Signing of a contingent binding agreement with Netia S.A. on the sale of shares of Telefonia DIALOG S.A.

Thursday, 29 September, 2011
Report no. 27/2011

The Management Board of KGHM Polska Miedź S.A. („KGHM”) announces that KGHM and Netia S.A. („Netia”) signed on 29 September 2011 a contingent binding agreement on the sale of 19,598,000 shares of Telefonia DIALOG S.A. with its registered head office in Wrocław („Dialog”) („Shares”), representing 100% of the share capital of Dialog („Agreement”). 

In the Agreement, the parties agreed to the conditions under which KGHM will sell the Shares to Netia. Sale of the Shares will be made on the basis of a definitive agreement once the condition precedent has been satisfied. Based on the Agreement, the sale price of the Shares will amount to PLN 944 million. 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). Based on the first six months of 2011, the annualised consolidated EBITDA of Dialog for 2011 is estimated at PLN 139 million. The price will be adjusted by the amount set forth in the Agreement, based on the „locked-box” mechanism: (i) less payment made by Dialog to KGHM during the period from 31 May 2011 to the closure date, and (ii) including interest calculated based on the price in the amount of 4.76% annually, calculated from 31 May 2011 to the transaction closure date. 

Closure of the transaction was made contingent on satisfying the condition precedent in the form of Netia's obtaining the approval of the antimonopoly body for this acquisition. The Agreement will be terminated, if by 30 June 2012 the condition precedent is not satisfied, unless the parties agree otherwise. 

The terms of the Agreement conform to market practice, and do not differ from terms generally used in these types of agreements. 

Dialog is a fixed-line operator providing services based on its own and on leased telecommunication networks, primarily in the region of Lower Silesia, including fixed-line services and broadband Internet and television, as well as mobile telephony services and mobile Internet access. 

Legal basis: 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)