Ciech S.A.

M&A Activity • Mar 28, 2021

The Management Board of CIECHS.A. (the "Issuer" or "CIECH")herewith informs that on 26 March 2021, the Issuer, CIECH Soda PolskaS.A. (the "Subsidiary"), Budimex S.A. ("Budimex"),EEW Energy from Waste GmbH ("EEW"), EEW Energy from WastePolska sp. z o.o. ("EEW Polska"), FBSerwis S.A. ("FBSerwis")and the Municipality of Janikowo (collectively as the "Parties")signed:

1.aletter of intent to continue their cooperation in the implementation ofan investment consisting in the construction of a thermal wastetreatment installation by EEW, EEW Polska and FBSerwis (the "SecondLetter of Intent", "Investment" and"Installation"respectively)ata real estate property owned by the Subsidiary (the "Property"),and

2.a Memorandum ofUnderstanding (the "SecondMoA").

The Parties cooperated in theimplementation of the Investment on the basis of a letter of intent (the"First Letter of Intent") and a Memorandum of Understanding(the "First MoA"), concluded on 23 March 2020, theexecution of which was notified by the Issuer in its Current Report No.13/2020 of 23 March 2020 (the "Report").

Due to a change in legalcircumstances (the "Legal Circumstances"), including, amongothers:

1.Judgmentof the Court of Justice of the European Union (CJEU) (case numberT-699/17), in which the CJEU confirmed the invalidity of the CommissionImplementing Decision (EU) 2017/1442 of 31 July 2017 (establishing bestavailable techniques (BAT) conclusions, under Directive 2010/75/EU ofthe European Parliament and of the Council, for large combustionplants", which may have an impact on the Investment and Installation; and

2.norequirement to enter the Installation on the list to be published by theMinister responsible for the environment.

After the expiry of the FirstLetter of Intent and the First MoA, the Parties decided to continue withtheir cooperation under the newly executed Second Letter of Intent andthe Second MoA.

The purpose of the SecondLetter of Intent is the cooperation of the Parties in the assessment ofprofitability and feasibility, preparation of conditions for making adecision to engage in the Investment and construction of theInstallation, and defining the principles of cooperation among theParties in connection with the preparation and implementation of theInvestment, including: cooperation in obtaining an environmental permitdecision, a building permit, an integrated permit or a waste processingauthorisation for this Installation. Apart from the obligation of theParties to act in good faith and their loyal cooperation in order toimplement the Investment, the Second Letter of Intent does not createany liabilities among the Parties. The implementation of the Investmentdepends on the fulfilment of numerous uncertain conditions, including,the ability to obtain all the aforementioned permits and authorisations.

The primary objective of theinstallation, from the point of view of the CIECH Group, will be tosupply the Subsidiary's production plant, located in Janikowo, withthermal energy (process steam).

The Issuer assumes thatestablishing this cooperation and receiving thermal energy from theInstallation in Janikowo will have a positive impact on the consolidatedfinancial results of the CIECH Group by reducing the price of heat,which is a key component in the production of soda and salt, andreducing CO2 emissions by the Subsidiary's production plant located inJanikowo.

The Investment will beimplemented and financed, in its entirety, by a special purpose vehicleestablished by EEW, EEW Polska and FBSerwis (hereinafter referred to asthe "SPV"). Budimex has agreed to support FBSerwis with itshuman, technical and financial resources. The Subsidiary will notparticipate in financing the Investment.

The commissioning of theInstallation is anticipated towards the middle of 2026, provided thatthe SPV obtains all necessary decisions and authorisations, at thelatest, in the fourth quarter of 2023.

The Parties assume that theSubsidiary will be receiving heat of at least 850 GWh per annum.

As part of the Second MoU, theparties agreed on the terms of such continued cooperation, including,among others, the execution of an Investment implementation agreement, aLease Agreement, an agreement for the supply of heat to the Subsidiary'splant in Janikowo, and a long-term contract for the supply of waste.During the negotiation of the terms and conditions of the agreement forthe supply of heat, the Parties are to agree, among others, on the dateof commencement of the heat supply and the duration of theircooperation.

The Issuer anticipates that thecooperation in the supply of heat from the Installation will beanalogous to solutions already existing within the CIECH Group, wheresimilar cooperation exists in CIECH Soda Deutschland with its heatsupplier from the REMONDIS Group.

The continued cooperationbetween the Parties fits in well into the CIECH Group Strategy adoptedby the Issuer of 5 December 2018 (Current Report No. 34/2018 of 5December 2018) and activities of the Group aimed at:

1.reduction ofcarbon dioxide emissions by the Issuer and the Subsidiary,

2.adaptationof the energy mix to changing market conditions and environmentalprotection trends, and the assumed CO2 neutrality in Europe by 2050; and

3.loweringthe heat price and increasing the availability of the heat source at theSubsidiary's production plants.

Legal basis:Article17.1 of the Regulation of the European Parliament and of the Council(EU) No. 596/2014 of 16 April 2014 on Market Abuse (the Market AbuseRegulation) and repealing Directive 2003/6/EC of the European Parliamentand of the Council and Commission Directives 2003/124/EC, 2003/125/ECand 2004/72/EC (Official Journal of the European Union L No. 173, p. 1).