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Enea and ENGIE signed a conditional agreement for purchase of the Połaniec Power Plant

Enea and ENGIE International Holdings B.V. signed a conditional agreement for purchase of 100 per cent of shares of ENGIE Energia Polska, the owner of the Połaniec Power Plant. The investment falls within the implementation of the new Development Strategy of Enea Capital Group. The takeover of the Połaniec Power Plant will strengthen Enea`s position as one of the leading electricity producers in the country and reinforce the Group`s position on the market.

The enterprise value of ENGIE Energia Polska (calculated excluding debt and cash in the company) has been agreed at the amount of PLN 1,073,140,672. The final price of 100 per cent of shares of ENGIE Energia Polska will be calculated on the basis of the established enterprise value adjusted by net debt and working capital as of 31 December 2016.

Signing the agreement with ENGIE gives rise to the takeover of Połaniec Power Plant, one of the youngest and more modern system power plants in Poland. The Połaniec Power Plant has been thoroughly and consistently modernised for recent years, therefore it will be a valuable asset for Enea and one obtained at an optimum price. We will pay the equivalent of ca. PLN 0.6 million per 1 MW of power meeting the environmental standards, whereas the average cost of 1 MW at a conventional power plant built from scratch is ca. PLN 5-6 million – said Mirosław Kowalik, president of Enea. – I would like to thank the teams of both parties for commitment and hard work that allowed us to create a good compromise in such a comprehensive strategic transaction – he added.

Closing of the transaction is conditional upon fulfilment of conditions precedent. They include i.e.: obtaining the consent of the Minister of Energy (in accordance with the Act on Control over Certain Investments), obtaining the consent of the President of the Office of Competition and Consumer Protection for concentration, renunciation of pre-emptive right to purchase agricultural land that is the subject of the transaction by the President of the Agricultural Property Agency. The Połaniec Power Plant takeover by Enea will help establish an electricity generation area based on own raw materials, effective in terms of costs and operation.

The takeover by Enea of system generation assets owned by ENGIE Energia Polska will positively affect the share of the Group in the wholesale energy market. In this perspective the Group will not only enhance its market power and increase its revenue base, but also will become independent of the wholesale market liquidity.

The Połaniec Power Plant is a very efficient unit, with good financial results. The transaction will positively affect our revenue and the Group’s EBITDA level, or operating profit plus amortisation. The added value of the acquisition are synergies that we will be able to execute thanks to the cooperation between the generation (Kozienice plus Połaniec) and mining (LW Bogdanka) segments. One of our goals is enhancement of the Group’s results by working on operating efficiency and better integration of individual segments of our operation. The transaction increases our capabilities in this respect significantly and creates further capacity for development of the Group – indicated Mikołaj Franzkowiak, vice-president of Enea for financial affairs.

The investment falls within the implementation of the Development Strategy of Enea Capital Group in the 2030 perspective. One of its more crucial points anticipates the increase in the installed capacity of conventional sources of generation on which we base higher electricity sales, properly balancing these two parameters inside the Group.

There is a lot of intensive work facing us related to the conclusion of the agreement terms. We believe that soon, thanks to the investment, we will strengthen our Group’s market power. Located in south-eastern Poland, the Kozienice-Bogdanka-Połaniec mining and generation complex will bring a number of beneficial synergies to the Group. It will also enhance national energy security and security of supply for our Customers. Inclusion of the Połaniec Power Plant into Enea, a dynamically developing and socially involved raw materials and energy concern, will also benefit the area surrounding the power plant: inhabitants of the region and the company’s employees. We are an optimum and complementary investor for the Połaniec Power Plant – emphasised Mirosław Kowalik.

Połaniec Power Plant is one of the most efficient electricity generators in Poland. An important element of the asset is a modern biomass unit – one of the largest units of this type in the world (over 200 MW) generating green energy. In recent years, Połaniec Power Plant has implemented an intense over PLN 1 billion modernisation programme, prolonging its operation by 20 years, increasing the efficiency of energy generation and adjusting the generating equipment to the environmental standards in force, including the IED.

Połaniec Power Plant also has much in common with Kozienice Power Plant owned by Enea. Both power plants are very important to the Polish power system security and generate energy using 200 MW units. The key supplier of the raw material to Połaniec and Kozienice is Lubelski Węgiel Bogdanka. Additionally, Połaniec Power Plant belongs to a group of younger system power plants in Poland.

On 30 September 2016 Enea submitted an offer for the purchase of 100 per cent of shares in ENGIE Energia Polska, the owner of Połaniec Power Plant. On 2 December Enea obtained negotiation exclusivity rights.

ENGIE Energia Polska is currently the fifth largest producer of electricity in Poland. Together with ca. 1.9 GW Połaniec Power Plant the company accounts for 5 per cent of electricity generation in Poland.

Enea Group is one of the leaders of the Polish power market. It manages the complete chain of values: from coal in the mine to a socket at Customer’s home. It is responsible for reliable supplies of energy to 2.5 million Customers.

Having in mind the diverse and international nature of Enea SA's shareholding, and also the provisions of the Best Practices of WSE Listed Companies, Enea SA guarantees the availability of its website also in English. In case of any interpretation doubts and discrepancies between the Polish and English versions, the Polish version shall prevail.