PGE Polska Grupa Energetyczna S.A.

M&A Activity • Feb 10, 2021

Signing of an investment agreement with Ørsted regarding offshore windprojects

With regard to the current report no. 27/2019 dated October 22, 2019,the Management Board of PGE Polska Grupa Energetyczna S.A. ("PGE")discloses that on February 10, 2021, relevant entities from PGE andØrsted group concluded an agreement, according to which the partiesdetermined their share at 50% in two offshore projects developed untilnow by PGE: Baltica 2 (with potential capacity of approximately 1.5 GW)and Baltica 3 (with potential capacity of approximately 1 GW). Thedetails of the agreement are provided below.

PGE Baltica 6 sp. z o.o., PGE Baltica 5 sp. z o.o. (subsidiaries of PGE)(the "Current Shareholders"), Orsted Baltica 2 Holding sp. z o.o.("Orsted B2"), Orsted Baltica 3 Holding sp. z o.o. ("Orsted B3"),(subsidiaries of Ørsted Wind Power A/S ("OWPAS"), later jointly referredto as the "Investors"), Elektrownia Wiatrowa Baltica - 2 sp. z o.o.("EWB2") and Elektrownia Wiatrowa Baltica - 3 sp. z o.o. ("EWB3") signedan investment agreement related to the Investors' investment in theBaltica 2 and Baltica 3 projects (the "Investment Agreement").

The Investment Agreement constitutes a legal framework for theestablishment of a joint venture between PGE and OWPAS dedicated to thedevelopment, construction and operation of the Baltica 2 and Baltica 3offshore wind power farms.

Under the Investment Agreement, the Investors agree to subscribe fornewly issued shares in EWB2 and EWB3, representing 50% of the entireshare capital and entitling the Investors to 50% of votes in thegovernance bodies of each company. Upon completion of the transaction("Closing"), EWB2 and EWB3 will be joint ventures in which 50% of shareswill be held by the relevant Current Shareholder and the remaining 50%of shares will be held by the respective Investor.

The total subscription price for the newly issued shares in EWB2 and inEWB3 will amount to the equivalent of PLN 657 million. In addition, theInvestors may be required to make additional conditional contributionsto each of EWB2 and EWB3, respectively, following execution of finalinvestment decision and fulfilment of certain conditions.

Closing is conditional upon fulfilment of certain conditions precedent,including the consent by the President of the Office for Competition andConsumer Protection in Poland (Prezes Urzędu Ochrony Konkurencji iKonsumentów).

The Investment Agreement provides that the relevant parties will enterinto a number of ancillary transaction documents at Closing. Thesedocuments include a shareholders' agreement in respect of each of EWB2and EWB3, respectively, as well as documents establishing rules withregard to joint management of the project which will regulate amongothers such matters as corporate governance of the joint ventures,obligations of the parties related to funding and providing provision ofother support, restrictions regarding the transfer of ownershipinterests, and consequences of events of default and changes of control,provision of development services to the joint ventures and provision ofshareholder loans.