Ciech S.A.

Legal Proceedings Report • Aug 9, 2019

The Management Board of CIECH S.A. with itsregistered office in Warsaw (the "Issuer" or "Company"), informs thattoday the Board of Directors of a subsidiary of the Issuer - CIECH SodaRomania S.A. based in Romania ("CSR") decided to begin preparations inthe event of the need to suspend its production due to the cessation ofthe supply of process steam by its sole steam supplier - S.C. CET GovoraS.A. based in Romania in composition bankruptcy ("CET"). The Issuerinformed about the termination of the contract for the supply of processsteam by CET (the "Contract") in Current Report No. 23/2019 of 18 June2019. According to the provisions of the Contract, the supply of processsteam may cease after the expiry of the notice period, i.e. 18 September2019.

The aforementioned decision is the result oftermination of the Contract by CET, the assessment of the course ofnegotiations with CET to date on the determination of the new Contractterms, and the effect of an in-depth analysis of economic effects onCSR. If the price proposed by CET were accepted, the price of steam,including CO2 certificates, would increase by approx. 135%, as comparedto the price of steam with CO2 certificates prevailing in 2018. CSR'sacceptance of the new steam price would result in permanent lack ofprofitability of production at the CSR factory.

CSR will take all necessary and adequate preventivemeasures in order to protect CSR's interests in the event that CSR isnot able to continue production, including among others:1.renegotiating or terminating contractswhich, due to a change in the economic situation, cannot be continued onthe existing basis;2.preparing the concept of optimising theorganisational and personnel structure, including its adaptation to theCSR's new economic situation;3.preparing procedures and action plans related to the security of thetechnological process, production apparatus and equipment, as well asother CSR's assets, after the cessation of production at the CSRfactory;4. review of issued decisions,permits and concessions in terms of making the necessary notificationsand changes at the time of the cessation of production at the CSRfactory.

The Issuer, in cooperation with CSR, is analysing allpossible action scenarios, including hibernation of the Romanian plant.The Issuer and CSR have begun work on the preparation of a comprehensivecover package for employees of CSR and the Issuer's Romanian Branchlocated at CSR (the "Branch"), including in particular the voluntaryredundancy programme, outplacement activities and possible relocation ofa number of employees to other factories of the CIECH Group.

In the opinion of the Issuer, the possiblehibernation of the Romanian plant should not threaten the achievement ofthe goal of over PLN 900 M (Adj.) EBITDA in 2021, in accordance with theCIECH Group Strategy for 2019-2021, which was communicated by the Issuerin Current Report No. 34/2018 of 5 December 2018. In the analyses, whendeveloping the CIECH Group Strategy for 2019-2021, it was assumed thatin 2021, the Romanian business' share in the CIECH Group's (Adj.) EBITDAwould be less than 1%.The Issuer assumed thatthe Romanian business could generate in 2019 (Adj.) EBITDA of approx.PLN 25 million, given the negative cash flows.

Bearing in mind the decision made by the Board ofDirectors of CSR, the Management Board of the Issuer has decided todayby the resolution, to initiate adequate preventive measure at theBranch, in order to protect the interests of the Branch - in the eventthat CSR is not able to continue its production.

Legal basis: article 17.1 of the Regulation of theEuropean Parliament and of the Council (EU) No. 596/2014 of 16 April2014 on Market Abuse (the Market Abuse Regulation) and repealingDirective 2003/6/EC of the European Parliament and of the Council andCommission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (OfficialJournal of the European Union L No. 173, p. 1).