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Current Report No. 22/2019

  Investors Relations

Response to questions submitted by a shareholder

Body of the report:

The Management Board of Jastrzębska Spółka Węglowa S.A. (“JSW”, “Company”) hereby reports that in connection with the Company’s Extraordinary Shareholder Meeting convened for 21 March 2019 (“ESM”) the Company appends hereto the wording of questions submitted by a Company shareholder along with the answers to these questions.

In reference to item 6 of the agenda of the JSW S.A. ESM

Question: Provide explanations regarding the indication of a registered pledge on shares in Przedsiębiorstwo Budowy Szybów S.A. as a security interest for the planned debt financing for the JSW S.A. Group in a situation where the Shareholder Meeting has not yet adopted a resolution expressing consent for the Company to acquire PBSz.


As part of the anticipated provision of bank financing to Jastrzębska Spółka Węglowa S.A. (hereinafter: Company, JSW S.A., JSW), a loan will be made available to provide partial funding for the costs of acquisition of a 95.01% stake in Przedsiębiorstwo Budowy Szybów S.A. (hereinafter referred to as the PBSz Shares). 

If the JSW S.A ESM consents to the purchase of the PBSz Shares and the Company signs a loan agreement, the Company will be able to make use of the loan at the closing of the acquisition of Przedsiębiorstwo Budowy Szybów S.A. (hereinafter: PBSz) or immediately thereafter. The standard method of securing an obligation is to establish a pledge on the PBSz Shares to guarantee any claims the financing parties may have in the future. Banks typically require a security interest from the moment the financing is made available.

The consent of the JSW S.A. ESM may be granted before the decision is made to express consent to the purchase of the PBSz Shares but it does not determine in any manner the decision to approve the purchase transaction itself.

In reference to item 7 of the agenda of the JSW S.A. ESM

Question 1: Supplement the justification for the resolution of the JSW S.A. ESM by including a resolution of the Company’s Management Board


Attached hereto are copies of the following Resolutions adopted by the JSW S.A. Management Board:

1. Resolution No. 73/IX/2019 of 23 January 2019 regarding:

    - Motion to the JSW S.A. Supervisory Board to express consent for JSW S.A. to effect the purchase transaction of 4,430,476 shares in Przedsiębiorstwo Budowy Szybów S.A. with its registered office in Tarnowskie Góry, representing 95.01% of PBSz’s share capital and to issue an opinion on the motion in this matter to the JSW S.A. Shareholder Meeting.

    - Motion to the JSW S.A. Shareholder Meeting to express consent to execute the Transaction.

2.  Resolution No. 84/IX/2019 of 30 January 2019 regarding partial repealing of Resolution No. 73/IX/2019 adopted by the JSW S.A. Management Board on 23 January 2019

Question 2: Present the conclusions contained in the industry opinions referred to in the motion in the context of the usefulness of PBSz S.A. to the Company


Author of the expert opinion: Mineral and Energy Management Research Institute of the Polish Academy of Sciences (IGSMiE PAN). The report was prepared by IGSMiE PAN as a KPMG subcontractor.

Title: “Technical Due Diligence of the Emilia Project”

Date of preparation: 24 January 2018

The report summary reads as follows:

- Both the acquisition of PBSz and a change in the philosophy (model) of the company’s operation may be a beneficial venture for JSW. Every year, Jastrzębska Spółka Węglowa commissions approx. 20,000 running meters of stone and stone-coal excavations to external companies. The availability of qualified staff is problematic and the development of own personnel (covered by the collective bargaining agreement) does not necessarily have to be a technically and economically viable solution.

- The inclusion of PBSz into JSW’s structures should be based on the assumption that a cooperation model should be developed based on a transfer pricing system and an internal margin (profit) strategy. Such a strategy should enable PBSz to operate in an efficient manner within JSW but should also enable the company to maintain flexibility and the ability to perform profitable contracts outside the JSW Group.

- The launch of additional roadway faces will require securing the resources for capital expenditures associated with their fit-out (furnishing) with appropriate equipment and machinery. This cost will be incurred by JSW. On PBSz’s side, is will certainly be necessary to secure an appropriate pool of human resources capable of handling a significant portion of work to be commissioned by JSW. The performance of vertical contracts may also require expansion and co-funding, because both currently and in the future PBSz will be involved in the construction of the “Grzegorz” shaft.

