Amendment to a significant agreement

Current report no : 41/2014
Report date : 6/23/2014
Abbreviated name : Ciech SA
Subject : Amendment to a significant agreement 
Legal basis : Art. 56 section 1 point 2 of the Act on Offering – current and periodic information

Report : 

Ciech S.A. (hereinafter: "the Issuer" or "the Company") announces that on 23 June 2014, the Management Board of the Issuer gained knowledge of signature by Inowrocławskie Kopalnie Soli "Solino" S.A., with a registered office in Inowrocław (hereinafter:  "IKS Solino") of an annex to long-term framework agreement (hereinafter, respectively: "the Annex" and "the Agreement").

The Agreement was concluded on 30 October 1998 between IKS Solino and Janikowskie Zakłady Sodowe "JANIKOSODA" S.A. (hereinafter: "the Subsidiary"). The object of the Agreement is supply of brine by IKS Solino to the Company and supply of salt by the Company to IKS Solino. The Company became a party to the Agreement as a result of a division by separation of the Subsidiary. The division by separation of the Subsidiary was completed on 25 January 2013 with registration by the court of a change in the value of the share capital of the Issuer. The Issuer announced the completion of the division by separation of the Subsidiary in current report no. 6/2013, dated 29 January 2013. The brine supplied by IKS Solino is processed by the Production Plant of Janikowo Soda Polska CIECH S.A.

The Agreement was covered by a division plan of the Subsidiary, as announced in "Monitor Sądowy i Gospodarczy" ["Court and Economic Monitor"]of 5 September 2012, No. 172/2012 (4037), item 11805. In addition, the plan of division of the Subsidiary was an object of a session of the Extraordinary Shareholders' Meeting of the Issuer held on 19 November 2012, convened on 24 October 2012 - the current report of the Issuer no. 43/2012. As a result of the division by separation of the Subsidiary, the Issuer, being the taking-over company, assumed, according to the principle of general succession, the rights and obligations of the Subsidiary, as specified in the division plan, including the rights and obligations deriving from the Agreement.

The Annex constitutes an amendment to the Agreement within the scope concerning the supply by the brine by IKS Solino, with regard to the quantity of the supplied brine, the formula of supplies, the term of the Agreement and an introduction of a new definition of force majeure.  The Annex does not amend the price terms of the Agreement. The prices are agreed upon between the parties to the Agreement on the basis of, inter alia, the nominal growth in production costs, resulting from the inflation, and on the basis of a change in the quantity of collected brine. In the Annex, the parties decrease the quantity of brine supplied to the Issuer in quantities which decrease the average annual, current value of services deriving from the Agreement with regard to supply of brine and salt from approx. PLN 42,000,000 to approx. PLN 40,000,000. 

The Annex introduces a collection formula to the Agreement based on the take-or-pay principle, with regard to supply of brine. The parties to the Agreement have introduced a contractual tolerance level, which offers a possibility of increasing and decreasing brine collections.  No supply and collection of brine and industrial water in quantities which are below the contractual tolerance level shall entail an obligation for both parties to pay a guarantee penalty equal to the remuneration for undelivered or uncollected brine. Notwithstanding the payment of the guarantee fines, the Agreement offers a possibility of demanding compensation subject to general principles, provided that in such situation the paid guarantee fine is credited towards any such possible compensation. No contractual penalties, as defined in Art. 484 of the Civil Code, are stipulated.

The Annex changes the term of the Agreement. Currently the Agreement remains valid until 31 December 2025, and after that date it may be transformed into an agreement concluded for a fixed term, with a 12-months' notice binding for termination thereof. Before the signature of the Annex, the Agreement was in force until 31 October 2023.

The Annex introduces a new definition of force majeure whose scope extends to emergencies, as well as intervention acts of state authorities, connected with a situation of a fuel risk of the state.

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 to § 2 section 2 of the Regulation of the Minister of Finance of 19 February 2009 regarding current and periodic information (…). Total value of services deriving from the Agreement during the term thereof exceeds 10% of the equity capital of the Issuer.

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

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

Do góry