Budimex.pl

Current report no 21 / 2020

Date: March 23, 2020 3:12 PM

Establishment of cooperation in the construction of a thermal waste treatment plant at the CIECH Soda Polska S.A. facility in Janikowo

The Management Board of Budimex S.A. (“Issuer” or “Budimex”) announces that on 23 March 2020 Budimex S.A. and FBSerwis S.A. (a wholly-owned subsidiary of Budimex S.A.) (“FBSerwis”) concluded a letter of intent with CIECH S.A., CIECH Soda Polska S.A., EEW Energy from Waste GmbH (“EEW”), EEW Energy from Waste Polska sp. z o.o. (“EEW Polska”) and Janikowo municipality regarding the establishment of cooperation in the implementation of a project consisting in the construction of a thermal waste treatment plant by EEW, EEW Polska and FBSerwis on the real property owned by CIECH Soda Polska S.A. (hereinafter referred to as: “Letter of Intent”, “Project”, “Plant”, respectively).

 

The purpose of signing the Letter of Intent is to regulate the principles of cooperation between the Parties in connection with the preparation and implementation of the Project, including: cooperation in obtaining a decision on environmental conditions, a building permit, an integrated permit or an authorisation to process waste in the Plant. The expected date of obtaining all necessary permits is 2023. The earliest expected date of commissioning of the Plant is the end of 2025. Apart from obligating the Parties to act in good faith and loyally cooperate with one another in order to implement the Project, the Letter creates no further obligations between the Parties. The implementation of the Project depends on the fulfillment of numerous uncertain conditions, including obtaining all the abovementioned authorisations and permits.

 

In accordance with the Letter of Intent, if by 1 February 2021 the Plant is not included in the list (i.e. “Ministerial list of Plants”) published by the Minister competent for climate affairs in the form of a regulation, the Letter of Intent will automatically expire on that date.

 

According to the arrangements, the Project is going to be managed and financed entirely by a special purpose vehicle appointed by EEW or EEW Polska, with the potential capital participation of FBSerwis. The Plant will be powered by calorific waste from FBSerwis and the FBSerwis Group companies, delivered on the basis of a long-term contract for the supply of fuel-waste for the plant. The planned capacity of the thermal waste treatment plant is 280,000 tonnes of waste per year.

 

Budimex agreed to support FBSerwis in the project with its human, technical and financial resources. At the same time, due to its long-term and extensive experience in the implementation of large industrial projects, should the conditions enabling the Project implementation be met, Budimex in the Letter of Intent expressed its interest in implementing the Project as a general contractor.

 

Budimex assumes that, should all the conditions enabling the Project implementation be met, FBSerwis’ involvement in the Project, in particular thanks to the conclusion of a long-term waste supply agreement, will have a positive impact on the consolidated financial performance of FBSerwis and the Budimex Group, by ensuring continuous collection (at a fixed price) of calorific fraction of waste from the municipal systems operated by the FBSerwis Group companies (indirect subsidiaries of the Issuer), thereby reducing the cost of management of the high-calorific fraction.

 

Also, on 23 March 2020, a Memorandum of Understanding (“MOU”) was signed between CIECH S.A., CIECH Soda Polska S.A., EEW, EEW Polska and FBSerwis. Under the MOU, the parties internally agreed further details of the cooperation, including the signature of a Project implementation agreement, an agreement on CIECH Soda Polska S.A.’s making the real property available for the construction of the Plant, an agreement for the supply of heat to the Subsidiary’s facility in Janikowo, a long-term contract for the supply of waste.

 

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