CR no 10/2018 on 22.05.2018 17:32 Announcement of a tender offer to subscribe for the sale of shares of Polenergia S.A.

The Management Board of PGE Polska Grupa Energetyczna S.A. (the 'Bidder') announces that on May 22, 2018 the Bidder, using the intermediary services of Pekao Investment Banking S.A, announced a tender offer (the 'Tender Offer') to subscribe for the sale of 45,443,547 (forty five million four hundred forty three thousand five hundred forty seven) ordinary bearer shares (the 'Shares') of Polenergia S.A. (the 'Company'), that is for all shares issued by the Company, representing 100% of the total number of votes at the general meeting of the Company, for a price of PLN 16.29 (sixteen and 29/100 zlotys) per Share. The Bidder is also the entity acquiring the Shares in the Tender Offer.

The Tender Offer has been announced pursuant to Article 74 Section 1 of the Act of July 29, 2005 on public offering, the conditions governing the introduction of financial instruments to organised trading, and on public companies and in compliance with the Ordinance of the Minister of Development and Finance of September 14, 2017 on the forms of tender offers to subscribe for the sale or exchange of shares in a public company, the detailed procedures of the announcement thereof, and the conditions for acquiring shares pursuant to such tender offers. Unless the subscription period under the Tender Offer is extended or shortened, the subscriptions can be placed from July 13, 2018 to September 20, 2018.

The Tender Offer is announced subject to the following conditions:

(i) subscriptions placed under the Tender Offer cover at least 29,992,741 (twenty nine million nine hundred ninety two thousand seven hundred forty one) Shares, that is at least 66% of the total number of Shares, carrying at least 29,992,741 (twenty nine million nine hundred ninety two thousand seven hundred forty one) votes at the general meeting of the Company representing at least 66% of the total number of votes at the general meeting of the Company.

(ii) the conditio iuris (legal condition) for the Tender Offer is satisfied, that is the President of the Competition and Consumer Protection Office grants an unconditional consent to a concentration consisting of a takeover of control over the Company as a result of the Bidder acquiring the Shares, or the statutory period in which such consent should be issued elapses;

(iii) the general meeting of the Company adopts a resolution on the change in the composition of the supervisory board of the Company by way of appointing five (5) persons nominated by the Bidder to the supervisory board of the Company, with effect from the date of acquisition by the Bidder under the Tender Offer of at least 50% of the total number of Shares plus one (1) Share;

(iv) the general meeting of the Company adopts a resolution on the following changes to the Articles of Association of the Company with effect from the date of acquisition by the Bidder under the Tender Offer of at least 50% of the total number of Shares plus one (1) Share;

a) Article 10 Section 2 item a) of the Articles of Association is change to read as follows:

'Members of the Supervisory Board are appointed and revoked as follows:

a) if the Supervisory Board is comprised of:

(i) six (6) or seven (7) members, PGE Polska Grupa Energetyczna S.A. shall appoint and revoke four (4) members of the Supervisory Board;

(ii) eight (8) or nine (9) members, PGE Polska Grupa Energetyczna S.A. shall appoint and revoke five (5) members of the Supervisory Board;

The above rights shall be exercised in the form of a written statement made to the Company.';

b) Article 10 Section 2 item d) of the Articles of Association is deleted.

(v) the Bidder and the Company conclude an agreement on strategic cooperation and integration of the Company within the Bidder's group.

The Bidder considers its potential acquisition of the Shares to be a long-term strategic investment. The Bidder has the will and capacity to finalize the transaction, however it is not privy to the Company shareholders' position as to their response to the Tender Offer, if any. The Bidder believes that announcing the Tender Offer is the most transparent manner of disclosing its intentions and facilitates engaging the Company shareholders in discussions.

The takeover of the Company is in line with the Bidder's business strategy. The Bidder perceives the transaction as an opportunity to grow and expand through a merger with the vertically integrated power company. Similarly as the Bidder, the Company engages in the business of production of electricity, including in renewable energy sources, production of heat, distribution and trading in electricity.

If the Tender Offer results in the Bidder holding Shares that will represent at least 90% of the votes at the general meeting of the Company, the Bidder intends to squeeze-out the minority shareholders and thereafter revert the Shares into documentary form and delist them from the regulated market.

The Tender Offer document is attached to this Current Report.