64. Events after the balance sheet date

After the balance sheet date, on 16 February 2023, the Company concluded the working capital loan agreement with Bank Gospodarstwa Krajowego in a revolving credit line for the amount of PLN 750 million with a repayment date of 30 September 2023. On 24 February 2023, the Company drew all available financing.

After the balance sheet date, on 11 January 2023, the subsidiary, TAURON Wytwarzanie S.A. decided to send to the members of the consortium consisting of: RAFAKO S.A. and Mostostal Warszawa S.A. and the subcontractor, E003B7 Sp. z o.o. (a subsidiary of RAFAKO S.A.) (jointly referred to as: “the Contractor”) the summons for contractual penalties and damages (“the Summons“), resulting from the performance of the contract for the construction of a 910 MW power unit in Jaworzno. The decision of TAURON Wytwarzanie S.A. – in accordance with its powers under the contract – to issue the Summons resulted from the failure to obtain or confirm the contractual technical parameters, the occurrence of an objective delay on the part of the Contractor in the performance of the contract, the occurrence of the damage on the part of TAURON Wytwarzanie S.A. as a result of failure to achieve the availability parameter and identified and non-remedied physical defects in the subject of the contract. The Summons were accompanied by the note issued for the total amount of PLN 1 312 million, as the total amount of penalties and damages.

On 13 January 2023, TAURON Wytwarzanie S.A. and the Company received summons for payment from RAFAKO S.A. (“Summons for Payment”). The subject of the Summons for Payment addressed to TAURON Wytwarzanie S.A. are the claims for payment of the total amount of PLN 606 million under the titles listed in the Summons for Payment. At the same time, RAFAKO S.A indicated that in the event of the failure of the investor process concerning the acquisition of an investor for RAFAKO S.A, for reasons attributable, in RAFAKO S.A’s opinion, to TAURON Wytwarzanie S.A., RAFAKO S.A. would claim an amount of compensation not lower than PLN 300 million. Moreover, RAFAKO S.A. reserved that if RAFAKO S.A.’s contractors and business partners – as a result of an act or omission by TAURON Wytwarzanie S.A. – file claims for contractual penalties or damages against RAFAKO S.A, RAFAKO S.A would file claims for damages/recourse against TAURON Wytwarzanie S.A. in an amount not lower than PLN 483 million. The subject of the Summons addressed to the Company are the claims for payment of the total amount of PLN 251 million under the titles listed in the Summons for Payment. At the same time, RAFAKO S.A. indicated that it would seek damages from the Company in the amount of no less than PLN 483 million resulting from potential penalties and damages claimed by entities for which contracts are performed or which are business partners of RAFAKO S.A. This amount may increase due to further claims of the parties to the agreements, related to breaking of the agreements and delays in their implementation. RAFAKO S.A further stipulated, in the event of the failure of the investor process concerning the acquisition of an investor for RAFAKO S.A. due to reasons lying – in the opinion of RAFAKO S.A. – on the part of TAURON Wytwarzanie S.A., RAFAKO S.A will claim damages in the amount of not less than PLN 300 million. The preliminary analysis of the Summons for Payment carried out by the Company and TAURON Wytwarzanie S.A. indicated that they were unfounded.

On 7 February 2023, an agreement was concluded between TAURON Wytwarzanie S.A and the Contractor. The agreement established the terms of cooperation for the period up to 8 March 2023 and was concluded in order to ensure a constructive mediation process before the Court of Arbitration at the Office of Attorney General of the Republic of Poland, aimed at working out a solution to the disputes arising from the implementation of the contract for the construction of the 910 MW unit. According to the agreement, the parties declared their intention to continue mediating in good faith, with the intention of amicably settling the claims covered by the summons and notes on each side. The parties strive to reach a settlement agreement under which they would decide on the method of completion of the contract and performance of mutual settlements on this account. The parties agreed that completion of the contract would take place within 5 days of the verification and joint assessment of the guaranteed technical parameters A and B under the terms of the settlement agreement, but no later than 31 December 2023 and that the Contractor’s liability under the contract would be limited to the amount set in the settlement agreement. On 7 March 2023, the parties signed an annex amending the agreement by extending the maturity date of their mutual claims to 22 March 2023. The extension of the deadline was performed without the waiver of claims.

On 20 March 2023, TAURON Wytwarzanie S.A., RAFAKO S.A., Mostostal Warszawa S.A. and E003B7 sp. z o.o.  signed the assumptions of the settlement agreement (the “Settlement”) under which they would decide on the method of completion of the contract for the construction of the 910 MW unit in Jaworzno and performance of mutual settlements on this account.

