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Current Report No.: 11/2020

Execution of a letter of intent by a subsidiary of the Issuer on cooperation in the construction of a waste incineration plant

Current Report No.: 11/2020

Date of preparation:
28.02.2020

Abbreviated name of the Issuer: CIECH S.A.

Subject: Execution of a letter of intent by a subsidiary of the Issuer on cooperation in the construction of a waste incineration plant

Legal basis: Art. 17.1 of the MAR – inside information

Report:

The Management Board of CIECH S.A. (hereinafter referred to as the: “Issuer” or “CIECH”) informs that on 28 February 2020, a letter of intent was signed between CIECH Soda Polska S.A. with its registered office in Inowrocław (hereinafter referred to as the “Subsidiary”) and REMONDIS Energy & Services Sp. z o.o. with its registered office in Warsaw (hereinafter referred to as “REMONDIS”, and together with CIECH as the “Parties”), on their cooperation in the implementation of the investment, consisting in the construction by REMONDIS of an incineration plant for municipal waste or waste of municipal origin (hereinafter referred to as: “Letter of Intent”, “Investment” and “Incineration Plant” respectively). The electricity and heat generated in the process of thermal waste transformation will be supplied by REMONDIS to the Subsidiary. The cooperation is aimed at reducing the heat price and increasing the availability of the heat source at the Subsidiary's plant. The Issuer assumes that the collection of heat and electricity from the Incineration Plant will have a positive impact on the consolidated financial results of the CIECH Group by reducing the price of steam, i.e. a key raw material/ingredient in the production of soda ash. In addition, as a result of the cooperation between the Parties, the Subsidiary’s production plant would be able to reduce CO2 emissions.

The investment will be implemented and fully financed by REMONDIS. However, the Subsidiary will provide the necessary organisational, technical and formal assistance in implementing the Investment.

The commencement of the Investment and cooperation between the Parties, depends on the fulfilment of certain conditions, including:

  1. entry of the Incineration Plant on the list to be published by the Minister competent for the environment in the form of a regulation (hereinafter referred to as the “List”);
  2. conclusion by the Parties of an agreement for the reception of electricity and heat, under which the Parties will define the financial and any other conditions related to supplies (hereinafter referred to as the “Agreement”).

Upon the execution of the Letter of Intent, the Parties intend to negotiate the Agreement. In the event that the Incineration Plant is not entered on the said List by 31 December 2020, the Letter of Intent shall expire on that date.

The objective of the Parties is to commence the supply of heat and electricity to the Subsidiary by 2026 at the latest. The parties assume that the Subsidiary will collect heat within a period of approximately 25 years. As estimated by the Subsidiary, the minimum value of the Agreement over a 25-year period will be approximately PLN 350,000,000.

The Issuer expects the cooperation consisting in the heat supply from the Incineration Plant to be analogous to solutions already functioning in the CIECH Group, where similar cooperation exists between CIECH Soda Deutschland and a heat supplier from the REMONDIS Group.

The cooperation between the Parties fits in well into the CIECH Group Strategy adopted by the Issuer of 5 December 2018 (Current Report No. 34/2018 of 5 December 2018) and operations of the Group aimed at:

  1. reduction of the so-called Carbon Footprint (including, in particular, CO2 emissions);
  2. adaptation of the energy mix to changing market conditions and trends in environmental protection, and the assumed CO2 neutrality in Europe by 2050; and
  3. lowering the heat price and increasing the availability of the heat source at the Subsidiary's plant in Inowrocław.

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).

Signatures of the Company’s representatives:

Dawid Jakubowicz – President of the Management Board 

Mirosław Skowron - Member of the Management Board


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