As court proceedings continue in the Curonian Lagoon pollution case involving Grigeo Klaip\u0117da, PLY Analytics co-founder Vitalij \u0160ostak commented to Verslo \u017einios on how likely the maximum fine is and what impact it could have on the company\u2019s financial results.<\/p>\n\n\n\n
\u201cThe requested fine, although significant, is far from devastating,\u201d V. \u0160ostak says in his assessment of the impact on the issuer.<\/p>\n\n\n\n
According to V. \u0160ostak, the current EV\/EBITDA multiple is absurdly low \u2013 around 4x \u2013 and \u201cit very much appears that the current market price already reflects the most pessimistic scenario.\u201d Modelling a situation in which the company would need to borrow in order to pay the fine and compensation, \u201cthe EV\/EBITDA multiple would increase to approximately 5.9\u20136x. That would already reflect market averages much more adequately.\u201d<\/p>\n\n\n\n
\u201cEven in the most pessimistic case, if the company had to take on additional debt to pay the maximum fine, this would increase the net debt-to-EBITDA ratio to around 3x \u2013 assuming EBITDA remains unchanged and investment plans are not adjusted. Although this would already represent a fairly significant level of indebtedness, the company has reached such levels multiple times in its history, so such a scenario would be entirely manageable.\u201d<\/p>\n\n\n\n
Assessing the impact of the fine on Grigeo dividend payments, V. \u0160ostak states that if the maximum fine were imposed, the company might have to review its dividend policy, but adds: \u201cthe probability is not particularly high; although the risk of a significant dividend reduction does exist from the perspective of the company\u2019s financial capacity, it is not very large.\u201d<\/p>\n\n\n\n