Conclusion of a factoring agreement

Current report no : 15/2014
Report date : 5/19/2014
Abbreviated name : Ciech SA
Subject : Conclusion of a factoring agreement
Legal basis : Art. 56 section 1 point 2 of the Act on Offering - current and periodic information 

Report : 

CIECH S.A. (hereinafter also referred to as "the Issuer" or "the Client") hereby announces that on 16 May 2014, the Issuer entered into a factoring agreement (hereinafter: "the Agreement") with Pekao Faktoring Sp. z o. o., with a registered office in Lublin (hereinafter: "the Factor"). The object of the Agreement is the rendering of factoring services by the Factor for the Client, covering purchase of cash amounts receivable due to the Client from its contractors under the concluded commercial agreements. 

The Agreement was concluded for an unspecified period of time, provided that the Agreement may be terminated both by the Client and by the Factor after the lapse of the first 12 months.

The Parries have agreed a limit of the maximum amount of involvement of the Factor towards the Client under the Agreement as the amount constituting a total equivalent of PLN 120,000,000 (one hundred twenty million) or the equivalent thereof in EUR or in USD, with allocation for the following financing:

• in PLN, up to PLN 120,000,000,
• in USD, up to 2,500,000,
• in EUR, up to 11,500,000 EUR.

The security anticipated by the Agreement includes a blank promissory note issued by the Client, including by the Client, including a promissory note declaration, as well as a transfer of rights from an insurance policy of the amounts due (hereinafter: "the Policy"). According to the Agreement, the Factor bears responsibility for a risk of insolvency of contractors, up to the value of compensation which is due according to the terms and conditions of the Policy, in the event of occurrence of  damages. The Factor bears responsibility for a risk of solvency of the insurer.

The remuneration due to the Factor is no different than the value of remuneration commonly paid in the market of factoring services and is calculated on the value of the financed amounts receivable. The other terms and conditions of the Agreement are no different than the terms and conditions commonly used in trade for this type of agreements.

Pursuant to the documentation of issue of foreign debentures, as referred to in current report no. 60/2012 ("Foreign Debentutes") and issue of domestic debentures, as referred to in report no. 62/2012 ("Domestic Debentures"), the Issuer shall be obliged to allocate the funds obtained from the factoring transaction under the Agreement for one or more of the following purposes:

• partial, early buyback of Foreign Debentures and Domestic Debentures (provided that the buyback price offered to debenture-holders may not exceed 100% of the face value of, respectively, Foreign Debentures or Domestic Debentures, increased by the value of interest, calculated, but not paid until the time of buyback);
• early repayment of the credit granted to the Issuer under the renewable credit agreement, as referred to in report no. 30/2013 ("Renewable Credit");
• financing of re-investment in new assets; or
• financing of investment expenditure.

Due to the above, at the present stage the Issuer intends to allocate the funds obtained from the factoring transaction on the financing of investment expenditure.

The security established by the Issuer for creditors under Foreign Debentures, Domestic Debentures and the Renewable Credit (as described in report no. 60/2012), to the extent within which they encumber the amounts receivable which are an object of the transfer to the Factor under the Agreement, shall be released according to the procedure specified in the agreement between the creditors, as referred to in report no. 60/2012).

The Management Board of the Issuer, according to § 21 section 2 point 8) of the By-Laws of the Company, has obtained the consent of the Supervisory Board of the Issuer for the conclusion of the Agreement. The criterion justifying the consideration of the Agreement as a significant agreement: § 2 section 1 point 44 letter a) of the Regulation of the Minister of Finance of 19 February 2009 regarding current and periodic information (…) - the value of the object of the Agreement is equal at least 10% of the equity capital of the Issuer.

Legal basis: Art. 56 section 1 point 2 of the Act of 29 July 2005 on Public Offering (…) and Public Companies, and § 5 section 1 point 3 and § 9, with reference with § 2 section 1 point 44 of the Regulation of the Minister of Finance of 19 February 2009 regarding current and periodic information (…).

Type of occurrence: § 5 section 1 point 3 of the Regulation of the Minister of Finance of 19 February 2009 regarding current and periodic information (…) – conclusion of a significant agreement.

Signatures of the Company’s Representatives : Dariusz Krawczyk – President of the Management Board 

---