Purchasing platform

Exercise of the right of withdrawal from significant contracts

Legal basis (selected in ESPI): Article 56 Section 1 Item 2 of the Act on Offering – current and periodic information

In reference to Current Report No. 66/2015 of 16 November 2015, the Management Board of PKP CARGO S.A. (“PKP CARGO”) hereby reports that on 24 June 2016 PKP CARGO and its subsidiary PKP Cargotabor Usługi sp. z o.o. (“PKP CU”) decided to exercise their right to withdraw from the conditional binding purchase agreement for 40,796 shares with a par value of PLN 1,000 each, with a total par value of PLN 40,796,000, representing approx. 99.85% of the share capital of Orlen KolTrans sp. z o.o. (“KolTrans”) (“KolTrans Purchase Agreement”) entered into with PKN Orlen S.A., and PKP CARGO exercised its right to withdraw from the conditional binding agreement to purchase an organized part of the enterprise of Euronaft Trzebinia sp. z o.o. (“Euronaft”) through which Euronaft provides rail transport services, siding services and track works and rolling stock repair services (“OPE Euronaft”) entered into with Euronaft (“OPE Euronaft Purchase Agreement”, jointly with the KolTrans Purchase Agreement: “Purchase Agreements”).

Pursuant to the Purchase Agreements, in a situation where any of the conditions precedent was not fulfilled within 6 months from the date of execution of the Purchase Agreements, i.e. by 16 May 2016, the parties commenced negotiations and conducted them in good faith in order to reach an agreement that would allow them achieve the objective of the transaction covered by the provisions of the Purchase Agreements as quickly as practicable. Pursuant to the Purchase Agreements, in a situation where the parties, within 7 months from the date of execution of the Purchase Agreements, i.e. by 16 June 2016, failed to reach an agreement in writing and any of the conditions precedent was not fulfilled, each party had the right to withdraw from any of the Purchase Agreements within 30 days from the expiration of 7 months from the date of their signing.

To date, the condition precedent consisting of the delivery to PKP CARGO of a decision issued by the President of the Office for Competition and Consumer Protection (UOKiK) expressing unconditional consent for a concentration in the form of the purchase of shares in KolTrans and the OPE Euronaft has not been fulfilled.

The right of withdrawal from the Purchase Agreements should be exercised by serving a written notice of withdrawal from the pertinent Purchase Agreement on the other party. The service of the notice of withdrawal will cause the termination of the Purchase Agreement. Information on the exercise of the right of withdrawal from the PKN Orlen and OPE Euronaft Purchase Agreements will be disseminated by PKP CARGO in the form of a separate current report.

In the Purchase Agreements, the parties declared that if either party exercises its right of withdrawal, then neither party will be entitled to any claim towards the other party. The withdrawal from the Purchase Agreements does not provide for any financial consequences for PKP Cargo or PKP CU arising from their termination.

The decision of the PKP CARGO S.A. Management Board to withdraw from the Purchase Agreements was preceded by in-depth analysis of the reasonability of the transaction of acquisition of the railway assets of KolTrans and the OPE Euronaft. The decision is based on a number of identified risk factors for PKP CARGO resulting from the performance of contracts in the context of the future of the market, the attitude of the trade unions to a change of the owner of the assets, the protracted proceedings before UOKiK and the wait for the consent of the President of UOKiK for the concentration.

Legal basis:
§ 5 section 1 item 5 of the Finance Minister’s Regulation of 19 February 2009 on the current and periodic information transmitted by securities issuers and the conditions for recognizing the information required by the regulations of a non-member state as equivalent (Journal of Laws of 2014 Item 133).