Energa S.A.

Capital/Financing Update • Dec 23, 2019

Current Report No. 38/2019

Date: 23 December 2019

Subject: Conclusion of the Loan Agreement among Energa S.A., Enea S.A.and Elektrownia Ostrołęka spółka z o.o. and planned conversion ofreceivables of Energa S.A. and Enea S.A. under an earlier loan toElektrownia Ostrołęka into the shares of the latter company

Legal basis: Article 17(1) of the Market Abuse Regulation - confidentialinformation

The Management Board of Energa S.A. ("Lender") hereby informs that on 23December 2019 a Loan Agreement among Energa S.A. ("Lender", "Energa"),Elektrownia Ostrołęka spółka z o.o ("Borrower") and Enea S.A. ("Enea")was concluded ("Loan Agreement").

Granting of the loan under the Loan Agreement constitutes partialperformance of Energa's obligations under the Memorandum ofUnderstanding of 30 April 2019 between Energa and Enea on the financingof the construction of the Ostrołęka C Power Plant ("Project")("Memorandum of Understanding of 30 April 2019"), further detailing thedeclarations of financial commitment made by Energa and Enea in theMemorandum of Understanding of 28 December 2018. Energa announced bothof these Memoranda of Understanding in its current report No 55/2018 of28 December 2018 and No 7/2019 of 30 April 2019.

The amount of the loan incurred by the Borrower is up to PLN 340 millionand will be paid out in tranches upon reasonable request of the Borrowerin relation to the Project implementation. The first tranche of PLN 160million is to be paid out on the date of this report, that is on 23December 2019.

Interest on the loan will be calculated based on the interest rate thatreflects the cost of capital in the power generation sector and thatwill be updated as at the end of the 1st, 2nd and 3rd quarters 2020.

The loan repayment is secured with an unprotested blank promissory noteand the Borrower's statement on submission to enforcement proceedingspursuant to Article 777 of the Civil Procedure Code. Bullet repayment ofthe loan with interest is set to take place by 26 February 2021.

Under the Loan Agreement, Energa has performed a conditional sale ofhalf of its receivable under the Loan Agreement from the Borrower toEnea. The receivables sold will be transferred to Enea upon thefulfilment of conditions precedent set out in the Memorandum ofUnderstanding on 30 April 2019 on (i) 31 January 2021 or (ii) on thedate the entire price is paid by Enea to Energa, whichever is the later.

After 31 January 2021, receivables under the Loan Agreement may beconverted by Energa and Enea to the Borrower's capital.

Furthermore, the Management Board of Energa S.A. hereby informs that anannex was made on 23 December 2019 among Energa, the Borrower and Enea(the "Annex") to the loan agreement of 17 July 2019 (the "Loan Agreement1").

The Loan Agreement 1 was made by and between Energa and the Borrower upto the amount of PLN 76 million as part of performance of the Memorandumof Understanding of 30 April 2019 for a period ending on 31 December2019.

Up to the Annex date, Energa has disbursed two loan tranches totallingPLN 58 million.

To perform the obligation under the Memorandum of Understanding of 30April 2019, Energa and Enea made a dispositive assignment agreement on30 September 2019, whereby Energa transferred half of its receivablesunder Loan Agreement 1 onto Enea, i.e., the rights under a part of theloan granted to the Borrower in the amount of PLN 29 million with allthe rights related thereto, particularly interest fixed as at 30September 2019.

Energa and Enea intend to convert the receivables under Loan Agreement 1to shares in the Borrower's share capital. The Annex was made to extendthe loan repayment term until 31 January 2020 in order to enable theinterested parties to fulfil corporate requirements as necessary for thecompletion of the conversion before the maturity of the receivablesunder Loan Agreement 1, particularly in order for Energa and Enea toobtain permission of their respective Supervisory Boards to converttheir respective receivables under Loan Agreement 1 into the Borrower'sshares.

Energa has not previously informed the market of the conclusion of theLoan Agreement 1 and of the transfer of a part of receivables under LoanAgreement 1 onto Enea due to the amounts of those transactions whichwere below the materiality threshold in terms of Energa's businessoperations, and also in view of Energa's existing disclosure practice asit considered those agreements not to fulfil the criterion ofsignificant agreements. Energa also bore in mind that the transactionswere implemented as part of performing the Memorandum of Understandingof 30 April 2019 of which the market had been advised.

Given the Loan Agreement and the material amount of Energa's exposure onthat account, Energa decided that the Loan Agreement 1 and the Annexbecame significant agreements and that the information of theirconclusion became of importance for the market in order to present afull picture of Energa's current financial commitment to the Project andof the further investment plans related thereto.