Polish energy sector construction firm Rafako, based in the town of Racibórz, lodged an application for bankruptcy in a court on Thursday and its shares were suspended from trading on the Warsaw Stock Exchange.
“Without a deal on our debt it will be impossible to find a strategic investor for the company. It will also be impossible to continue operations or a return to trading on the stock market,” company chairman Maciej Stańczuk told the Businessinsider website, after attempts to persuade creditors to take shares in the firm in exchange for debt fell apart.
The news is a blow not just for shareholders, but for the town of Racibórz, where the company is based.
The energy sector company, which opened its doors in 1968, attracted specialists from throughout Poland during the 1970s and 80s to the area. The boiler-making works was much needed in a town where the population had dropped to near zero when the area was ceded to Poland from Nazi Germany after World War II.
Rafako was on its uppers in the 1990s but carried on when many other plants in the southern Silesia region crashed. The firm was one of the symbols of Racibórz’s resilience during devastating floods in 1997.
Western Poland newspaper Dziennik Zachodni wrote recently of the heroism of the workers, who toiled to hoist machinery and goods produced by the factory up above flood levels.
During the floods that recently hit Poland, Racibórz was spared the kind of damage it suffered in 1997.
Rafako was one of the construction companies that built new large generator blocks at the Bełchatów power station near the central town of Łódź in 2011, the largest coal-powered energy plant in Europe.
The news is a blow not just for shareholders, but for the town of Racibórz, where the company is based.
The energy sector company, which opened its doors in 1968, attracted specialists from throughout Poland during the 1970s and 80s to the area. The boiler-making works was much needed in a town where the population had dropped to near zero when the area was ceded to Poland from Nazi Germany after World War II.
Rafako was on its uppers in the 1990s but carried on when many other plants in the southern Silesia region crashed. The firm was one of the symbols of Racibórz’s resilience during devastating floods in 1997.
Western Poland newspaper Dziennik Zachodni wrote recently of the heroism of the workers, who toiled to hoist machinery and goods produced by the factory up above flood levels.
During the floods that recently hit Poland, Racibórz was spared the kind of damage it suffered in 1997.
Rafako was one of the construction companies that built new large generator blocks at the Bełchatów power station near the central town of Łódź in 2011, the largest coal-powered energy plant in Europe.
Tough times
But in recent years, since it has been a subsidiary of ailing construction company PBG S.A., times have been fraught. Investments in hydrocarbon-fueled power stations have not exactly been the flavor of the month, as a green transition has taken precedence.
The problems felt by Rafako have had a knock-on effect on many of the coal-dependent employers in the Racibórz area. The town population has shrunk by a sixth since 1997.
According to its financial statements, the company’s sales have sunk from just under 1 billion złotys (€230 million) in 2019 to just over 200 million (€46 million) in 2023.
Moreover, the company has been hit by severe cash flow problems.
Payment delays on two of Rafako’s major building contracts have been crippling. In one case, the construction of a coking plant for coal mining firm JSW in nearby Radlin has been subject to costly overruns.
Meanwhile, Rafako had a long-running dispute with state-run power generation firm Tauron over bugs in a power plant construction project in the town of Jaworzno in Lower Silesia. Neither dispute was good for business, and the order book was far from full.
With little money coming in and unable to pay its creditors – a number of banks and suppliers, who also did not want to accept shares in the company by way of payment – Rafako was left with few alternatives.
Who could help?
In January 2023, current Prime Minister Donald Tusk, then in opposition, said that the future of the Polish energy sector depended on companies like Rafako.
In December last year, former State Assets Minister Boris Budka, part of Tusk’s new government, said he would try to find a solution for Rafako.
However, his successor as Assets Minister, Jakub Jaworowski, said on Thursday that the company did not come under his ministry’s remit, and that as a private company its problems were of its own making. However, he said he would refer the case to the Ministry of Development.
Observers have noted that although the Assets Ministry is not a shareholder of Rafako, it is a shareholder of its slow-paying customers Tauron and JSW, and of a bank which is foreclosing on Rafako debts – PKO BP.
Under the auspices of the Ministry of Development is the Polish Development Fund, which has about a 7.8% share in Rafako.
No help is likely from the fund though. The Polish Development Fund’s unit trust fund PFR TFI put out a statement saying: “Despite a long period of discussions and attempts at finding a solution with the support of many different bodies, we were unable to reach an agreement which could guarantee a stable future for the company.”
