Body of the report:
In reference to current report no. 48/2013 of 18 November 2013 pertaining to information on the signing of a letter of intent on 8 November 2013 by and between the Company and Kompania Węglowa S.A. domiciled in Katowice („KW”, „Seller”) concerning the possibilities of deepening cooperation in mining the deposits of the Knurów-Szczygłowice Hard Coal Mine and the Company’s potential acquisition of an organized part of KW’s business entailing the Knurów-Szczygłowice Hard Coal Mine („Mine”), the Management Board of Jastrzębska Spółka Węglowa S.A. („JSW”, „Company”, „Buyer”) reports that the parties signed a preliminary purchase agreement for the Mine on 10 April 2014.
1. The subject matter of the agreement is for the Company to acquire an organized part of the business in the form of the Knurów-Szczygłowice Hard Coal Mine entailing this mine’s tangible and intangible assets used to excavate hard coal („ZORG”), with a production capacity of 3.8 million tons of coal per annum, consisting roughly of 40% coking coal, 1.26 billion tons of economically-viable resources and 375.1 million tons of recoverable reserves, including 119.7 million tons under concessions that are currently in force – which will provide for the operation of the mine for more than 80 years.
2. The sale price for ZORG is PLN 1,490,000,000 (say: one billion four hundred million zloty).
3. The Buyer and Seller’s obligations to execute the final purchase agreement for ZORG arise upon the fulfillment of a number of suspending conditions („Suspending Conditions”), with the key ones being as follows: the Buyer obtaining the consent of the Antimonopoly Office (UOKiK), the Buyer obtaining financing in the agreed amount, the expression of consent by Parties to specific agreements executed by the Seller within the scope of running ZORG and specific rental and lease agreements executed by the Seller for the Buyer to assume the party’s rights (assignment of rights / liabilities or duties as the case may be) or novation of such agreements and execution of the pertinent new agreements with the Buyer, the Buyer and Seller acquiring the decisions, permits, consents and licenses required by law from public administrative bodies or courts and other entities and securing all internal consents and permits from their governing bodies as required to execute or perform the preliminary and final purchase agreements for ZORG, the Seller acquiring the bondholders’ consent to sell ZORG as specified by the bond issue program and to release the encumbrances established on ZORG or ZORG’s assets.
4. The preliminary purchase agreement for ZORG expires if the suspending conditions are not fulfilled by 31 July 2014 (inclusively).
5. The agreement contemplates a contractual penalty in the amount of PLN 100,000,000 (say: one hundred million zloty) due in the event of non-performance or improper performance of the actions under a given Party’s control at the fault of a Party leading thereby to the non-fulfillment of the Suspending Conditions or a Party avoiding execution of the final purchase agreement for ZORG on the closing date in spite of fulfilling the Suspending Conditions.
6. The agreement confers to the Buyer the right to withdraw from the preliminary agreement if a mining or construction catastrophe or some other event occurs up to the closing date (inclusively) that would reduce ZORG’s production capacity for a period of at least 6 months by 15% or more compared to the production capacity defined in the technical and economic plan.
The Company will announce the fulfillment of the conditions of the transaction and the signing of the final agreement in separate reports.