Current Report No. [37/2016]

Date of preparation: 18.11.2016

Hour of preparation: 14:54

Abbreviated name of the Issuer: CIECH S.A.

Subject:  Conclusion of an agreement for the supply of process steam by a subsidiary of the Issuer

Legal basis: Art. 17. 1 of the MAR – inside information

Contents of the report: 

The Management Board of CIECH S.A. with its registered office in Warsaw (the “Issuer” or the “Company”) hereby informs that on 18 November 2016, a subsidiary of the Issuer - CIECH Soda Romania S.A. based in Romania (“CSR”) – entered into an agreement for the supply of process steam (the “Agreement”) with S.C. CET Govora S.A. in composition bankruptcy based in Romania (“CET”).

The subject matter of the Agreement is the supply of process steam required by CSR for the production of soda ash and liquid silicates. 

The Agreement was concluded with effect as of 06 September 2016, for a fixed period of 10 years, i.e. until 05 September 2026.

The parties fixed the price of process steam for the period until 31 December 2018. The price of steam includes CO2 certificates associated with the process of generating steam by burning coal and gas.

The estimated value of the Agreement, in the period until 31 December 2018, amounts to approx. RON 310,000,000, i.e. the equivalent of PLN 305,350,000, in accordance with the exchange rate determined by the National Bank of Poland (NBP) on the date of execution of the Agreement.

The price of process steam for the years 2019-2026 will be determined based on the pricing formula to be agreed between the Parties through negotiations. If the Parties fail to fix the price on or before 01 December 2018, the Agreement will be terminated by operation of law, with effect on 01 January 2019.

The parties agreed that the information on the estimated demand for process steam for a given year of duration of the Agreement would be submitted by CSR to CET by 31 October of the previous year. The actual steam demand with a tolerance of plus 10% or minus 30% in relation to the estimated demand will not affect the price.

The parties may terminate the Agreement, with a period of notice of 9 months, as of 31 March 2018.

The remaining terms and conditions of the Agreement do not differ from those commonly applied in arm's length dealings with regard to such contracts.

The Issuer posted information the negotiations conducted with the court-appointed administrator of CET in its current reports nos. 24/2016 of 06.07.2016, 25/2016 of 28.07.2016, 26/2016 of 03.08.2016, 28/2016 of 18.08.2016 and 31/2016 of 06.09.2016.

Legal basis: article 17.1 of the Regulation of the European Parliament and of the Council (EU) No. 596/2014 of 16 April 2014 on Market Abuse (the Market Abuse Regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (Official Journal of the European Union L No. 173, p. 1) (the “MAR”)

Signatures of persons representing the Company: 

Maciej Tybura – President of the Management Board
Artur Król – Member of the Management Board