In accordance with the most significant findings:

• subject to RAFAKO S.A. reaching an agreement with the guarantors, TAURON Wytwarzanie S.A. will limit its claims against RAFAKO S.A., Mostostal Warszawa S.A. and E003B7 sp. z o.o. to the amount of PLN 240 million and this amount will be satisfied by drawing on the performance bond granted request of E003B7 sp. z o.o. and will be paid by the guarantors;
• in the framework of exercising of RAFAKO S.A.’s claims against TAURON Wytwarzanie S.A., TAURON Wytwarzanie S.A. will pay RAFAKO S.A and E003B7 sp. z o.o. the total amount of PLN 65 million under the titles set forth in the assumptions of the Settlement;
• on the day of entry into force of the Settlement, TAURON Wytwarzanie S.A. will discharge RAFAKO S.A., Mostostal Warszawa S.A. and E003B7 sp. z o.o. from their obligations resulting from technical guarantees, the parties will terminate the contract for construction of the 910 MW unit extinguishing the liabilities arising from the contract and will mutually waive all claims against above those subject to the Settlement,
• on the date of signing of these assumptions to the Settlement Agreement, RAFAKO S.A. and Mostostal Warszawa S.A. will submit and deliver to TAURON Wytwarzanie S.A. a statement on extending, until 28 April 2023, the deadline for issuing and delivering the payment guarantee requested by RAFAKO S.A. from TAURON Wytwarzanie S.A. and on 21 March 2023 the parties will conclude another annex to the agreement concluded between them on 7 February 2023, pursuant to which the deadlines for standstill arrangements will be extended to 28 April 2023.

In addition, the parties agreed that they would unanimously seek approval of the settlement agreement from the common court. The conditions precedent to the entry into force of the Settlement Agreement include: obtaining corporate approvals by TAURON Wytwarzanie S.A., RAFAKO S.A. and Mostostal Warszawa S.A. by 20 April 2023; and conclusion by RAFAKO S.A. of an agreement with the guarantors on the immediate payment of PLN 240 million to TAURON Wytwarzanie S.A. by 24 April 2023, adoption by the general meeting of RAFAKO S.A. by 24 April 2023 a resolution to increase the company’s share capital by the amount indicated in the notice convening the general meeting, submission by MS Galleon Gmbh, by 24 April 2023, of a declaration of further interest in continuing the investor process of RAFAKO S.A., and conclusion by RAFAKO S.A., by 24 April 2023, of a settlement with Ignitis Grupė AB or its subsidiary entity/s regarding the Vilnius project.

On 21 March 2023, the parties signed Annex No 2 to the agreement. Under the Annex concluded, the parties agreed to extend:

• to 24 April 2023, the due date of the claim of TAURON Wytwarzanie S.A. against the Contractor in the amount of PLN 550 million (the total amount of the performance bond in respect of the performance of the contract for the construction of the unit with the capacity of 910 MW in Jaworzno) and the obligation of TAURON Wytwarzanie S.A. to refrain from asserting any claims against the Contractor arising from or in connection with the performance of the contract in respect of the above amount;
• until 28 April 2023: the maturity date of RAFAKO S.A.’s claim against the Company and RAFAKO S.A.’s claim against TAURON Wytwarzanie S.A. referred to above, the obligation of TAURON Wytwarzanie S.A. to refrain from asserting any claims against the Contractor arising from or in connection with the performance of the contract in the scope of the amount of PLN 763 million, as well as the obligation of the parties to refrain from asserting against each other and the financing institutions any pecuniary and non-pecuniary claims, including requests/calls for payment and non-pecuniary claims, and to refrain from submitting motions, notices and claims to judicial and administrative authorities.

The Annex shall enter into force on the condition precedent that the Contractor delivers to TAURON Wytwarzanie S.A. by 23 March 2023 annexes to the guarantees extending the validity of these guarantees until at least 28 April 2023. The annexes signed by the guarantors to all the guarantees issued under the contract, constituting the contract performance security instruments, extending the guarantee validity period until 30 April 2023, have been delivered. Thus, the condition precedent of the annex was met, which means that the provisions of the annex entered into force.

Katowice, 28 March 2023

Paweł Szczeszek – President of the Management Board

Patryk Demski – Vice President of the Management Board

Bogusław Rybacki – Vice President of the Management Board

Krzysztof Surma – Vice President of the Management Board,

Tomasz Szczegielniak – Vice President of the Management Board

Artur Warzocha – Vice President of the Management Board

Oliwia Tokarczyk – Executive Director for Accounting and Taxes