No. 34/2019  |  26-08-2019

Agreement between PKN ORLEN S.A., the State Treasury and Grupa LOTOS S.A. in relation to a transaction for the purchase of shares in Grupa LOTOS S.A. by PKN ORLEN S.A. from the State Treasury

PKN ORLEN S.A. ( “Company”) hereby notifies that on 26 August 2019 an agreement was signed between the State Treasury, the Company and Grupa LOTOS S.A. headquartered in Gdansk (“Grupa LOTOS”) in relation to a transaction for the purchase of shares in Grupa LOTOS S.A. by PKN ORLEN S.A. from the State Treasury (the “Agreement”), ( “Transaction”), where the Transaction is aimed at taking capital control directly or indirectly over Grupa LOTOS by the Company.
The Agreement is non-binding and does not create any obligations for the State Treasury, the Company or Grupa LOTOS with respect to the execution of the Transaction, but only defines their common understanding of the anticipated shape of the Transaction and further cooperation in its execution. Parties to the Agreement may detail or differently regulate the shape of the Transaction as well as its additional elements in separate contracts or other agreements. The Agreement is not an offer or preliminary contract under Polish civil code and it does not form any  other type of legal act obligating the State Treasury to realise the Transaction.
The Agreement confirms the Transaction structure specified in the letter of intent concluded on 27 February 2018 between the State Treasury and the Company, provided that the structure will be clarified at the further stage of cooperation, in particular on the basis of remedies resulting from the future decision of the European Commission regarding concentration approval. Additionally it also indicates further direction of the consolidation project of the Company and Grupa LOTOS that is aimed at the full consolidation of the abovementioned companies and their enterprises in order to obtain the maximum effects of synergies.
Moreover, the Agreement includes in particular provisions regarding:
1) The method of determining the price of the sale of Grupa LOTOS shares  – with particular emphasis on the need to use at least two commonly used and recognised methods for valuation (in the case of Grupa LOTOS shares sales by different way than a tender offer) and the need to determine the price according to the general applicable law (in the case of Grupa LOTOS shares sales by the way of a tender offer);
2) Preliminary conditions for realization of the first stage of the consolidation project that includes not only the European Commission approval for concentration  but also removing or modifying the voting cap regulations at the general meeting included in the Grupa LOTOS Articles of Association as well as obtaining necessary administrative and corporate approvals;
3) Exercising the voting right relating to Grupa LOTOS shares by the Company and the State Treasury after the Transaction; in case the tender offer results in a proportional reduction of the State Treasury subscriptions for Grupa LOTOS shares sales, it is the intention of the Company and the State Treasury, subject to potential different written agreements, that the voting right at the Grupa LOTOS general meeting will be exercised independently and no written or verbal agreement on Grupa LOTOS shares purchase, on compatible exercising of voting right at the Grupa LOTOS general meeting, neither on conducting the permanent policy towards Grupa LOTOS will bind them.
Grupa LOTOS as a signatory of the Agreement confirmed its knowledge regarding the planned consolidation project as well as a declaration of will to duly cooperate with the State Treasury and the Company within the frames of general applicable law, including the cooperation in the process of obtaining the European Commission’s approval for concentration and submission of the statement of Grupa LOTOS Management Board on the planned tender offer for its shares.
The Agreement terminates on the day when the State Treasury subscribes on the disposal of all Grupa LOTOS shares owned by the State Treasury as a reply for the tender offer announced by the Company, or on 30 June 2020 – depending which date will fall earlier.
The Company will notify in separate regulatory announcements the next steps connected with further realisation of the Transaction, including the status of the European Commission notification.
See also: regulatory announcement no 26/2018 dated 27 February 2018, regulatory announcement no 106/2018 dated 30 November 2018 and regulatory announcement no 31/2019 dated 3 July 2019.