CONCLUSION OF PRELIMINARY AGREEMENT OF SUBSIDIARY SHARES SALE

The Management Board of Polenergia S.A. (‘Company’ or ‘Polenergia’), acting pursuant to Art. 17 (1) of the Regulation (EU) No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse and repealing Directive 2003/6/EC of the European Parliament and the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (OJ L 173, 2014, p. 1, as amended, ‘MAR’), hereby announces that on 20th December 2018 the Company concluded a preliminary conditional agreement (‘Preliminary Agreement’) of the sale of 50% of shares (‘Shares’) of the Company’s subsidiary, Polenergia Bałtyk I S.A. (‘SPV’), which is running a project of constructing an offshore wind farm in the Baltic Sea (‘Project’). The Preliminary Agreement was concluded with Wind Power AS (‘Wind Power’), a company belonging to Equinor capital group, formerly Statoil (‘Equinor’). The Preliminary Agreement was concluded upon the exercise of an option to buy the SPV Shares, granting of which was announced by the Company in Current Report No. 4/2018 of 5th March 2018.

The sale of the SPV Shares is to be carried out within the agreed by the parties cooperation in the field of joint implementation of the Project (‘Transaction’). The rules of implementation as well as rights and obligations of the parties are subject to other agreements which are to be concluded as part of the Transaction and the main elements of which are described below.

Preliminary Agreement

The Preliminary Agreement provides for the conclusion of a promised agreement transferring the ownership of the Shares held by the Company to Wind Power. Signing of the final transferring agreement depends on the fulfillment of the following conditions precedent: (i) obtaining by each party of an unconditional consent of the President of the Office of Competition and Consumer Protection (‘UOKiK’) to the Transaction, and (ii) obtaining a legally valid registration by the Registry Court of a resolution regarding a transformation of the SPV from a joint stock company into a limited liability company. The total base selling price of the SPV Shares is PLN 33,351,813, calculated based on the actual costs incurred for the Project, including the standard adjustment mechanism towards this amount based on the SPV’s financial situation at the time of the Shares ownership transferring described in the Preliminary Agreement.

It was agreed that the fulfillment of both conditions precedent should take place by 30th September 2019 (the so-called long-stop date of an agreement), and in the absence of the consent of the President of UOKiK and failed registration of the SPV transformation by this time, the Preliminary Agreement will be terminated.

Polenergia will publish information on the fulfillment or non-fulfillment of these conditions in the form of current reports.

The Preliminary Agreement includes, among others: (i) a catalog of the agreed by the parties statements and warranties of the Company regarding the legal title to the Shares being sold, and related to the legal and factual status of the Project, as well as the SPV’s business situation and condition, including in particular its compliance with certain anti-corruption laws and principles, and (ii) the rules of liability of the parties for breach of the agreement, including the liability of the Company for the statements and warranties described above. The Preliminary Agreement also provides for the rules of the SPV running in the period between signing of the Preliminary Agreement and conclusion of the promised agreement.

The Preliminary Agreement shall be governed by and construed in all respects in accordance with the laws of Poland.

Other agreements to be concluded under Transaction

As part of the Transaction, Polenergia and Wind Power also plan to conclude other agreements regarding the definition of rights and obligations of the parties as the SPV shareholders, and the principles of the Project implementation.

In particular, at the latest upon the finalization of the sale of the SPV Shares, the shareholders agreement regarding the SPV (‘Shareholders’ Agreement’) is to be concluded. The Shareholders’ Agreement determines mutual rights and obligations of Polenergia and Wind Power as SPV shareholders, as well as the principles of cooperation in the Transaction realization.

In addition, it is planned that the SPV and a designated entity from Equinor capital group (which will provide certain services to the SPV as the Project Manager) will conclude agreements on the development and implementation of the Project by the SPV (the so-called Development and Execution Services Agreement and Operation and Maintenance Services Agreement), specifying, e.g. the scope of services provided by the Project Manager, its obligations and responsibility, the Manager’s remuneration and the principles of involvement of subcontractors to provide services. The parties agreed that Polenergia (or designated entities from Polenergia capital group) will work for the SPV in consultation with the Project Manager as for the provision of a specific range of services for the needs of the Project.

As regards rights and obligations of the parties as SPV shareholders, the Shareholders’ Agreement defines, among others: i) the rules of the SPV’s internal organization and business operations, and ii) the rules of disposing and acquiring of the SPV shares and restrictions on them. As far as the rules of the Project implementation are concerned, the Shareholders’ Agreement defines the main development phases and management rules of the Project, rights and obligations of the parties in the field of planning, budgeting and financing of the Project, and procedures for settling any decision deadlocks concerning the Project.

The Shareholders’ Agreement shall be governed by and construed in all respects in accordance with the laws of Poland.

Obligation to obtain UOKiK President consent

Conducting of the Transaction, which was qualified as the creation of a joint venture for the purposes of Project implementation, requires each party to obtain the unconditional consent of the President of the Office of Competition and Consumer Protection. In the event of obtaining the conditional consent, the Preliminary Agreement provides for the ability of the parties to engage in further discussions regarding the continuation of the Transaction, with reference to any additional conditions provided for in such consent.

To the extent permitted by relevant regulations, the parties plan to coordinate activities in preparation of the required information and data for the needs of application preparation. In this respect, the parties agreed to appoint a joint legal advisor who will be responsible for the preparation of the application and will represent the parties in the proceedings before the President of the Office of Competition and Consumer Protection. The rules for providing information and data to the appointed advisor have been agreed in order to preserve the confidentiality of certain categories of information belonging to each party. Such a procedure is intended to ensure the most effective preparation of the application and participation in the proceedings of the body, at the same time excluding the necessity to transfer data directly between the parties.