- For the purposes of evaluation of the benefits stemming from the acquisition of PBSz, analytical models have been built and, using three scenarios, the minimum, medium and maximum ranges of achievable synergies have been ascertained. These synergies transpire in the following areas:

    - savings in payroll expenses,

    - savings in capital expenditures on fit-out with equipment and machinery (assuming that PBSz, supported with co-funding, will be capable of running the work on roadway excavations with correspondingly greater progress),

    - discount (depending on the scenario) in relation to the market in the area of appropriate stone roadway excavation projects or shaft and shaft-auxiliary works.

This co-funding is construed in the model as an increase in the level of real wages of PBSz staff – with a certain discount relative to personnel costs at JSW and with investments in machinery and equipment at the faces. The expenditures will reach PLN 40-65 million annually according to the baseline scenario (taking into account leases of basic machinery).

- The combined synergies under the distinct scenarios range from PLN 65 million to PLN 444 million in 2018-2034 (in nominal terms) and from PLN 50 million to PLN 320 million (in real terms).

- It should be emphasized that the achievement of these benefits requires determination on the part of the JSW Management Board in making changes also to PBSz and in developing an optimal model for the operation for both these companies. Certain good examples exist on the market attesting to the possibility of successful cooperation between a mining company and a service company rendering work in the area of roadway excavations and shaft boring (KGHM PM and PeBeKa).

- The risks described in the technical portion of this document apply also to the identified synergy areas and should be taken into consideration in the process of making a binding acquisition decision.

Author of the expert opinion: Prof. Piotr Czaja, Ph.D. Eng., AGH University of Science and Technology in Kraków

Title: “Opinion on the current position of Przedsiębiorstwo Budowy Szybów S.A. (PBSz) in the underground construction market in Poland”

Date of preparation: 11 June 2018

The report summary reads as follows:

PBSz is a modern company that is well prepared for the performance of mining construction works. The company’s key advantages are as follows

- 70 years of tradition, excellent production results in the past and good production results currently,

- The company’s excellent production potential, both in respect of shaft deepening processes, excavating underground mining roadways and pits and non-conventional works associated with ongoing operation of collieries,

- Appropriate equipment and know-how necessary to execute complicated underground construction projects,

- Maintenance and constant improvement of the company’s production potential by investing in new equipment (to date, the average value of purchases per year has been approx. PLN 20 milion)

- Successfully completed difficult and risky shaft construction projects in Poland and abroad

- Good operational personnel, well prepared in terms of their knowledge and skills, mobile in the context of their command of foreign languages, adept at using the latest tools in the field of designing and monitoring underground construction facilities, will enable the execution of even the toughest challenges posed by the modern mining industry,

- Established position in the Polish, European and global underground construction markets,

- Entry into the copper mining market and constant improvement in the capacity to perform works other than related to shaft-drilling (excavation of roadways, mining pits and non-standard works).

- Good cooperation with scientific institutions and research and development centers resulting in the development of new designs for equipment improving the efficiency and effectiveness of production processes,

- Extensive intellectual property in the form of patents and utility models,

- Proper management personnel and implemented quality management systems and quality assurance systems for selected works

All this means that PBSz must not be deprived of suitable corporate governance, and its entry into the structures of a company with a clearly defined strategy and a properly defined future will enable it to become a strong pillar of the enterprise. Addition of new capital in the form of modern equipment may lead to the creation of a strong and highly competitive enterprise, certainly in the European underground construction market and very probably also in the global underground construction market.

A very significant component of PBSz’s operations may be underground urban and tunnel construction, which will certainly be achievable for this company if it operates on a stable ground and is provided with the opportunity to make new purchases of equipment.

Similarly, the prospects of large-diameter (above 2.5 m) boring projects in the Polish underground mining market look increasingly better. The inclusion of this type of service in the company’s offering would significantly amplify the company’s project portfolio.

In such a situation, a well-run company with an extended range of specialist services on offer might enjoy very good development prospects.

Author of the expert opinion: Central Mining Institute (GIG). Research team: Jan Szymała, Ph.D. Eng., Mariusz Szot, Ph.D. Eng., Marek Rotkegel, Ph.D. Eng., Jan Wojnicki, M.Sc. Eng. Auxiliary team: Dorota Stochel, M.Sc. Eng., Adam Hądzlik, Eng.

Title: “Expert opinion on the analysis of the market position of PBSz S.A. and assessment of the potential consequences of the bankruptcy of PBSz SA for the market and JSW S.A.”

