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Signing of the Investment Agreement on financial investment in Polska Grupa Górnicza (Polish Mining Group)

  • No. of the report: 20/2017
  • Report date: 31.03.2017 01:43PM CEST
  • Report legal ground: Art. 17 ust. 1 MAR - informacje poufne.

Contents of the report

In connection with the current report no. 19/2017 dated March 29, 2017, the Management Board of PGE Polska Grupa Energetyczna S.A. (“PGE”) discloses that on March 31, 2017, PGE Górnictwo i Energetyka Konwencjonalna S.A. (“PGE GiEK”) – the subsidiary of PGE, signed the investment agreement determining the conditions of the financial investment (the “Investment”) in Polska Grupa Górnicza Sp. z o.o. (“PGG”) (the “Investment Agreement”) .

The parties of the Investment Agreement are PGE GiEK, Enea S.A., ENERGA Kogeneracja sp. z o.o., PGNiG TERMIKA S.A., Węglokoks S.A., Towarzystwo Finansowe Silesia sp. z o.o., Fundusz Inwestycji Polskich Przedsiębiorstw Fundusz Inwestycyjny Zamknięty Aktywów Niepublicznych (jointly referred later to as the “Investors”) and PGG. The Investment Agreement provides that PGG will acquire selected mining assets from Katowicki Holding Węglowy S.A. ("KHW") on the ground of the promised contract, which is planned to be signed on April 1, 2017.

The Investment Agreement determines method of investment, operating rules of PGG and its bodies, as well as rules for withdrawal from the Investment. The Investment Agreement assumes recapitalisation of PGG in three stages by PGE GiEK, Enea S.A., ENERGA Kogeneracja sp. z o.o., PGNiG TERMIKA S.A. and Towarzystwo Finansowe Silesia sp. z o.o. with total amount of PLN 1 billion.

Within the recapitalisation of PGG, PGE GiEK committed itself to acquire new shares of PGG with a total nominal value of PLN 100 million in exchange for the cash contribution in amount of PLN 100 million, in three stages:

a) within the first stage PGE GiEK will acquire new shares in PGG in exchange for the cash contribution in amount of PLN 50 million. Recapitalisation within the first stage is planned for April 2017;

b) within the second stage in June 2017 PGE GiEK will acquire new shares in PGG in exchange for the cash contribution in amount of PLN 20 million;

c) within the third stage in the first quarter of 2018 PGE GiEK will acquire new shares in PGG in exchange for the cash contribution in amount of PLN 30 million.

After acquisition of the above mentioned shares, PGE GiEK will have 15.32% in the share capital of PGG in comparison to 17.10% as at March 31, 2017.

The Investment Agreement determines the rules for appointing the Supervisory Board members, according to which each Investor and the State Treasury will be entitled to appoint one member in the Supervisory Board which will consist of up to 8 members.

Planned acquisition of the KHW assets by PGG will contribute to improving the profitability of the PGE GiEK’s investment in PGG, inter alia due to assumed cost and revenue synergy effects.

Signatures of persons representing the company
Date Name Position and function
31.03.2017 Emil Wojtowicz Vice-President of the Management Board
31.03.2017 Marek Pastuszko Vice-President of the Management Board