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Current Report No. 58/2010

01.12.2010 00:00

Entry into a material agreement

The Management Board of TAURON Polska Energia S.A. (“the Company”) inform that in the period from 11 June 2010, i.e. the day when the Company’s shares were admitted to trading to 1 December 2010 the turnover between the companies from the Capital Group of TAURON and Kompania Węglowa S.A. (“the Seller”) have reached the material amount. Estimated total net value of the agreements as of the day of disclosing the information is PLN 2.48 billion.

At the same time, the Company informs that the agreement with the highest value concluded with Kompania Węglowa in the above-mentioned period was agreement of 1 December 2010 concluded by Południowy Koncern Energetyczny S.A. acting as the Buyer (“the Agreement”). The subject of the Agreement is the sale of coal from mines and mining facilities of Kompania Węglowa S.A. for electricity generation purposes. The coal will be used in power plants and combined heat and power plants belonging to Południowy Koncern Energetyczny S.A. The term of the agreement is 3 years and the estimated value of the agreement over that period is approx. PLN 2.3 billion net.

The Parties to the Agreement agreed that penalties will be applied in the case of failure to supply or collect the coal. The penalties will amount to 20% of the net value of the coal that is not supplied or not collected, however a +/- 5% deviation is allowed per year. The maximum amount of the penalty in the case of failure to collect 95% of the annual supply volume stipulated in the agreement may reach approx. PLN 145 million per year. The Seller should not apply penalties for failure to collect the coal in the case of a breakdown that would disable transmission of electricity or in the case of documented force majeure events. The Parties decided that the Agreement may be terminated if by 15 October 2011 the Parties fail to reach an agreement and as a result fail to conclude an annex regarding the price of coal including the then applicable laws on excise tax, by a 30-days’ notice calculated from the date of declaration to terminate the agreement.

The remaining terms and conditions of the Agreement do not differ from standard terms and conditions applied for such agreements. The criterion for recognizing the agreement as material is the fact that the total value of agreements signed with Kompania Węglowa S.A. exceeds 10% of the Company’s equity.

Article 56 section 1 item 2 of the Act on Public Offering – current and periodic information §5 section 1 item 3 of the Decree of the Minister of Finance of 19 February 2009 on current and periodic information disclosed by issuers of securities and conditions for recognising as equivalent information required by the laws of a non-member state (Journal of Laws of 2009 No. 33, item 259, with amendments).
 

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