Conclusion of a loan agreement

The Management Board of Przedsiębiorstwo Przemysłu Spożywczego PEPEES S.A. (the Company, the Issuer) informs about signing (on 10 August 2017) a multi-purpose loan agreement (the Agreement) concluded between the Issuer and its subsidiaries, i.e. Zakłady Przemysłu Ziemniaczanego "Lublin" Sp. z o.o. (Lublin) and Przedsiębiorstwo Przemysłu Ziemniaczanego Bronisław Sp. z o.o. (Bronisław), (jointly refrred to as the Borrowers) and Powszechna Kasa Oszczędności Bank Polski S.A. (PKO BP, the Bank).
Under the Agreement, the Bank granted the Issuer and its aforementioned subsidiaries a multi-purpose credit limit to the total amount of PLN 46.5 million, for individual companies respectively: the Issuer - up to PLN 30 million, Lublin - up to PLN 5 million and Bronisław - up to PLN 11.5 million. The following loans have been granted within the above limit:
• current account overdraft: the Issuer - PLN 4 million, Lublin - PLN 0.5 million and Bronisław - PLN 0.5 million
• revolving working capital loan: the Issuer - PLN 10 million, Lublin - PLN 3 million and Bronisław - PLN 3 million
• non-revolving working capital loan: the Issuer - PLN 16 million, Lublin - PLN 1.5 million and Bronisław - PLN 8 million
The limit has been granted until 31 August 2018.
The financial terms of the Agreement provide for variable lending interest rate equal to the reference rate, plus the margin of PKO BP, with proviso that the interest rate shall not be lower than the PKO BP margin and shall not be lower than zero.

The Agreement provides for the establishment of collateral for the Borrowers' liabilities arising from the granted loans and other liabilities under the Agreement in the form of: blank note with a promissory note agreement, registered pledges on the Borrowers’ inventories, registered pledges on fixed assets belonging to the Borrowers, assignment of receivables and joint contractual mortgage to the amount of not less than PLN 58.5 million on the perpetual usufruct of land and the ownership of buildings vested in Lublin and Bronisław.
In addition, each Borrower has committed to submit, by 30 September 2017, a notarised statement on submission to enforcement proceedings in respect of the Bank's claims under the Agreement, pursuant to Art. 777(1)(5) of the Code of Civil Procedure.
Pursuant to the Agreement, the use of loans by individual Borrowers is linked, among others, to the condition of establishment of the aforementioned collaterals and taking other formal and legal actions taking into account market standards in this area.
The Agreement also provides that during the financing period, the Borrowers will be required to: (i) maintain a net debt at a determined level in relation to EBITDA, (ii) maintain a leverage ratio (net debt to equity plus minority capital) at a level below a certain value, and these financial indicators will be subject to evaluation at quarterly intervals and will be calculated on the basis of the consolidated financial statements of the Issuer's capital group. In case of violation of the aforementioned  commitment the Bank will be entitled to reduce the limit granted or terminate the Agreement with all Borrowers. The Issuer's Management Board also agreed to refrain from recommending a dividend payment without the consent of PKO BP.

The remaining terms of the Agreement, including those related to the possibility of withdrawing from the Agreement or to breaching its terms and conditions which may result in its termination, do not depart from the terms and conditions commonly provided in such agreements.
Signatures of persons representing the company

President of the Management Board Wojciech Faszczewski, 2017-08-10
Member of the Management Board Tomasz Rogala, 2017-08-10