie Wodociągi

23.12.2019

Autorzy:
Tomasz Darowski
Beata Cieszyńska

DZP has advised Tarnobrzeskie Wodociągi sp. z o.o. (“Tarnobrzeskie Wodociągi”) and Tarnobrzeg Municipality on the sale of a minority shareholding in Tarnobrzeskie Wodociągi to a Local Government Investment Fund Closed-end Private Equity Investment Fund (“Fund”), represented by the Polish Development Fund (“PDF”). 

In the transaction, the Fund entered into an investment agreement with Tarnobrzeg Municipality and Tarnobrzeskie Wodociągi in which the parties laid down the conditions for the Fund’s investment and the sale to the Fund of up to 45% of shares in two tranches. As a result, the Fund became a minority, passive shareholder in the company. According to the investment agreement, it will not affect the company’s day-to-day management and in approx. 20 years, as a result of redemptions of the Fund's shares, the local government will again become the sole shareholder in Tarnobrzeskie Wodociągi.

This is another successful transaction (in addition to, inter alia, investments in Opole, Gdynia and Nowy Sącz) carried out thanks to the "Package for Medium Cities" programme, on which DZP advised. The programme was set up to stimulate economic growth and improve the quality of life in medium-sized cities in Poland. The Fund's investment model is safe for local governments and their subsidiary companies. The Fund invests in well-managed, profitable municipal companies with stable financial standing, thus obtaining a favourable capital investment, and for municipalities it means additional funds to carry out investments important for their development and the quality of life of their inhabitants.

DZP handled the formal side of the transaction, supported the City in the City Council adopting a procedure to select a buyer for the shares and ensured that the negotiations were conducted on the rules laid down in the procedure. DZP also developed and negotiated the whole of the transaction documentation with the PDF, primarily the investment agreement, share purchase agreements and amendments to the articles of association based on the arrangements made during the negotiations.

The DZP lawyers who handled the transaction were Tomasz Darowski (Partner) and Beata Cieszyńska (Senior Associate) from the Infrastructure & Energy Practice.

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