Coal assets spin-off

The carve-out of coal assets to the National Energy Security Agency (NABE) is an important part of the transformation program of the Polish energy sector. The role of NABE will be to ensure energy security through stable supplies of energy produced from coal and ensuring the necessary availability of power in the National Energy System. At the same time, NABE will ensure stable functioning of the coal sector in the perspective of 2049 (under the current social contract on the transformation of the mining sector).

We welcome the presentation of the proposal of terms of the transaction for the acquisition of coal assets from PGE and other energy groups. This is a breakthrough step in the process of creating NABE. The detailed terms and conditions of the transaction will still be negotiated. In turn, its finalization will reduce the risk of the Group's CO2 costs and open PGE to the possibility of obtaining financing for investments consistent with the strategic direction that we - as the leader of the energy transformation in Poland - have set for ourselves. At the same time, PGE GiEK's debt to PGE S.A. will be settled and repaid consistently, which, in addition to the amount obtained from the sale of coal asset, will be important for our potential to finance transformation investments. In this way, we will build a new lasting value of the Polish Energy Group.

Wojciech Dąbrowski President of the Management Board, PGE Polska Grupa Energetyczna

In March 2022, the government adopted a program to transform the electricity sector and spin off coal assets from energy groups. As a result, coal-fired power plants and lignite mines will be grouped in a separate entity with a 100% State Treasury ownership (National Energy Security Agency – NABE). This will allow PGE to focus on development in line with the Strategy in areas changing the face of the Polish energy sector – primarily renewable energy, energy distribution and decarbonisation of the heating sector. At the same time, concentration of generation within a single entity will secure Poland’s energy security and an uninterrupted energy transition process.

Acquisition by the State Treasury from PGE Polska Grupa Energetyczna S.A, ENEA S.A, ENERGA S.A., TAURON Polska Energia S.A. of all assets related to power generation at hard coal- and lignite-fuelled power plants, including service companies providing services to them.

  • Due to the inseparability of lignite-fuelled energy complexes, the assets to be acquired will also include lignite mines
  • Hard coal mining assets will not be integrated into the coal-fired generation entity
  • District heating assets in connection with planned upgrades to low- and zero-carbon sources will not be subject to the spin-off
  • The acquisition would take place through the purchase of shares of individual companies directly by the State Treasury and their subsequent consolidation within NABE
  • Materials terms and conditions of the conclusion of the preliminary agreement for the sale of the share to the State Treasury, particularly include:
    • reaching an agreement in terms of content of the Transaction documentation, including future financing of NABE and obtaining initial credit decisions from banks for financing of NABE,
    • positive consideration by the Prime Minister of the request for acquisition of shares by the State Treasury from the Reprivatisation Fund
  • NABE will be a fully self-sufficient entity, i.e. it will be able to provide itself with all the internal and external functions necessary for smooth operations, i.e. HR, IT, purchasing, trading
  • NABE will focus on maintenance and modernisation investments necessary to maintain the efficiency of the coal units in operation, including those aimed at lowering emission factors
  • NABE will support a safe and sustainable transition due to the provision of the power needed to balance the National Electricity System.
  • On July 14, 2023, PGE received a non-binding proposal for acquisition by the State Treasury of all shares held by PGE in PGE Górnictwo i Energetyka Konwencjonalna S.A. constituting 100% of the share capital of PGE GiEK in order to set up NABE
  • In accordance with the Document the sale price of shares of PGE GiEK (Equity Value) amounts to PLN 849 million on the basis of the Enterprise Value settled as at September 30, 2022 (settlement according to locked-box mechanism) and adjusted for the net debt.
  • The Document assumes that the debt of PGE GiEK towards PGE in amount of PLN 5.4 billion will be subject to repayment throughout 8-year period from the conclusion of the Transaction and the repayment of 70% of the debt will be secured by the guarantee of the State Treasury.

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