PGE Polska Grupa Energetyczna S.A.

Share Issue/Capital Change • Mar 31, 2017

Signing of the Investment Agreement on financial investment in PolskaGrupa Górnicza (Polish Mining Group)

In connection with the current report no. 19/2017 dated March 29, 2017,the Management Board of PGE Polska Grupa Energetyczna S.A. ("PGE")discloses that on March 31, 2017, PGE Górnictwo i EnergetykaKonwencjonalna S.A. ("PGE GiEK") - the subsidiary of PGE, signed theinvestment agreement determining the conditions of the financialinvestment (the "Investment") in Polska Grupa Górnicza Sp. z o.o.("PGG") (the "Investment Agreement") .

The parties of the Investment Agreement are PGE GiEK, Enea S.A., ENERGAKogeneracja sp. z o.o., PGNiG TERMIKA S.A., Węglokoks S.A., TowarzystwoFinansowe Silesia sp. z o.o., Fundusz Inwestycji PolskichPrzedsiębiorstw Fundusz Inwestycyjny Zamknięty Aktywów Niepublicznych(jointly referred later to as the "Investors") and PGG. The InvestmentAgreement provides that PGG will acquire selected mining assets fromKatowicki Holding Węglowy S.A. ("KHW") on the ground of the promisedcontract, which is planned to be signed on April 1, 2017.

The Investment Agreement determines method of investment, operatingrules of PGG and its bodies, as well as rules for withdrawal from theInvestment. The Investment Agreement assumes recapitalisation of PGG inthree stages by PGE GiEK, Enea S.A., ENERGA Kogeneracja sp. z o.o.,PGNiG TERMIKA S.A. and Towarzystwo Finansowe Silesia sp. z o.o. withtotal amount of PLN 1 billion.

Within the recapitalisation of PGG, PGE GiEK committed itself to acquirenew shares of PGG with a total nominal value of PLN 100 million inexchange for the cash contribution in amount of PLN 100 million, inthree stages:

a) within the first stage PGE GiEK will acquire new shares in PGG inexchange for the cash contribution in amount of PLN 50 million.Recapitalisation within the first stage is planned for April 2017;

b) within the second stage in June 2017 PGE GiEK will acquire new sharesin PGG in exchange for the cash contribution in amount of PLN 20 million;

c) within the third stage in the first quarter of 2018 PGE GiEK willacquire new shares in PGG in exchange for the cash contribution inamount of PLN 30 million.

After acquisition of the above mentioned shares, PGE GiEK will have15.32% in the share capital of PGG in comparison to 17.10% as at March31, 2017.

The Investment Agreement determines the rules for appointing theSupervisory Board members, according to which each Investor and theState Treasury will be entitled to appoint one member in the SupervisoryBoard which will consist of up to 8 members.

Planned acquisition of the KHW assets by PGG will contribute toimproving the profitability of the PGE GiEK's investment in PGG, interalia due to assumed cost and revenue synergy effects.