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Current Report No.: 13/2020

Establishing cooperation in the construction of a thermal waste treatment installation at the CIECH Soda Polska S.A. plant in Janikowo.

Current Report No.: 13/2020

Date of preparation:
 23.03.2020

Abbreviated name of the Issuer: CIECH S.A.

Subject: Establishing cooperation in the construction of a thermal waste treatment installation at the CIECH Soda Polska S.A. plant in Janikowo.


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 23 March 2020, a letter of intent was signed between the Issuer, CIECH Soda Polska S.A. (hereinafter referred to as the “Subsidiary”), Budimex S.A. (hereinafter referred to as “Budimex”), EEW Energy from Waste GmbH (hereinafter referred to as “EEW”), EEW Energy from Waste Polska sp. z o.o. (hereinafter referred to as “EEW Polska”), FBSerwis S.A. (hereinafter referred to as “FBSerwis”) and the Municipality of Janikowo, on their cooperation in the implementation of the investment, consisting in the construction by EEW, EEW Polska and FBSerwis of a thermal waste treatment installation (hereinafter referred to as: the “Letter of Intent”, “Investment” and “Installation” respectively) on the property owned by the Subsidiary. 

The primary objective of the installation will be to supply the Subsidiary's production plant, located in Janikowo, with thermal energy (process steam).

As in the case of the construction of an incineration plant on the premises of the Subsidiary's production plant located in Inowrocław (the Issuer provided information on the execution of a letter of intent in this matter in its Current Report No. 11/2020 of 28 February 2020), the Issuer assumes that establishing this cooperation and receiving thermal energy from the Installation in Janikowo will have a positive impact on the consolidated financial results of the CIECH Group by reducing the price of steam, which is a key component in the production of soda and salt, and reducing CO2 emissions by the Subsidiary's production plant located in Janikowo. 

The Investment will be implemented and financed, in its entirety, by a special purpose vehicle established by EEW, EEW Polska and FBSerwis (hereinafter referred to as the “SPV”). Budimex has agreed to support FBSerwis with its human, technical and financial resources. The Subsidiary will not participate in financing the Investment. The earliest commissioning of the Installation is anticipated towards the end of 2025, provided that the SPV obtains all necessary decisions/authorisations in 2023. 

The parties assume that the Subsidiary will be receiving heat of at least 850 GWh per annum.

According to the Letter of Intent, in the event that the Installation has not been included on the list, to be published by the Minister competent for the environment in the form of a regulation, by 1 February 2021 – the Letter of Intent shall expire on that date.

At the same time, on 23 March 2020, a Memorandum of Understanding (hereinafter referred to as the “MoU”) was executed between the Issuer, the Subsidiary, EEW, EEW Polska and FBSerwis. Under the MoU, the parties agreed on further cooperation steps, including the execution of an Investment implementation agreement, an agreement for the Subsidiary's provision of access to the property intended for the construction of the Installation, an agreement for the supply of heat to the Subsidiary's plant in Janikowo, and a long-term contract for the supply of waste. During the negotiation of the terms and conditions of the agreement for the supply of heat, the Parties are to agree, among others, on the date of commencement of the heat supply and the duration of their cooperation. 

The Issuer anticipates that the cooperation in the supply of heat from the Installation will be analogous to solutions already existing within the CIECH Group, where similar cooperation exists in CIECH Soda Deutschland with its 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 activities 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 production plants. 

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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