Ciech S.A. — M&A Activity 2019

Dec 5, 2019

Text of the report:

The Management Board of CIECHS.A. with its registered office in Warsaw (the "Issuer" or "CIECH")herewith informs that on 5 December 2019, a letter of intent was signedbetween CIECH and an Industrial Gas Pipeline Operator, GAZ-SYSTEM SpółkaAkcyjna (hereinafter referred to as "GAZ -SYSTEM") on establishingcooperation in the implementation of an investment, consisting in theconstruction by GAZ -SYSTEM of a salt mine (the "SM") and an undergroundgas storage facility (the "UGS") at the Damasławek salt dome, togetherwith a line infrastructure (jointly referred to as the "Investment"),and cooperation in the supply of salt brine to CIECH Soda Polska S.A.production plants (hereinafter referred to as "CIECH Soda Polska").

The parties are to conductnegotiations, the purpose of which will be to develop solutions takinginto account the interests of the parties, and to sign the Term Sheetdocument regulating, among others, conditions for the implementation ofthe Investment, including the estimated cost and schedule of theInvestment, the principles of its financing by each party and keycooperation assumptions after the completion of the Investment, whichthen will be detailed under investment agreements and a long-termcommercial contract for the supply of brine.

The execution of the letter of intent is one of thesteps towards ensuring the security of brine supply for the productionplants of CIECH Soda Polska after 2025.

The execution of the letter of intent does not affectrelations with existing business partners.