Date of preparation: June 2018

According to this expert opinion, the acquisition of PBSz by JSW would have the following upside:

- possibility of planning and designing investment projects using PBSz’s design capabilities, taking into account the company’s production capacity,

- possibility of ensuring the execution of investment projects in a long-term perspective in compliance with the planned schedule using the company’s human resources and equipment,

- flexibility in making technological changes and pace of work during the execution of investment projects,

- professional and quick response in emergency situations, removal of hazards or breakdowns in mine shafts of the JSW Group.

Authors of the expert opinion: Prof. Henryk Kleta, Ph.D. Eng., Prof. Stanisław Duży, Ph.D. Eng., Agata Milian, M.Sc., Silesian University of Technology

Title: “Analysis of the market for shaft mining works and assessment of the potential consequences of the bankruptcy of PBSz S.A. for the market and JSW S.A.”

Date of preparation: 12 June 2018

The final part of the report reads as follows:

[...] if PBSz shuts down its current operation, the main consequence will be the dispersion of experienced staff to external companies and mines in light of the growing shortage of experienced personnel in such a niche specialty as, undoubtedly, the construction of shafts. In our opinion, if efforts are subsequently undertaken to reconstruct a similar structure and restore the ability to provide shaft construction services, they will probably require at least 5 years to be successful. Secondment of JSW miners to perform these services may fail to be fully effective due to the need for staff to acquire experience in shaft construction, which is a process that takes at least several years.

Question 3: Describe the Company’s current progress in the area of agreements and statements with key clients and the execution of an agreement with PBSz’s trade unions regarding the paths of maximum wage increases enabling the achievement of the assumed synergies.


On 12 March 2019, an agreement was entered into by and between PBSz, JSW S.A. and all trade unions operating in PBSz regarding the paths of wage increases enabling the achievement of the assumed synergies in accordance with the appendix to the Conditional Commitment Agreement of 21 December 2018 providing for the purchase of the PBSz Shares, containing the draft agreement initialed by the trade unions and JSW S.A.

As at the date of this report, tripartite statements (agreements) regarding the status of works performed by PBSz and further cooperation have been signed by and between JSW, PBSz and TAURON WYDOBYCIE S.A. and by and between JSW, PBSz and KGHM. The submitted statements attest to the compliance of the works performed by PBSz with the contracts and the timely completion of the accepted works.

Question 4: Give a realistic assessment of the possibility to engage employees of PBSz in works for JSW S.A., given that PBSz provides its services to the largest mining companies in Poland.


Until July 2018, PBSz , given the uncertain market situation, had been reducing its headcount to adapt it to the needs arising from the concluded works contracts. By the end of that month, PBSz’s headcount was about 917 employees. In the context of a very advanced process in which JSW S.A sought to acquire 95% of the company’s shares, PBSz has changed its employment policy dramatically. In view of JSW S.A.’s declaration about its intent to use PBSz’s potential to implement the JSW Strategy as regards the excavation and deepening of the planned mine pit works, as well as to the roadway excavation, PBSz has been slowly restoring its headcount in order to increase its working potential.

In January 2019, PBSz already had 1,031 employees, including:

- 225 employees engaged in roadway excavation works (an increase of 25 persons as from October 2018);

- 224 employees engaged in shaft excavation and deepening works (an increase of 11 persons as from October 2018);

Concurrently, in February 2019, the company decided to hire 43 new employees (about 30 for drilling teams, and the remainder to shaft works). All newly-hired employees hold the required qualifications. Furthermore, PBSz has a database of registered work applications of several dozens of qualified miners; they can be hired when new contracts for new drilling or shaft works are secured and continued over a longer term.

In connection with the ongoing acquisition process, in the second half of 2018 PBSz decided to provide its excavation works crews to JSW S.A. PBSz won a tender held by the Knurów-Szczygłowice Coal Mine - the Szczygłowice Section to drill Crosscut 1 - from seam 405/1 to circuit item 650, and started drilling works in September 2018, which are now continued under newly-concluded contracts. As of February 2019, PBSz employs approx. 80 excavation works miners in this mine and is planning to further increase this headcount.

In January 2019, PBSz started excavation works on the F-belt crosscut in the unified “KWK Borynia-Zofiówka-Jastrzębie Coal Mine” - the Zofiówka Section, with about 60 employees.  At present, the mine is preparing tender requirements for the drilling of pit water sedimentation tanks and a shaft bypass in the area of the excavated 1-Bzie shaft, as well as further works related to the development of the shaft-hoisting installation on the 1-Bzie shaft. PBSz is planning to take part in those tenders.

