Current Report No.: 9/2021

Execution of a letter of intent to continue cooperation in the construction of a thermal waste treatment plant by a subsidiary of the Issuer.

Current Report No.: 9/2021

Date of preparation:

Abbreviated name of the Issuer: CIECH S.A.

Subject: Execution of a letter of intent to continue cooperation in the construction of a thermal waste treatment plant by a subsidiary of the Issuer.

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


The Management Board of CIECH S.A. (the “Issuer” or “CIECH”) herewith informs that on 26 March 2021, the Issuer, CIECH Soda Polska S.A. (the “Subsidiary”), Budimex S.A. (“Budimex”), EEW Energy from Waste GmbH (“EEW”), EEW Energy from Waste Polska sp. z o.o. (“EEW Polska”), FBSerwis S.A. (“FBSerwis”) and the Municipality of Janikowo (collectively as the “Parties”) signed:

1. a letter of intent to continue their cooperation in the implementation of an investment consisting in the construction of a thermal waste treatment installation by EEW, EEW Polska and FBSerwis (the “Second Letter of Intent”, “Investment” and “Installation” respectively)  at a real estate property owned by the Subsidiary (the “Property”), and

2. a Memorandum of Understanding (the “Second MoA”). 

The Parties cooperated in the implementation of the Investment on the basis of a letter of intent (the “First Letter of Intent”) and a Memorandum of Understanding (the “First MoA”), concluded on 23 March 2020, the execution of which was notified by the Issuer in its Current Report No. 13/2020 of 23 March 2020 (the “Report”). 

Due to a change in legal circumstances (the “Legal Circumstances”), including, among others:

1. Judgment of the Court of Justice of the European Union (CJEU) (case number T-699/17), in which the CJEU confirmed the invalidity of the Commission Implementing Decision (EU) 2017/1442 of 31 July 2017 (establishing best available techniques (BAT) conclusions, under Directive 2010/75/EU of the European Parliament and of the Council, for large combustion plants”, which may have an impact on the Investment and Installation; and

2. no requirement to enter the Installation on the list to be published by the Minister responsible for the environment.

After the expiry of the First Letter of Intent and the First MoA, the Parties decided to continue with their cooperation under the newly executed Second Letter of Intent and the Second MoA. 

The purpose of the Second Letter of Intent is the cooperation of the Parties in the assessment of profitability and feasibility, preparation of conditions for making a decision to engage in the Investment and construction of the Installation, and defining the principles of cooperation among the Parties in connection with the preparation and implementation of the Investment, including: cooperation in obtaining an environmental permit decision, a building permit, an integrated permit or a waste processing authorisation for this Installation. Apart from the obligation of the Parties to act in good faith and their loyal cooperation in order to implement the Investment, the Second Letter of Intent does not create any liabilities among the Parties. The implementation of the Investment depends on the fulfilment of numerous uncertain conditions, including, the ability to obtain all the aforementioned permits and authorisations.

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

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 heat, 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 commissioning of the Installation is anticipated towards the middle of 2026, provided that the SPV obtains all necessary decisions and authorisations, at the latest, in the fourth quarter of 2023.  

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

As part of the Second MoU, the parties agreed on the terms of such continued cooperation, including, among others, the execution of an Investment implementation agreement, a Lease Agreement, 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 continued 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 carbon dioxide emissions by the Issuer and the Subsidiary,

2. adaptation of the energy mix to changing market conditions and environmental protection trends, 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:

  1. Dawid Jakubowicz – President of the Management Board
  2. Jarosław Romanowski – Member of the Management Board

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