Discussions of the sale of shares in CHP Energia sp. z o.o.

The Management Board of Pepees S.A. (hereinafter "Pepees" or "the Company") announces information whose public disclosure has been delayed pursuant to Article 17 sec. 4 of the Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (Market Abuse Regulation) and repealing Commission Directive 2003/124/EC, 2003/125/EC and 2004/72/EC (the "MAR Regulation"), i.e. it informs that the Company held discussions regarding a possible sale of shares in CHP Energia sp. z o.o, sale of the enterprise or organized part of the enterprise. On 22 May 2020, the following agreements were concluded: Agreement on Protection of Information between CHP Energia Sp. z o.o. and ORLEN Południe Spółka Akcyjna and Agreement on Protection of Information between CHP Energia Sp. z o.o. and Energomedia Sp. z o. o., concerning the conduct of discussions as to the possible acquisition of the enterprise of a biogas plant or land for the construction of a biogas plant or optionally long-term cooperation. The condition of the sale was that the buyer undertakes to collect the potato pulp from the Company. This opened the way for negotiations to begin in order to agree on the terms and conditions of the sale.
It was in the Company's legitimate interest to delay the publication of information on the commencement of negotiations as its release could infringe its legitimate interests. Disclosure of information about the early stage of the discussions before the parties formally confirmed their will and the purpose of the discussions was clarified through signing of the agreement could cause confusion and misunderstanding among investors and other stakeholders of the Company, which could adversely affect the negotiations.
As a result of negotiations, on February 19, 2021 a preliminary conditional agreement on the sale of all shares of Pepees in CHP Energia sp. z o.o. ("Agreement") was signed. As a condition for the conclusion of the final agreement, the National Agricultural Support Centre could not exercise its pre-emptive right to real estate of the area of approximately 0.68 hectares, belonging to one of the minority shareholders of CHP Energia sp. z o.o., adjacent to plots belonging to CHP Energia sp. z o.o., where the biogas plant is located and which is to be sold together with shares in CHP Energia sp. z o.o. In the Company's opinion, the terms and conditions of the Agreement do not deviate from market standards.
Public disclosure of confidential information about the conclusion of a preliminary agreement would jeopardize Pepees's interests. Such a threat, in the opinion of the Company, could be associated with the fact that disclosure that not only the sale of property, but also the entire transaction of selling shares in CHP Energia sp. z o.o depends on the decision of the National Agricultural Support Centre ("NASC") could disrupt the decision-making process on the part of NASC and expose the Company to the risk of third parties’ attempts to interfere in administrative proceedings conducted by NASC, leading, in extreme cases, to a refusal to grant consent or extension of the procedure for its granting beyond the deadline for conclusion of the final agreement, which could also lead to the failure of the transaction.
Sale of shares in CHP Energia sp. z o.o. is extremely important for the Company because of the need to optimize Pepees Group's operations, while ensuring long-term collection of pulp by a stable business partner.
After fulfilment of condition precedent, i.e. receipt of the NASC's statement that it would not exercise its pre-emptive right, on March 18, 2021, a final sale agreement was concluded in respect to all shares in CHP Energia sp. z o.o. The purchaser of the shares is ORLEN Południe S.A., a subsidiary of PKN ORLEN S.A.