Current Report No.: 14/2020
Date of preparation: 25.03.2020
Abbreviated name of the Issuer: CIECH S.A.
Subject: Information on the Voluntary Redundancy Programme and group layoffs at CIECH Soda Romania and the Issuer's Romanian Branch, as well as continued production suspension.
Legal basis: Art. 17.1 of the MAR – inside information
Report:
With reference to Current Report No. 40/2019 of 18 September 2019, the Management Board of CIECH S.A. with its registered office in Warsaw (the “Issuer”) herewith informs that today, a subsidiary of the Issuer - CIECH Soda Romania S.A. based in Romania (“CSR”) and the Romanian Branch of the Issuer (the “Branch”) decided to implement, as of 1 April 2020, the Voluntary Redundancy Programme (the “VRP”) with regard to employees of CSR and the Branch, and to launch, as of 27 March 2020, the group layoff procedure with regard to employees of CSR.
In response to the proposal to join the VRP, 72% of the total CSR and Branch staff volunteered. A group layoff procedure will be implemented with regard to 13% of CSR employees. The remaining staff of CSR and the Branch will continue with their employment, mainly in the production of silicates and maintenance of the soda production installations. The total cost of the VRP and group layoffs, with regard to the employees of CSR and the Branch, will amount to approximately RON 12.5 million and is included in the VRP provision created in the consolidated financial statements of the CIECH Group for 2019. The publication of the financial statements is scheduled for 31 March 2020. The implementation of the VRP and commencement of the group layoff procedure ends the period of technical unemployment (downtime) that has continued at CSR since the beginning of 2020.
The decision to implement the VRP and launch the group layoffs was made in connection with the ineffective negotiations on the price of process steam (the “Steam”), conducted for many months with its sole supplier, i.e. CET Govora S.A. based in Romania in arrangement bankruptcy (“CET”). CET's previous Steam price proposals have prevented CSR from conducting economically profitable business operations. In the Issuer's opinion, there are no prospects for quick resumption of soda production.
Accordingly, CSR and the Romanian Branch can no longer bear the cost of maintaining the entire staff of the plant in the soda production suspension mode, and were forced to decide to implement the VRP and launch the group layoffs.
At the same time, the CIECH Group is still analysing the possibility of developing an effective Steam source at a reasonable cost in the next few years to enable CSR to resume its soda production in the long term. However, possible scenarios of such action exclude any investment expenses affecting the balance sheet of the CIECH Group.
As part of this project, CIECH's intention is to establish cooperation with an external partner responsible for the construction and maintenance of a new steam source, as well as authorities, in order to obtain government assistance and launch support mechanisms provided by the European Union.
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
