4.2.1 Financing of operations and safety
improvement programs

Among the principles of the Nuclear and Radiation Safety Concept adopted by the Board of Slovenské elektrárne a.s. is the commitment to spend the necessary funds to meet the main principles of nuclear and radiation safety policies and to provide for continuous training and improvement of qualification of the staff. To fulfill this commitment, it was necessary to develop a financial strategy plan to enable , among the tasks mentioned, to also fulfill also the production and technological development program.

The financial strategy of the company has been defined as a way to provide for optimum financing of operating and investment needs of the company. The strategic goals of the operator with respect to the finances include:

• preservation of a financially sound company,
• raising long-term funds that correspond to the service life of power sector projects,
• gaining the trust of banks and financial institutions.

Gaining the trust of banks and financial institutions is a long-term process that requires ongoing thorough analyses of achieve economical results, analyses of the environment within which the company is doing business (market position, market stability, development and provision for supplies and sales), and preparation of a transparent projection of future economical means. For the Joint Stock Company Slovenské elektrárne it was the period between 1994 and 1995 when it was spending efforts to gain this trust; several dozens of its employees were directly or indirectly involved in the development and presentation of background materials. Results appeared during the subsequent years when they succeeded in providing for sufficient funds to complete the construction and to implement safety relevant measures at NPP Mochovce, to reconstruct and upgrade NPP V-1 and V-2 units, but also to implement environmental projects connected with the upgrading of conventional thermal sources of the company.

The following may be mentioned as the most significant outcomes:

• 12/95 - issue of bonds at Slovenská sporiteľňa,
• 3/96 - restructuring of loans from Investičná a rozvojová banka,
• 5/96 - package of loans for the completion of construction of NPP Mochovce,
• 6/96 - 3-year revolving loan from a Slovak consortium of banks (VÚB),
• 7/96 - 3-year syndicated loan from JP Morgan,
• 11/96 - loan from European Investment Bank,
• 12/96 - issue of bonds at Slovenská sporiteľňa,
• 3/97 - loan led by Bank of America and Sumitomo Bank,
• gradual reduction of interest rates and extension of the tenure, with guarantees provided on behalf of the company only, without government guarantees, without retention rights or without issuing Bills of Exchange or other form of collateralization,
• rating agencies Standars & Poor`s and Moody`s Investments granted to the company economic rating at the sovereign rating level.

In this way, SE, a.s. could provide for transactions in a summary financial volume exceeding Sk 50 bn; loan restructuring improved the balance sheet structure, and reduced the average interest rates from the original 14.3% down to 11.6%.

Funds obtained from company’s own profits and funds obtained from the above mentioned financial transactions enabled to implement, in addition to current repairs of nuclear facilities, also demanding projects of safety improvements at existing as well as newly constructed nuclear installations. During the preceding period, Slovenské elektrárne, a.s. invested:

• Sk 2 bn (USD 67 m) - „Small Reconstruction “ project for NPP V-1units,
• Sk 8.6 bn (USD 245 m) - „Gradual Reconstruction “ project for NPP V-1 units
• Sk 55.416 bn - construction of NPP Mochovce units 1 and 2, including the implementation of safety measures and physical protection system.