For the purposes of the works in the Zofiówka mine, the company has already purchased fit-out for two coal faces , i.e. 2 HT-5000 loaders and drilling rigs.

In a consortium formed with the PPG ROW-JAS company, in the middle of 2018 PBSz started the deepening of shaft IV in the “KWK Pniówek” Mine. Those works currently employ about 20 employees.

Although there had been no formal decision about PBSz being acquired by JSW S.A., since the second half of 2018 PBSz’s involvement in the excavation works in JSW S.A. has increased. Commissioning of new coal faces in JSW mines reflects the company’s large capacity to increase shaft and horizontal works.

At the same time, PBSz provides parallel drilling works in KGHM Polska Miedź S.A., with a team of about 360 employees. The contracts concluded so far envisage continuous work until 2023 and generate a positive margin for PBSz. For the purposes of the continuation of those works in 2018 and 2019, the company purchased new machinery worth over a dozen million PLN.

When merged with the JSW S.A.’s organization, PBSz will continue the construction of the “Grzegorz” shaft for Tauron Wydobycie S.A. for a few years to come.

Continuation of those works has been confirmed by the relevant agreements in accordance with the “Conditional Commitment Agreement to Sell Shares”.

When already a part of JSW S.A., PBSz is planning to increase headcount by 240 persons in 2019, in order to perform the planned work for JSW S.A. and continue the contracts concluded with other coal mining companies.

Question 5: Explain if the assumed synergy effect, resulting from, inter alia, additional revenues generated by PBSz under the contracts with JSW S.A. has had an impact on the valuation and - consequently - led to higher purchase prices.


Importantly, if PBSz operated independently of JSW S.A., the profits and cash flows generated by PBSz on the contracts with JSW S.A would belong to the owner of PBSz. On the other hand, if PBSz is acquired by JSW S.A., the profits and cash flows will stay with the JSW Group.

The performance by PBSz of additional world in JSW S.A. is one of the sources of the identified synergies (besides cost synergies) to be gained in the acquisition; the value of those synergies has been accounted for in the post-money valuation, which - in accordance with the established practice - should serve for JSW S.A. as the ceiling value of the transaction’s profitability.

However, the post-money valuation was not a direct basis for the transaction price determination. The point of departure for the JSW S.A.’s offer to purchase PBSz’s shares was the pre-money valuation (i.e. net of the synergy effects); JSW S.A. used the difference between the post-money valuation and the pre-money valuation as a reasonable price negotiating range in respect of the transaction premium. How this range was used in the negotiations was a product of such factors as: the degree of interest in the acquisition, assessment of the existing risks, the parties’ negotiating power and the willingness (or - to achieve a positive economic calculation - even necessity) to retain at least some of the synergy benefits for JSW S.A. It is JSW S.A.’s opinion that the PBSz final purchase price, which resulted from those negotiations, takes account of a reasonable level of the transaction premium, tapping within the transaction price on a moderate share of the identified synergies possible to achieve after the acquisition.

Question 6: Present up-to-date information as regards the appointment by JSW S.A. of a member of the PBSz Supervisory Board and the arrangements made thereby in respect of the exercise of individual supervision in PBSz.


Pursuant to the Conditional Commitment Agreement to Sell PBSz Shares, dated 21 December 2018, the appointment of JSW representative to the PBSz Supervisory Board was possible only after the JSW Supervisory Board endorsed the transaction, i.e. expressed a positive opinion on the JSW Management Board’s motion to the JSW Shareholder Meeting for its consent to JSW concluding a purchase transaction of 4,430,476 PBSz shares, representing a 95.01% stake in the company’s share capital. The Supervisory Board gave its endorsement on 15 February 2019. The Company proposed Mr. Andrzej Palarczyk as JSW representative to the PBSz Supervisory Board; Mr. Palarczyk is the Management Board Representative for Utilizing the PBSz’s Potential in the JSW organization. Mr. Palarczyk has 30 years of professional experience in mining investment projects and has held managerial functions pertaining to the preparation of production in mines. On 5 March 2019, Mr. Andrzej Palarczyk was appointed to the PBSz Supervisory Board. On 19 March 2019, the PBSz Supervisory Board delegated Mr. Andrzej Palarczyk to perform individual supervision in PBSz. Since the date of his appointment to the Supervisory Board, Mr. Palarczyk has had unrestricted access to the PBSz Management Board and the company’s documents. He discusses with the PBSz Management Board the on-going operation of the company and focuses on the preparations to use to a maximum extent the synergy potential arising between JSW and PBSz after the acquisition. Up till now, Mr. Palarczyk has not voiced any objections in respect of running the affairs of this company.

