Current report no.27/2016 (26.07.2016)
Title:
Conclusion of a material agreement by the Issuer’s subsidiary - Bioenergia Invest S.A
Legal basis:
Art. 17 sec. 1 Market Abuse Regulation
Message:
The Management Board of the Issuer informs that on the 26th July 2016 the Issuer was informed that its subsidiary Bioenergia Invest S.A. with the seat in Warsaw (Supplier) concluded on the 25th July 2016 with the company Tergo Power Lublin sp. z o.o. with the seat in Lublin (Buyer) an agreement of sales of biomass from agriculture.
The Issuer informed about the framework agreement on biomass sale concluded by Bioenergia Invest S.A. with the company Tergo Power Lublin sp. z o.o. on the 12th February 2016 in the current report no. 9/2016.
The concluded agreement on biomass sales will be effective during 15 contractual periods, each period starting on 1 September of the year of validity of the agreement and ending on 31 August of the following calendar year, except for the first contractual period which will start on the date of the first supply and will end on 31 August before the another contractual period. The date of the first supply will be set by the Buyer 18 months before the first delivery.
The estimated value of biomass from agriculture sold by Bioenergia Invest S.A. in the form of straw cubes will amount up to 54.000.000 PLN in each of the first 5 contractual periods and up to 65.772.000 PLN in each of the following 5 contractual periods. The value of the agreement in the last 5 contractual periods will be based on the unit price agreed in a separate between the Supplier and Buyer, in accordance with the market purchase price of biomass and the Supplier’s margin.
The agreement enters into force on the date of its conclusion, but its execution is reserved under a suspending clause that the power plant of 50 MW, which the Buyer is going to build, will be able to operate. The above-mentioned requirement will be considered to be fulfilled if the following conditions will be jointly met by the end of 2020:
a. the financing institution confirms financing for the power plant - this condition will be met when the first entry to the site log of the power plant is made;
b. all legal requirements concerning start of operation of the power plant are met, which means that: the environmental decision is final; the construction permit is final; the occupancy permit is final; the agreement for connection to the transmission network is concluded;
c. the power plant is granted the public aid through the auctioning system, according to the Act on renewable sources of energy of 20 February 2015 (Journal of Laws of 2015, item 478, as amended) or – in case of change of the act currently in force – through equivalent means introduced on the basis of new laws.
The Parties agreed the quality parameters of the supplied biomass and the price formula for the sold biomass, as well as the maximum unit price binding for 10 contractual periods of validity of the agreement. The price of biomass in consecutive years will be agreed on the basis of separate written arrangements of the Parties.
According to the agreement provisions, the Buyer warrants the Supplier the exclusivity for biomass supplies within a 130 km radius from the power plant. The Supplier guaranteed the Buyer the exclusivity within 240 km radius from the power plant. The Parties agreed that the Buyer can not take over any of Supplier’s subcontractors or suppliers and can not take any actions aiming at their takeover.
Besides, the Parties agreed mutual contractual penalties for non-performance or undue performance of the agreement.
The possible contractual penalties of the Supplier are:
- 5% of the value of non supplied biomass in case of delay in supply of more than 4.000 tonnes in a decade and 10% % of the value in case of failure to make up such delays in supply in two subsequent decades,
- up to 75.000 PLN in total in the contractual period of contractual penalties for titles other than delays in supply of biomass,
- 1 % of the value of the anuual supply in case of lack of supplies causing a stoppage of operation of energy boilers of the power plant.
The possible contractual penalties of the Buyer are:
- 5% of the value of non collected biomass in case of delay in collection of more than 4.000 tonnes in a decade and 10% % of the value in case of failure to make up such delays in collection in two subsequent decades,
- up to 75.000 PLN in total in the contractual period of contractual penalties for titles other than delays in collection of biomass,
- 1 % of the value of non collected biomass in case of exceeding 25.000 tonnes in the contractual period.
The Parties agreed that the liabilities of each party for non-performance or undue performance of the agreement up to the amount 108.000.000 PLN shall be guaranteed not earlier than one month and not later than 6 months from the date on which the Buyer will win an auction for supply of energy from source of renewable energy.
Other provisions of the concluded agreement do not differ from the standard terms commonly used in this kind of agreements.
According to the Individual Reporting Standard of URSUS S.A., adopted by the issuer with reference to the reporting obligations resulting from the Market Abuse Regulation, the above-mentioned agreement is considered to be material due to the fact that its estimated value at the date of its conclusion exceeds 10% of the equity of the Issuer’s Capital Group presented in the last published by the Issuer consolidated financial statement of the Capital Group URSUS.
