EXECUTION OF INVESTMENT AGREEMENT AND SHAREHOLDERS AGREEMENT AND ANNOUNCEMENT OF TENDER OFFER FOR THE SALE OF SHARES IN POLENERGIA S.A.

The Management Board of Polenergia S.A. (the „Company” and, respectively, the „Management Board”) discloses, that on 3 November 2020 the Company was informed that on the same day the Company’s majority shareholder – Mansa Investments sp. z o.o. with its seat in Warsaw („Mansa Investments”) and BIF IV Europe Holdings Limited with its seat in London, United Kingdom, an Affiliate of Brookfield Renewable Partners L.P. (the “Investor”, and jointly with Mansa Investments – the “Parties”) entered into transaction documentation comprised of an investment agreement (“Investment Agreement” or “IA”) and a shareholders’ agreement (“Shareholders’ Agreement” or “SHA”, and jointly with the IA – the “Transaction Documentation”) fulfilling the criteria set out in art. 87 sec. 1 point 5 of the Act of 29 July 2005 on Public Offering, the Conditions Governing the Introduction of Financial Instruments to Organised Trading, and on Public Companies, and relating to acquisition of shares in the Company, exercise of voting rights at the Company’s general meeting and joint policy towards the Company, with respect to a “Transaction” comprising, inter alia:

A.    Tender Offer
In accordance with the Transaction Documentation the Parties have agreed to cooperate in connection with the acquisition by the Investor of a stake of existing shares in the Company through a public tender offer for 100% of shares in the Company (“Tender Offer”) to be announced by the Investor and Mansa Investments acting in concert, whereas the Parties’ expectations are that the Tender Offer results in the Parties holding shares representing jointly at least 90% of votes at the Company’s General Meeting.
The Parties agreed that the Tender Offer will be announced on 6 November 2020 after the publication by the Company of the 3Q 2020 consolidated financial report. Subject to applicable laws the price per one share of the Company in the Tender Offer will be set at PLN 47.00.

Completion of the Tender Offer and the resulting acquisition by the Investor of the shares in the Company (“Tender Shares”) will be conditional upon:
a)    The Transaction being granted with appropriate merger clearance;
b)    The Company’s adherence to the SHA (provided this shall take place only if the number of shares submitted for sale in the Tender Offer allows for the Investor and Mansa Investments to jointly hold shares representing at least 90% of votes at the Company’s General Meeting); and
c)   resolution of the Company’s Supervisory Board on the designation of the Investor’s nominee to the Supervisory Board to individually perform supervisory duties, whereby under the Investment Agreement Mansa Investments is obliged to appoint the Investor’s nominee to the Supervisory Board prior to lapse of the subscription period, exercising for this purpose its individual right under the Company’s statutes (section 10.2 of the Company’s statutes).

All Tender Shares will be acquired by the Investor. Mansa Investments will not submit any of its shares for sale in the Tender Offer. The Parties are not to purchase or sell any shares in the Company following signing of the Investment Agreement and throughout the subscription period of the Tender Offer.

B.    Interim period obligations
During the period between signing of the IA and settlement of the Tender Offer, the Parties have agreed that the Company will operate within its ordinary course of business (as this term is further defined in the IA), provided however that transactions exceeding certain materiality thresholds (defined both with respect to type and nature of the dealing, as well as with respect to the value) will require prior approval by the Investor.

C.    Delisting and squeeze-out
The Tender Offer will be aimed at subsequent delisting of the Company’s shares from the Warsaw Stock Exchange, such delisting to be potentially preceded with a squeeze-out (depending on the outcome of the Tender Offer).

D.    Issuance of New Shares
Following delisting of the Company’s shares from the Warsaw Stock Exchange, the Company’s share capital shall be increased through the issuance of “New Shares”, whereby:
a)    New Shares shall be subscribed for solely by Mansa Investments (or its affiliate);
b)    the aggregate issue price for the New Shares (the aggregate amount of contribution) shall be equal to the aggregate outstanding amount of Mansa Investments’ receivables under the shareholder loans provided to the project vehicles in order to finance development of the existing onshore wind farm projects (for description of the respective loans please refer to the Company’s current report no. 7/2020 POL dated 14 April 2020); and
c)    the issue price per New Share shall be equal to PLN 25.10, i.e. the Company’s share closing price on the Warsaw Stock Exchange on the day on which the above described loans agreements have been executed.

E.    Company’s statutes, corporate governance
Pursuant to the Shareholders Agreement, Mansa Investments and the Investor shall perform appropriate actions to amend the Company’s statutes following delisting of the Company from the Warsaw Stock Exchange, so that those correspond and appropriately reflect the respective provisions of the SHA. However, following settlement of the Tender Offer, in between the Parties (incl. the Company) the provisions of the SHA will (to the extent legally permissible) take precedence over the currently existing Statutes and the Parties undertake to exercise the corporate powers available to them, including (without limitation) voting rights, to give full effect to the provisions of the Shareholders Agreement.
The SHA regulates in detail the rules of the Company’s corporate governance that shall apply following settlement of the Tender Offer and acquisition of shares in the Company by the Investor. In particular, but without limitation, the SHA provides that: (i) the Supervisory Board shall be composed of at least 6 members, where each of Mansa Investments and the Investor shall immediately  following settlement of the Tender Offer designate 3 Supervisory Board members, and (ii) a wide range of transactions shall require prior approval by the Supervisory Board, further provided that if certain materiality thresholds are exceeded, affirmative vote by the appointees of both Parties may be required in order for the given resolution to be effectively adopted.

The Parties undertook to introduce appropriate changes to the composition of the Supervisory Board immediately following completion and settlement of the Tender Offer, so that it complies with the arrangements under the SHA.

F.    Further development of the Company
Following settlement of the Tender Offer, Mansa Investments and the Investor shall exercise joint control over the Company.

The Parties have agreed to further support the ongoing development and growth of the Company as a market-leading private energy company in Poland in line with the existing Strategy of Polenergia Group for 2020-2024, as approved by the Company’s Supervisory Board on 18 May 2020 (please refer to the Company’s current report no. 11/2020 POL dated 18 May 2020). In this respect, the Investor undertook to provide in next two years immediately following the delisting of the Company’s shares from the Warsaw Stock Exchange in total EUR 150 million of equity injections. The issue price per such new shares shall be equal to PLN 43.00 each.

G.    Distribution policy
The Transaction Documentation defines a distribution policy to be applied by the Company following settlement of the Tender Offer, whereby with respect to profits generated during years 2020-2024 the distributions shall be limited (if any), and with respect to profits generated during the year 2025 and subsequent years, certain minimum amounts shall be distributed (if available).
The Transaction Documentation contains other provisions customary for this type of the transaction and legal documentation.

Legal basis: Art. 17(1) of Regulation of the European Parliament and Council (EU) No. 596/2014 on market abuse and repealing Directive 2003/6/EC of the European Parliament and Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (Journal of Laws of the European Union L of 2014, No. 173, p. 1 as amended).