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Current Report No.: 14/2017

Title: Conclusion of an investment agreement
Date: 2017.31.03
Report no.:  Current Report No.: 14/2017

Current Report No.: 14/2017

Date of publication: 31.03.2017

Short name of issuer: Enea S.A.

Subject: Conclusion of an investment agreement

Legal basis: Article 17 item 1 of MAR - confidential information

Content of report:

In relation to the current report No. 13/2017 dated 30 March 2017 the Management Board of Enea S.A. ("Company") informs that on 31 March 2017 the Company concluded:

1.an investment agreement specifying the conditions for the financial investment in Polska Grupa Górnicza sp. z o.o. ("PGG") ("Investment") ("Investment Agreement");

2.memorandum of understanding relating to the exercise of a joint control over PGG ("Investors' Memorandum of Understanding").

Investment Agreement

The parties to the Investment Arrangement include the Company, ENERGA Kogeneracja sp. z o.o., PGE Górnictwo i Energetyka Konwencjonalna S.A., PGNiG TERMIKA S.A., Węglokoks S.A., Towarzystwo Finansowe Silesia sp. z o.o., Fundusz Inwestycji Polskich Przedsiębiorstw Fundusz Inwestycyjny Zamknięty Aktywów Niepublicznych (further on referred to jointly as "Investors") and PGG. The Investment Agreement foresees that PGG will acquire the selected mining assets from Katowicki Holding Węglowy S.A. ("KHW") based on the final agreement which is to be executed on 1 April 2017 ("Purchase Agreement").

The Investment Agreement regulates the course of the Investment and the Company's entering into PGG, principles of operation of PGG and its authorities, and also the terms under which the parties may exit from the investment in PGG. The Agreement foresees the recapitalisation of PGG in three stages by the Company, ENERGA Kogeneracja sp. z o.o., PGE Górnictwo i Energetyka Konwencjonalna S.A., PGNiG TERMIKA S.A. and Towarzystwo Finansowe Silesia sp. z o.o. for the total amount of PLN 1 billion.

As part of PGG recapitalisation the Company undertook to subscribe for new shares in PGG with the total nominal value of PLN 300 million in consideration for the contribution in cash amounting to PLN 300 million, in three stages:

a)as the first stage the Company will subscribe for the new shares in PGG totalling to PLN 150 million in consideration for the contribution in cash amounting to PLN 150 million. After taking up the shares the Company will hold a 4.39% share in PGG's share capital. The first recapitalisation is to be performed in April 2017;

b)as the second stage the Company will subscribe for the new shares in PGG totalling to PLN 60 million in consideration for the contribution in cash amounting to PLN 60 million. After taking up the shares the Company will hold a 5.81% share in PGG's share capital. The second recapitalisation is to be performed in June 2017;

c)as the third stage the Company will subscribe for the new shares in PGG totalling to PLN 90 million in consideration for the contribution in cash amounting to PLN 90 million. After taking up the shares the Company will hold a 7.66% share in PGG's share capital. The third recapitalisation is to be performed in Q1 2018.

The Agreement regulates the principles of appointing members of the Supervisory Board, according to which each of the Investors and the State Treasury will be entitled to nominate one member of the Supervisory Board composed of eight members maximally.

The Investment is in line with Enea Capital Group's Development Strategy whose one element is securing the base of commodities for the conventional power engineering.

Investors' Memorandum of Understanding

Pursuant to the Investors' Memorandum of Understanding, subject to the condition of obtaining the consent of the President of the Office of Competition and Consumer Protection, the Company will take over a joint control over PGG. The joint control will be exercised together with ENERGA Kogeneracja sp. z o.o., PGE Górnictwo i Energetyka Konwencjonalna S.A., PGNiG TERMIKA S.A., and Fundusz Inwestycji Polskich Przedsiębiorstw Fundusz Inwestycyjny Zamknięty Aktywów Niepublicznych ("Controlling Shareholders").

The Investors' Memorandum of Understanding regulates the principles of determining a common position of the Controlling Shareholders as regards the decisions relating to PGG.

At the same time, in relation to the current report No. 33/2016 of 28 October 2016 relating to the execution of letter of intent with Węglokoks S.A. and Towarzystwo Finansowe Silesia sp. z o.o. expressing the preliminary interest in the financial engagement in KHW or KHW's assets ("Letter of Intent"), the Company informs that on 31 March 2017 the Letter of Intent was terminated by the parties thereto.

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.