Enea S.A. — M&A Activity 2016

Dec 8, 2016

Current Report No.: 42/2016

Date of preparation: 08.12.2016

Short name of issuer: Enea S.A.

Subject: Conclusion of an Investment Agreement with Energa S.A. relatingto the engagement in the preparation for construction, construction andexploitation of the new power unit in Ostrołęka Power Plant

Legal basis: Article 17 item 1 of MAR - confidential information

Content of report:

The Management Board of Enea S.A. ("Company"), in relation to thecurrent report No. 37/2016 of 30 November 2016 informs that on 8December 2016 the Company concluded an Investment Agreement("Agreement") with Energa S.A. and Elektrownia Ostrołęka S.A., relatingto the implementation of the project titled Ostrołęka C ("Project","Investment", "Ostrołęka C"). The subject of the Agreement ispreparation, construction and exploitation of 1,000 MW bituminous coalfired power unit.

Pursuant to the concluded Agreement, the cooperation, as a rule, will beorganised in three stages: Development Stage - until the instruction tocommence works for the general contractor; Construction Stage - untilthe commissioning of Ostrołęka C for commercial exploitation andExploitation Stage - commercial exploitation of Ostrołęka C. After theDevelopment Stage Enea S.A. is obliged to participate in theConstruction Stage with the assumption that the Project profitabilitycondition is satisfied, and Project financing will not infringe upon theCompany's bank covenants.

It is estimated that Enea S.A.'s total capital expenditures until thecompletion of the Development Stage will amount to ca PLN 128 million.

For the implementation of the Investment Energa S.A. will dispose of theshares held in Elektrownia Ostrołęka S.A., constituting 50% in the sharecapital, to Enea S.A., in the amount of ca. PLN 101 million. A conditionprecedent suspending the Investment Contract's entry into force isobtaining the consent of the President of the Office of Competition andConsumer Protection to perform the consolidation being the acquisitionof the shares in the special purpose vehicle to implement the Project.

Elektrownia Ostrołęka S.A. on the realisation of specific assumptions(with a relevant share of Enea S.A., Energa S.A. and potential FinancialInvestors) and assuming the introduction of the Capacity Market or othersupport mechanisms, will be able to undertake a comprehensiveimplementation of the Project.

The terms of cooperation agreed upon following the execution of theInvestment Contract should contribute to the announcement of a tenderfor the selection of a general contractor for the power unit until theend of 2016, with the aim of completing the Investment in the secondhalf of 2023.