Question 7: Show the reasoning for the selection of valuation methods for PBSz and explain why the asset method was not applied in the valuations.


PBSz is a going concern; therefore, the DCF method, generally recognized in the mergers and acquisitions market, and the market method based on the trading ratios of comparable listed companies, were selected.

Noteworthy, asset-based methods are used to valuate development ventures or ventures in bankruptcy/liquidation, i.e. ones that do not conduct operating activities and do not generate any revenues.

In view of the above, it can be stated  that the methods applied are the most correct to reflect the valuation of service companies.

A valuation of 100% of shares (equity) with the revenue method, prepared for the purposes of the transaction and taking account of post-acquisition synergies, ranges between about PLN 231 - 255 milion.

The market method is based on comparisons with the market value of companies having the closest/most comparable business profile. The PBSz’s valuation with the market method, based on the EV/EBITDA ratio (where EV is the enterprise value, i.e. equity plus net debt, and EBITDA is the operating profit increased by depreciation and amortization), showed the comparable companies to reach EV/EBITDA in the range of 4-10x.

A good example is Major Drilling Group International Inc., a Canadian company traded at the Toronto stock exchange, with a business profile comparable to PBSz. In 2018: (RF completed in April 2018) The company generated CAD 342 million in revenues (about PLN 944 million at the exchange rate of 31 December 2018) and CAD 23.1 million EBITDA (about PLN 64 million). The company provides contracted drilling for companies focusing mainly on minerals mining. It operates in three geographical segments: Canada and USA, South and Central America, and Asia and Africa. It also has operations in Mexico and in Europe. The company provides three types of drilling services: specialized, conventional and underground.

As at 31 December 2019, the EV/EBITDA ratio of Major Drilling Group International Inc. was 9.82x (source: Thomson Reuters Eikon).

With PBSz’s EBITDA of PLN 31.8 million, the negotiated transaction price of PLN 204 million represents a ratio of 6.4x

Question 8: Explain whether the determination of a final transaction price took account of the risk (for PBSz) of the irregularities discovered in the modernization of a shaft located in a mine of the Katowicki Holding Węglowy S.A., and the allegations addressed against the persons involved, whose value, according to media reports, is estimated at about PLN 21.7 milion.


The risk of an estimated loss to Przedsiębiorstwo Budowy Szybów S.A. (PBSz) of about PLN 22 million, identified based on a National Prosecutor Office’s press announcement of 6 March 2019, published in an article entitled “Detentions and Allegations for Causing an almost PLN 22 million loss to Katowicki Holding Węglowy”, was communicated to the Sellers together with a demand to secure this risk in the form of an additional guarantee extended by an entity of a standing satisfactory to the Buyer. The Sellers were also informed that JSW may accept, for example, a corporate guarantee of Famur S.A. as the Sellers’ parent company.  Should the information announced by the National Prosecutor Office be validated, it would represent a Breach of the Sellers’ Warranties under the Conditional Commitment Agreement to Sell Shares in the Przedsiębiorstwo Budowy Szybów S.A.’s share capital, dated 21 December 2018, in the event that the risk has materialized and the legal successors of the Katowicki Holding Węglowy S.A. brought claims against PBSz, because the conditions of the Sellers’ liability could be fulfilled.

At present, the JSW Management Board believes that for JSW to take over the risk in return for it being reflected in the price would be detrimental to JSW. Hence a full security to cover the risk is preferred.

The identified risk for PBSz is very limited by, inter alia, the fact that the primary liability is borne by the perpetrators of the described actions (accused natural persons), and at the present stage there is no information available about PBSz having caused a loss to Katowicki Holding Węglowy S.A. (and consequently of any claim being brought against PBSz).

JSW sees the actions of the mine employees, described in the announcement of the National Prosecutor Office, as highly reprehensible; if those actions are evidenced in a court of law, they would represent a very harmful phenomenon for any mine, and would call for condemnation and bringing the perpetrators to justice.

