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11/27/2020 12:56:22 AM

Current Report No. 45/2016

14.12.2016 17:20

Signing agreements on hybrid financing with the European Investment Bank

The Management Board of TAURON Polska Energia S.A. (the “Company”) informs that on 14 December 2016 the following agreements were signed between the Company and the European Investment Bank (”EIB”):
a) project agreement (the “Project Agreement”) determining detailed requirements relating to the financed investment task,
b) subscription agreement (the “Subscription Agreement”) providing basis for conducting the issue of hybrid bonds (”Bonds”) with the value of EUR 190 million.

Funds to be acquired through the issuance of Bonds will be allocated for covering expenditure of TAURON Dystrybucja S.A. associated with the development and modernisation of power grid infrastructure in the years 2016-2020.

The Bonds issued will represent subordinated, unsecured bearer coupon securities to be acquired by the EIB under the operations of the European Fund for Strategic Investments launched by the EIB in cooperation with the European Commission for the purpose of implementation of so-called Juncker Plan.

In accordance with the Subscription Agreement, the Bonds will be issued within a single series. The issue date of the Bonds is scheduled on 16 December 2016. The redemption deadline will fall 18 years after the issue date, whereas in accordance with hybrid financing characteristics, the first financing period of 8 years has been defined (”1st Financing Period”), during which neither earlier redemption of the Bonds by the Company nor earlier sale of the Bonds by the EIB to third parties will be possible (in both cases, subject to exceptions defined in the Agreement).

In the 1st Financing Period, the Bonds will bear interest at a fixed rate, whereas in the consecutive 10-year financing period (”2nd Financing Period”) - at a floating rate (Euribor 6M) plus the agreed margin. The Agreement stipulates a possibility to postpone payment deadlines of interest on Bonds, maximum until the day of redemption of the Bonds or until the fifth day following taking the decision on payment of the dividend.

As a result of subordinated nature of the Bonds, in case of issuer’s bankruptcy or liquidation, any liabilities arising from the Bonds will have a priority order for the payment only before the Company shareholders’ claims.

The planned issue of Bonds will have a positive impact on financial stability of the Company since the Bonds are excluded from calculation of the debt ratio constituting a covenant for other Company financing programmes. Moreover, the Bonds will be eligible for classification as equity by the rating agency at a level of 50 per cent of this financing. At the stage of issue planning, the bonds obtained expected rating of Fitch rating agency at a level of BB+ (EXP).

Article 17 item 1 of MAR - confidential information

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