Submission of the Conditional Investment Offer in Polska Grupa Górniczasp. z.o.o.The Management Board of PGE Polska GrupaEnergetyczna S.A. (hereinafter "PGE", "Issuer") discloses that on March15, 2016 has submitted the Conditional Investment Offer in Polska GrupaGórnicza (hereinafter "Conditional Offer"). As part of the ConditionalOffer the Issuer has expressed interest in acquisition through the takeup of stake in increased share capital of Polska Grupa Górnicza sp. zo.o. (hereinafter "PGG") for a total amount up to PLN 500,000,000(hereinafter "Investment"), on condition that a number of the belowmentioned conditions set and conditions suspending the Investment aremet, which is described below.
PGG is currently a subsidiary of Węglokoks S.A., that is to operatebasing on selected mining assets to be acquired from Kompania WęglowaS.A. (hereinafter "KW").
It is planned that PGG would acquire following organizational units ofKW: KWK (hard coal mine) Chwałowice Division in Rybnik, KWK JankowiceDivision in Rybnik, KWK Marcel Division in Radlin, KWK Rydułtowy-AnnaDivision in Rydułtowy, KWK Bielszowice Division in Ruda Śląska, KWKBolesław Śmiały Division in Łaziska Górne, KWK Halemba-Wirek Division inRuda Śląska, KWK Piast Division in Bieruń, KWK Pokój Division in RudaŚląska, KWK Sośnica Division in Gliwice, KWK Ziemowit Division inLędziny, Zakład Elektrociepłownie (CHPs Division), Zakład GórniczychRobót Inwestycyjnych (Mining Investments Works Division), ZakładInformatyki i Telekomunikacji (IT Division), ZakładRemontowo-Produkcyjny (Overhaul and Manufacturing Division) and"Corporate Center".
The Conditional Offer has been prepared based on preliminary informationregarding the activity of KW and PGG operations contained indocumentation provided to the Issuer and includes conditions set andconditions suspending the participation of PGE in the Investment, whichinclude i.a.:
1) Implementation of restructuring activities guarantying profitabilityof PGG business and generation of positive cash flow to equity, acrossall units of PGG, including reaching agreements with the social side,that will assure realization of restructuring assumptions,
2) Obtaining by PGG new external investors allowing for recapitalizationamounting to at least PLN 1,500,000,000 (this amount includes PGEconditional involvement) and concluding investment agreements with otherinvestors being involved in the Investment,
3) Business Plan of PGG will be prepared based on achievable assumptionswhich do not assume the need of further recapitalization of the companyby PGE, in the horizon of at least year 2026,
4) Reaching the satisfactory structure of PGG financing - for bothshareholders and bondholders, including PGE, that will - among others -exclude or minimize the risk, that the Investment is considered unlawfulState aid,
5) Restructuring of KW debt, taken over by PGG, including negotiationsof KW debt restructuring, that will be satisfactory for PGE and signingagreements that will provide stable long-term functioning of PGG,
6) Obtaining of required internal corporate acceptance,
7) Obtaining permissions of respective anti-trust authorities andpermissions of other administrative bodies which are required by law.
The final decision of Issuer regarding the involvement in the Investmentwill take place following analysis of the due diligence results andafter determining the final shape of the other arrangements. Ifapproved, PGE will clarify the quota of involvement in the Investmentand the final conditions for participation. PGE has reserved the rightto indicate its subsidiary, which will finally acquire shares in theincreased capital of PGG.
Conditional Offer does not constitute an offer within the meaning ofart. 66 of the Civil Code and is only an expression of the will ofaccession to negotiations in good faith.
PGE in a current report will inform about the possible submission of abinding offer and its conditions, as well as about the decision on theacquisition of shares in PGG.