PGE Polska Grupa Energetyczna S.A.

Governance Information • Apr 26, 2016

Signing of agreement on initiation of Polska Grupa Górnicza (PolishMining Group)

The Management of PGE Polska Grupa Energetyczna S.A. ("PGE", "theCompany") discloses that on April 26, 2016, PGE Górnictwo i EnergetykaKonwencjonalna S.A. ("PGE GiEK") - the subsidiary of PGE, signed theagreement on initiation of Polska Grupa Górnicza ("the Agreement").

The agreement has been signed between following counterparties: KompaniaWęglowa S.A., Polska Grupa Górnicza sp. z o.o. ("PGG"), PGE GiEK,Węglokoks S.A., Towarzystwo Finansowe Silesia sp. z o.o. ("TFS"),Fundusz Inwestycji Polskich Przedsiębiorstw Fundusz InwestycyjnyZamknięty Aktywów Niepublicznych ("FIPP"), PGNiG TERMIKA S.A., EnergaKogeneracja Sp. z o.o (PGE GiEK, Węglokoks S.A., TFS, FIPP, PGNiGTERMIKA S.A., Energa Kogeneracja Sp. z o.o. - mutually referred as"Investors"), Alior Bank S.A., Bank BGŻ BNP Paribas S.A., PowszechnaKasa Oszczędności Bank Polski S.A., Bank Zachodni WBK S.A., BankGospodarstwa Krajowego S.A. and labor unions acting in Kompania WęglowaS.A. (mutually referred as "Parties").

The Parties of the Agreement confirmed the validity of establishing ofPGG, which will operate on the basis of selected mining assets, to beacquired from Kompania Węglowa S.A. (including 11 hard coal mines, 4support units and central managing structure).

Investors will take up new shares of PGG amounting to PLN 2,417 million(including PLN 1,800 million to be covered with cash payment).

PGE GiEK, as one of Investors declared recapitalization of PGG withamount of PLN 500 million in cash.The investment is compliantwith the strategy of PGE Group, which includes securing fuel base forconventional generation.

PGG shall function on the basis of the business plan submitted toParties by PGG, which aims at strict control of coal production costs,achieving defined profitability levels and efficiency improvement.Details will be governed by the investment agreement, which is plannedto be signed on April 29, 2016.

Due to lack of full control over the company, PGE does not assume fullconsolidation of PGG's financial data.

Legal ground: Art. 56 section 5 of the Act on public offering,conditions governing the introduction of financial instruments toorganised trading, and public companies (Dziennik Ustaw 2013, item 1382,as amended).