TAURON Polska Energia : Current Report No. 11/2017

31.03.2017 17:30

​In reference to Current Report No. 36/2016 of October 27th 2016 on the execution of an agreement on the conditions for further implementation of the 'Construction of a CCGT Unit in Stalowa Wola' project (the 'Project') and annexes, the Management Board of TAURON Polska Energia S.A. ('TAURON') announces that on March 31st 2017 Elektrociepłownia Stalowa Wola S.A. ('ECSW') repaid all liabilities towards all the financial institutions which have financed ECSW to date (i.e. the European Investment Bank, the European Bank for Reconstruction and Development, and Bank Polska Kasa Opieki S.A.) (the 'Financial Institutions') in amount of PLN 581.4 m and once the payment is confirmed by the Financial Institutions the conditions precedent will be met and thus the documents referred to in Current Report No. 36/2016 and listed below will take effect:

a) agreement concerning determination of key preconditions for the Project restructuring, between TAURON, Polskie Górnictwo Naftowe i Gazownictwo S.A. ('PGNiG') and ECSW;
b) annex to the power purchase agreement of March 11th 2011 ('Power Purchase Agreement') between TAURON, PGNiG and ECSW;
c) annex to the gas fuel supply agreement of March 11th 2011 ('Gas Supply Agreement') between PGNiG and ECSW.

First of all the agreement sets forth the rules of settlement of contractual penalties, modification of the pricing formulas used so far to ensure the prices reflect market rates and addresses the issues related to financial restructuring of the Project. The Agreement reflects the intent of the Project sponsors (TAURON, PGNiG) ('Sponsors') to proceed with the construction of the CCGT unit, amend the Gas Supply Agreement and the Power Purchase Agreement and change the method of funding the Project from project finance to corporate finance, with continued involvement of the financing institutions.

In particular, the amendments to the Gas Supply Agreement and the Power Purchase Agreement provide for such modification of the pricing formulas used under these agreements to ensure the prices reflect market rates.

Furthermore, in view of delays in the Project implementation, the annex to the Gas Supply Agreement provides for changes to the amounts, times and methodologies of charging contractual penalties.

ECSW raised funds for repayment of the credit facilities under loan agreements concluded with PGNiG and TAURON (the 'Sponsors'); under these loan agreements, each of the Sponsors advanced a loan of PLN 290.7m.

As the Standstill Agreement referred to in Current Report No. 36/2016 has been performed, the aforementioned financial institutions are obliged to release all the legal security interests both in ECSW's assets and the Sponsors' claims, and in particular to return the bank guarantees received from the Sponsors for an aggregate amount of about PLN 629m, of which PLN 314.5m represents the aggregate amount of the bank guarantees provided by the Issuer.

Notwithstanding the above, the Sponsors and ECSW are continuing their joint efforts to secure new funds for financing the construction of a CCGT Unit in Stalowa Wola project, on the terms and with a structure more favourable than those under the previous agreements.

Article 17 paragraph 1 MAR - inside information