Sale of shares of Telefonia DIALOG S.A.

Friday, 16 December, 2011
Report 42/2011

The Management Board of KGHM Polska Miedź S.A. („KGHM”) announces that on 16 December 2011, KGHM sold to Netia S.A. („Netia”) 19 598 000 shares of Telefonia DIALOG S.A. with its registered head office in Wrocław („DIALOG”), with a nominal value of PLN 25.00 per share, and a total nominal value of PLN 489 950 000.00, representing 100% of the share capital of DIALOG and 100% of the votes at the general meeting of DIALOG („Shares”). 

The sale of these Shares took place in performance of obligations arising from the contingent binding agreement on the sale of the shares of DIALOG entered into between KGHM and Netia on 29 September 2011 („Contingent Agreement”), as a result of payment of the price, upon fulfillment of the condition precedent in the form of the issuance by the President of the Polish Office of Competition and Consumer Protection of unconditional consent to the takeover of DIALOG („Condition Precedent”). The Shares were sold by KGHM to Netia through Dom Inwestycyjny BRE Bank S.A. KGHM provided information on the signing of the Contingent Agreement and fulfillment of the Condition Precedent in current reports numbered respectively 27/2011 dated 29 September 2011, and 41/2011 dated 9 December 2011. 

The final price at which the Company sold these Shares was calculated in accordance with the formula set forth in the Contingent Agreement, and amounted to PLN 968 926 898 . The sale price of the Shares includes payment of the Enterprise Value („Enterprise Value”) in the amount of PLN 890 million and the equivalent of the balance of net cash held by Dialog in the amount of PLN 54 million as at 31 May 2011 (the „locked-box” date). The cash generated by DIALOG from the Locked-Box date to the transaction closure date will remain in DIALOG. The sale price of the Shares was increased by interest calculated based on the price in the amount of 4.76% annually, calculated from 31 May 2011 to the transaction closure date. 

The carrying amount of the Shares in the accounts of KGHM is PLN 824 926 000. 

Legal basis: art. 56 sec. 5 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).