28.4 Other court cases and disputes

Compensation for conversion of shares

On November 12, 2014, Socrates Investment S.A. (purchaser of receivables from former shareholders of PGE Górnictwo i Energetyka S.A.) filed a lawsuit seeking damages in the total amount of over PLN 493 million (plus interest) for the loss suffered in connection with the incorrect (in its opinion) determination of the share exchange parity in the process of the merger of PGE Górnictwo i Energetyka S.A. with PGE S.A. The company filed a response to the lawsuit. On November 15, 2017 the Company received a procedural document from the claimant – change of demand sought, increasing the amount sought in court to PLN 636 million. A hearing to appoint a court expert was held on November 20, 2018. A first-instance court proceeding is currently under-way. In a ruling dated April 19, 2019 the court appointed experts to draft an opinion on this matter. On April 8, 2022, a further hearing was held on the need and possibility of a supplementary opinion by an additional expert. To date, a final expert opinion has not been produced.

Furthermore, a similar claim was raised by Pozwy sp. z o.o., an entity that purchased claims from former PGE Elektrownia Opole S.A. shareholders. Pozwy sp. z o.o. filed a claim at the District Court in Warsaw against PGE Górnictwo i Energetyka Konwencjonalna S.A., PGE S.A. and PwC Polska sp. z o.o. („Defendants”), demanded from the Defendants, in solidum, or jointly damages for Pozwy sp. z o.o. totalling over PLN 260 million with interest for allegedly incorrect (in its opinion) determination of the exchange ratio for PGE Elektrownia Opole S.A. shares for PGE Górnictwo i Energetyka Konwencjonalna S.A. shares in a merger of these companies. This lawsuit was delivered to PGE S.A. on March 9, 2017, and the deadline for responding to it was set by the court as July 9, 2017. The following companies: PGE S.A. and PGE GiEK S.A. submitted a response to the claim on July 8, 2017. On September 28, 2018, the District Court in Warsaw ruled in the first instance – the lawsuit by Pozwy sp. z o.o. against PGE S.A., PGE GiEK S.A. and PWC Polska sp. z o.o. was dismissed. On April 8, 2019 PGE S.A. received a copy of an appeal lodged by the claimant on December 7, 2018. A response from PGE S.A. and PGE GiEK S.A. to the appeal was drafted on April 23, 2019. A hearing was held on December 21, 2020. The Appeals Court ruled to repeal the District Court’s ruling in its entirety and referred the case to the District Court for re-examination. On January 22, 2021 PGE S.A. and PGE GiEK S.A. appealed the ruling to the Supreme Court, requesting that the appealed ruling be repealed entirely and the case referred to the Appeals Court for re-examination. At a closed-door hearing on April 27, 2021 the Supreme Court reversed the judgement. The case was returned to be re-examined by the Appeals Court. The case is currently pending before the Court of Appeal in Warsaw, with witnesses being heard at subsequent hearings set by the Court.

PGE Group companies do not accept the claims being raised by Socrates Investment S.A., Pozwy sp. z o.o. According to PGE S.A., these claims are groundless and the entire consolidation process was conducted fairly and correctly. The value of the shares, which were subject to the process of consolidation (merger), was established by an independent company PwC Polska sp. z o.o. Additionally, merger plans of the companies mentioned above, including the exchange ratios were examined for accuracy and reliability by an expert appointed by the registration court; no irregularities were found. Then, the court registered the mergers of the aforementioned companies.

PGE Group did not create a provision for this claim.

Termination by Enea S.A. of long-term energy origin rights sale contracts

In connection with the termination by Enea S.A. in 2016 of long-term agreements for the sale of energy origin rights arising from certificates of origin of energy from renewable sources, PGE Group companies are in dispute with Enea S.A.

As a result of the willingness between the parties to hold settlement talks in an alternative dispute resolution, the court proceedings were suspended in 2020. In 2021, the parties to the disputes submitted them for conciliation by the General Prosecutor’s Office of the Republic of Poland. In February 2022, the conciliation was concluded and the parties took steps to resume the litigation. In the course of 2022, the parties resumed conciliation and, at the concerted request of the parties, suspended the proceedings before the Courts.

On 20 December 2022, an agreement was signed for the amicable settlement of all pending disputes.

According to the content of the agreement concluded with PGE EO, its significant provision was the commitment of the parties to conclude a transaction for the sale to Enea S.A. of rights resulting from certificates of origin of electricity for a total price of approximately PLN 25 million. The sale took place on December 28, 2022.

According to the above agreements, PGE Group companies will receive approximately PLN 287 million by the end of April 2023. The impact of the concluded agreements increased the PGE Group’s pre-tax financial result for 2022, taking into account the energy origin rights sale transaction described above, by approx. PLN 163 million.

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