KGHM signs agreement to sell its stake in Polkomtel S.A. to Spartan Capital Holdings Sp. z o.o.

Thursday, 30 June, 2011
Report 20/2011

The Management Board of KGHM Polska Miedź S.A. (“KGHM”) announces that on 30 June 2011 a preliminary agreement was signed between KGHM, Polski Koncern Naftowy ORLEN S.A. (“PKN ORLEN”), PGE Polska Grupa Energetyczna S.A. ("PGE"), Vodafone Americas Inc, Vodafone International Holdings B.V. (together „Vodafone”) and Węglokoks S.A. (“Węglokoks”) as the sellers (“Sellers”), and Spartan Capital Holdings Sp. z o.o., the special purpose vehicle controlled by Mr. Zygmunt Solorz-Żak, as the purchaser (“Purchaser”) for the sale of 100% of the shares of Polkomtel S.A. (the “Agreement”), including KGHM's entire 24.39% shareholding in Polkomtel S.A. 

As a result of the Agreement, KGHM agreed to sell 5,000,266 ordinary registered shares of Polkomtel S.A., with a nominal value of PLN 100 per share, representing approximately 24.39% of the registered capital of Polkomtel S.A. at the total price of PLN 3,672,146,567, to be covered in cash. 
The total transaction consideration implies an Enterprise Value of PLN 18.1 bn. After deductions attributable to the debt of Polkomtel S.A. and the dividend payable for the benefit of the current Shareholders (i.e. Sellers) the net proceeds amount to PLN 15.1 bn. That part of the dividend from Polkomtel S.A. for 2010 due to KGHM amounts to PLN 250,013,300 and is payable by 31 July 2011. 

In case of certain breaches of the Agreement, the Purchaser is obliged, under the Agreement, to pay a contractual penalty amounting to approx. 15% of the price. Payment of the price and the contractual penalty has been secured by issue of letters of credits to the Sellers. 

The transaction is subject to approval by the Polish Office of Competition and Consumer Protection which, based on the Agreement, must be obtained by the end of 2011, otherwise the Agreement will be terminated unless the parties agree differently. Following the completion of the transaction and the acquisition by the Purchaser of 100% of the shares of Polkomtel S.A., KGHM, PKN ORLEN, PGE, Vodafone and Węglokoks will no longer hold any shares in Polkomtel S.A. 

Polkomtel S.A. is a telecommunications operator in Poland and provides voice and data services through a wide range of wireless and broadband solutions. 

In accordance with the “Decree of the Minister of Finance dated 19 February 2009 regarding current and periodic information published by issuers of securities and conditions for recognising as equivalent information required by the laws of a non-member state” the Agreement constitutes a “significant agreement” due to the fact that its value exceeds 10% of KGHM’s equity. 

See also: current report no. 19/2006 dated 10 March 2006, current report no. 51/2008 dated 21 November 2008 and current report no. 53/2008 dated 18 December 2008. 

Legal basis: § 5 sec. 1 point 3 of the Decree of the Minister of Finance dated 19 February 2009 regarding current and periodic information published by issuers of securities and conditions for recognising as equivalent information required by the laws of a non-member state (Journal of Laws from 2009 No. 33, item 259 with subsequent amendments) and art. 56 sec. 1 point 1 of the Act dated 29 July 2005 on public offerings and conditions governing the introduction of financial instruments to organised trading, and on public companies (Journal of Laws from 2005 No. 184, item 1539 with subsequent amendments)