The potential criminal liability of the mine employees does not automatically predicate on the liability of the business partners. However, potential liability of PBSz’s employees might prove improper performance of the obligations arising from the agreement between the Katowicki Holding Węglowy S.A. and the consortium, of which PBSz was a member. The considerations presented above determine JSW’s stance to the Sellers as regards the additional security.

Question 9: Explain the transaction price for the purchase of the KOPEX (now: Primetech) shares by Famur (assets with a machine part then merged into the Famur Group) in the context of the Company’s planned purchase of PBSz (currently the single significant asset of Primetech). According to the generally available information, the Famur Group paid PLN 204 million for the share stake, which is a price equivalent to the price negotiated by JSW S.A. for 95.01 % of PBSz shares.


According to public knowledge, since 2016 PBSz, as a Primetech S.A. (formerly: KOPEX S.A.) subsidiary, has been controlled by the TDJ Group, which also controls the Famur company. The purchase of a controlling stake in Kopex S.A. (hereinafter: “KOPEX” or “KOPEX Group”) by the TDJ Group in December 2016 was one of the key implementation points of the KOPEX Group’s restructuring package. The value of this transaction (including the acquired Kopex’s debt) was about PLN 860 million. For a stake of 65.83% of KOPEX S.A. shares, TDJ paid PLN 204 million (including the transaction costs), which represents a valuation of 100% of the KOPEX S.A.’s capitals at about PLN 300 million; TDJ also took over KOPEX S.A.’s financial liabilities in the amount of about PLN 620 million and cash in the amount of about PLN 64 million (as at 30 September 2016, i.e. the end of the last reporting period prior to the transaction). As at the transaction date, KOPEX-PBSz was one of a few significant assets of the KOPEX Group, serving as a security for Tranche B of the restructuring financial indebtedness, in the amount of PLN 250 million. The KOPEX-PBSz shares were the only security of tranche B established by the banks consortium.

Noteworthy, the price of the PBSz acquisition by JSW, agreed in the Conditional Commitment Agreement to Sell 95.01% of Shares in PBSz, was a result of almost one-year long negotiations, which started from JSW having presented a conditional binding offer of about PLN 179 million, which was definitely rejected by the Sellers. In the following weeks, JSW instructed KPMG to update the valuation of PBSz, and concurrently continued negotiations with the Sellers’ representatives as well as with the representatives of the banks financing Kopex under the 2016 restructuring agreement, which held security in the form of PBSz shares. During the negotiations, the Seller’s representatives presented price expectations to the tune of PLN 240 million for the acquired stake. As a result, JSW managed to reduce the Sellers’ expectations and on 17 July 2018 a document was signed with the Sellers, setting out the principal terms of the sale transaction of a 95.01% stake in PBSz for the price of PLN 205.3 million (“Term Sheet”). The price was later reduced by PLN 1.3 million, to the amount of PLN 204.0 million, in view of trade union demands regarding a one-off bonus to commemorate the merger with the JSW Group. We wish to emphasize that at a meeting with the Seller’s representatives on 9 November 2018, the JSW Management Board made an attempt to renegotiate the acquisition price agreed in the Term Sheet down to PLN 189 million. The offer was rejected in the letter of 3 December 2018, in which the Seller additionally advised that extending the negotiations process beyond the time limit specified earlier would prevent the transaction from being executed in accordance with the conditions laid down in the on the Term Sheet.

In view of the clarifications presented above, we confirm that the transaction price for the purchase of 4,430,476 shares of PBSz, representing a 95.01% stake in the PBSz share capital, was set based on a comprehensive analysis and valuation of PBSz, ordered by JSW S.A. and performed by the Advisors, as well as JSW S.A.’s negotiations with the Seller.

The acquisition price of a 65.83% stake in KOPEX S.A. (now: PRIMETECH S.A.) by FAMUR S.A., applied in the transaction referred to by the Minister of Energy, was not any kind of reference / benchmark in the process of acquiring PBSz shares by JSW S.A.

Furthermore, in response to the shareholder request for the justification to the resolutions brought to the agenda of the ESM to be elaborated upon, the Company attaches herewith the Resolutions of the Company’s Management Board no. 73/IX/2019 and 84/IX/2019.

Legal basis: § 19 Section 1 Items 2 and 12 of the Regulation issued by the Finance Minister on 29 March 2018 on the Current and Periodic Information Transmitted by Securities Issuers and the Conditions for Recognizing the Information Required by the Regulations of a Non-Member State as Equivalent.

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