Ciech S.A.

M&A Activity • Sep 27, 2022

The Management Board ofCIECH S.A. (the_#160;"Issuer"_#160;or_#160;"CIECH"),with reference to Current Report No. 2/2022 of 23 February 2022,herewith informs that on 26 September 2022, between the Issuer, CIECHSodaPolska S.A.(the_#160;"Subsidiary")andEEW Energy from Waste GmbH(the_#160;"EEW") (hereinafter jointly as the_#160;"Parties"),an agreement was signed for cooperation in the development of theproject - an investment consisting in the construction byEEWon a real estate located within the production complex of the Subsidiaryin Inowrocław (the "Real Estate"), an installation forthermal waste treatment, which will be able to provide the Subsidiarywith process steam, or possibly process steam and electricity (the"Agreement",_#160;"PotentialInvestment"and_#160;"Installation",respectively)._#160;_#160;

Pursuant to theAgreement, the implementation of the Potential Investment (also known asthe "Project") was divided into three stages: ProjectPreparation, Construction and Operation.

The main objective ofthe Agreement is to define the basic principles and structure of thecooperation of the Parties as part of the Project Preparation stage andto determine its scope. Further stages are to be covered by separateagreements. Preparation of the Project is to cover the activitiesspecified in the Agreement, including designing, obtaining the necessarydecisions and permits, contracting construction works and obtainingfinancing, as well as negotiating and concluding significant projectcontracts, including a steam offtake contract (possibly steam andelectricity) and a preliminary Real Estate sales agreement ("MaterialAgreements"). Neither Party is under the obligation to enter intoMaterial Agreements.

The Project Preparationstage commenced on the date of signing the Agreement and will end whenthe following conditions are jointly met: the final building permit isobtained, the Material Agreements have been signed andEEWEnergy from Waste Polska sp. z o.o.("EEWPolska") has concluded agreements securingthe sources of financing necessary for the construction of theInstallation. The Project Preparation stage will also end if theAgreement expires. The Agreement is to continue in force until theearlier of the following: (i) 10 December 2024 or (ii) the finalconstruction permit for the Installation has been obtained, MaterialAgreements have been signed andEEW Polskahassigned contracts securing the sources of financing necessary for theconstruction of the Installation.

The Parties mayterminate the Agreement at any time with a 30-day notice period,provided however that in the cases specified in the Agreement, includingtermination for reasons attributable to the Issuer or the Subsidiary,the Subsidiary will be required to reimburseEEWincurredexternal costs to the extent specified in the Agreement. A similar rightof the Subsidiary to demand fromEEWreimbursementof costs incurred in the event of termination of the Agreement forreasons attributable toEEW.

In the Agreement, theIssuer and the Subsidiary also undertook that at the Project Preparationstage they would not develop - independently or through a subsidiary -or in any other form participate in the development of any otherproject(s) located in Poland and consisting in the construction of newinstallations for thermal treatment of waste, which would be used tomanage waste from groups to be used under the Project (the "Exclusivity").In the event of a breach of the Exclusivity, the Issuer will have to payEEWa contractual penalty of EUR 2 million.

The main goal of thePotential Investment, from the CIECH Group point of view of the, will bethe supply of heat (process steam), possibly heat (process steam) andelectricity to the Subsidiary's production plant located in Inowrocław(the "Production Plant").

The Issuer assumes thatestablishing cooperation on the terms specified in the Agreement and -in the event of a decision to implement the Potential Investment and itscompletion - the receipt of thermal energy from the Installation willhave a positive impact on the consolidated financial results of theCIECH Group by reducing the price of heat, which is a key component inproduction soda and salt.

The Potential Investmentwill be carried out byEEWacting through a special purpose vehicle -EEWPolska.The Issuer and the Subsidiary will notbe participating in financing the Potential Investment (apart from thecosts of implementing the tasks constituting part of the ProjectPreparation, assigned to them in the Agreement, the value of which, atthe current stage, is approx. EUR 1,6 million).

The technical launch ofthe Installation, as envisaged in the indicative schedule appended tothe Agreement, should occur by the end of 2026, provided that thenecessary decisions and permits are obtained by 2024 at the latest.

The assumption is thatthe Installation will ultimately provide the Subsidiary with heat ofapprox. 800 GWh per annum (process steam, possibly process steam andelectricity). The first deliveries of process steam to the Subsidiary'sproduction plant should begin in June 2027.

The Issuer expects thatthe cooperation in the supply of thermal energy from the Installationwill be analogous to the solutions already operating within the CIECHGroup, where there is similar cooperation inCIECHSoda Deutschlandwith the heat supplier fromtheREMONDISGroup._#160;_#160;

The cooperation of theParties is in line with the Group's ESG Strategy adopted by the Issuer,available at:_#160;https://esgciech.com/.

Legal basis:_#160;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).