Current Report No.: 38/2022
Date of preparation: 26.09.2022
Abbreviated name of the Issuer: CIECH S.A.
Subject: Execution of an agreement on cooperation in the development of the project - construction of a thermal waste treatment installation by the Issuer, a subsidiary of the Issuer and EEW Energy from Waste GmbH.
Legal basis: Art. 17 sec. 1 of MAR – inside information
Text of the report:
The Management Board of CIECH S.A. (the “Issuer” or “CIECH”), with reference to Current Report No. 2/2022 of 23 February 2022, herewith informs that on 26 September 2022, between the Issuer, CIECH Soda Polska S.A. (the “Subsidiary”) and EEW Energy from Waste GmbH (the “EEW”) (hereinafter jointly as the “Parties”), an agreement was signed for cooperation in the development of the project - an investment consisting in the construction by EEW on a real estate located within the production complex of the Subsidiary in Inowrocław (the “Real Estate”), an installation for thermal waste treatment, which will be able to provide the Subsidiary with process steam, or possibly process steam and electricity (the “Agreement”, “Potential Investment” and “Installation”, respectively).
Pursuant to the Agreement, the implementation of the Potential Investment (also known as the “Project”) was divided into three stages: Project Preparation, Construction and Operation.
The main objective of the Agreement is to define the basic principles and structure of the cooperation of the Parties as part of the Project Preparation stage and to determine its scope. Further stages are to be covered by separate agreements. Preparation of the Project is to cover the activities specified in the Agreement, including designing, obtaining the necessary decisions and permits, contracting construction works and obtaining financing, as well as negotiating and concluding significant project contracts, including a steam offtake contract (possibly steam and electricity) and a preliminary Real Estate sales agreement (“Material Agreements”). Neither Party is under the obligation to enter into Material Agreements.
The Project Preparation stage commenced on the date of signing the Agreement and will end when the following conditions are jointly met: the final building permit is obtained, the Material Agreements have been signed and EEW Energy from Waste Polska sp. z o.o. (“EEW Polska”) has concluded agreements securing the sources of financing necessary for the construction of the Installation. The Project Preparation stage will also end if the Agreement expires. The Agreement is to continue in force until the earlier of the following: (i) 10 December 2024 or (ii) the final construction permit for the Installation has been obtained, Material Agreements have been signed and EEW Polska has signed contracts securing the sources of financing necessary for the construction of the Installation.
The Parties may terminate the Agreement at any time with a 30-day notice period, provided however that in the cases specified in the Agreement, including termination for reasons attributable to the Issuer or the Subsidiary, the Subsidiary will be required to reimburse EEW incurred external costs to the extent specified in the Agreement. A similar right of the Subsidiary to demand from EEW reimbursement of costs incurred in the event of termination of the Agreement for reasons attributable to EEW.
In the Agreement, the Issuer and the Subsidiary also undertook that at the Project Preparation stage they would not develop - independently or through a subsidiary - or in any other form participate in the development of any other project(s) located in Poland and consisting in the construction of new installations for thermal treatment of waste, which would be used to manage waste from groups to be used under the Project (the “Exclusivity”). In the event of a breach of the Exclusivity, the Issuer will have to pay EEW a contractual penalty of EUR 2 million.
The main goal of the Potential Investment, from the CIECH Group point of view of the, will be the supply of heat (process steam), possibly heat (process steam) and electricity to the Subsidiary's production plant located in Inowrocław (the “Production Plant”).
The Issuer assumes that establishing cooperation on the terms specified in the Agreement and - in the event of a decision to implement the Potential Investment and its completion - the receipt of thermal energy from the Installation 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 production soda and salt.
The Potential Investment will be carried out by EEW acting through a special purpose vehicle - EEW Polska. The Issuer and the Subsidiary will not be participating in financing the Potential Investment (apart from the costs of implementing the tasks constituting part of the Project Preparation, assigned to them in the Agreement, the value of which, at the current stage, is approx. EUR 1,6 million).
The technical launch of the Installation, as envisaged in the indicative schedule appended to the Agreement, should occur by the end of 2026, provided that the necessary decisions and permits are obtained by 2024 at the latest.
The assumption is that the Installation will ultimately provide the Subsidiary with heat of approx. 800 GWh per annum (process steam, possibly process steam and electricity). The first deliveries of process steam to the Subsidiary's production plant should begin in June 2027.
The Issuer expects that the cooperation in the supply of thermal energy from the Installation will be analogous to the solutions already operating within the CIECH Group, where there is similar cooperation in CIECH Soda Deutschland with the heat supplier from the REMONDIS Group.
The cooperation of the Parties is in line with the Group's ESG Strategy adopted by the Issuer, available at: https://esgciech.com/.
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 persons representing the Company:
Dawid Jakubowicz – President of the Management Board
Kamil Majczak – Member of the Management Board
