TAURON Polska Energia : Current report No. 17/2015
July 13, 2015 at 08:52 am EDT
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13.07.2015 00:25
The Management Board of TAURON Polska Energia S.A. ("Issuer") informs that on 13 July 2015 in relation to execution of the project "Construction of 413 MWe CCGT unit at TAURON Wytwarzanie Łagisza Power Plant in Będzin" ("Project"), the Issuer's subsidiary - TAURON Wytwarzanie S.A. ("TAURON Wytwarzanie") and Polskie Inwestycje Rozwojowe S.A. ("PIR") signed an Investment Agreement ("Agreement").
The purpose of the Agreement is to determine the terms and conditions of joint execution of the Project by TAURON Wytwarzanie and PIR. In particular, the provisions of the Agreement include the obligation of the parties to make investment by establishing a company Łagisza Grupa TAURON sp. z o.o. (Ltd.) ("Special Purpose Vehicle", "SPV"), whose purpose would be to execute the investment process and then operate the 413 MWe CCGT unit ("Unit"). TAURON Wytwarzanie undertakes, on terms and conditions specified in the Agreement, to secure achievement of the purpose of the Project by the SPV which consists in launching regular commercial operation of the Unit on the date defined by the parties, following successful commissioning and meeting specified requirements.
PIR plans to invest in the Project up to PLN 750 million, taking over 50% less one share in the SPV. Total value of the Project has been estimated at approx. PLN 1.5 billion.
PIR's obligation to join the SPV depends (apart from establishing the SPV and contribution of initial capital by TAURON Wytwarzanie) on, among others, signing further agreements enabling execution of the Project (including shareholders' agreement between the parties, Issuer and the SPV, agreement for Unit connection to the grid) and agreeing on all the issues related to execution of the Project (including management-related, organizational and technical matters), obtaining antimonopoly clearance and any other necessary permissions.
A major breach of agreement by TAURON Wytwarzanie would be discontinuation or lack of electricity generation at the Unit as well as discontinuation or lack of gas supply to the Unit for a period exceeding 6 months. Other terms and conditions of the Agreement (including termination by the parties) are relevant to the characteristics of the Project and do not vary significantly from standard provisions typical for such agreements. The agreement was signed for a period of 30 (thirty) years from the date of singing and may be extended.
The Project is in line with TAURON Group's Corporate Strategy presented in current reports No. 25/2011 and 28/2014 which stipulates development of a balanced generation portfolio comprising hard coal, gas, and renewable energy sources. Investment in construction of the CCGT unit at the Łagisza Power Plant should also help secure TAURON Group's position as the second largest electricity generator in Poland.
Article 56 section 5 of the Act on public offering - update of information
TAURON Polska Energia S.A. is a holding company organized around 5 areas of activity:
- electricity sales (70.3% of net sales);
- electricity distribution (16.6%);
- production of conventional electricity and heat (10.1%);
- coal extraction (1.8%);
- other (1.1%): primarily electricity production from renewable energies.
Poland accounts for 99.1% of net sales.
TAURON POLSKA ENERGIA S.A. 
