Budimex.pl

Current report no 23 / 2021

Date: March 26, 2021 7:45 PM

Prolongation 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. (“Budimex”), with reference to current report No 21/2020 of 23 March 2020, announces that on 26 March 2021 Budimex and FBSerwis S.A. (a wholly-owned subsidiary of Budimex) (“FBSerwis”) concluded the Second 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: “Second Letter of Intent”, “Project”, “Plant”, respectively).

 

Due to changing legal circumstances (hereinafter referred to as: “Legal Circumstances”), including but not limited to:

 

1. the judgment of the Court of Justice of the European Union (CJEU) (Case T-699/17), in which the CJEU annulled Commission Implementing Decision (EU) 2017/1442 of 31 July 2017 establishing best available techniques (BAT) conclusions, under Directive 2010/75/EU of the European Parliament and of the Council, which may affect the Project and the Plant, and

2. the lack of requirement to include the Plant on the list to be published by the Minister for Climate and Environment,

 

The Parties have decided to continue their cooperation on the basis of the newly signed Second Letter of Intent after the expiry of the First Letter of Intent on 1 February 2021.

 

The purpose of the Second Letter of Intent is the assessment of profitability and feasibility, preparation of the conditions for a decision on the engagement in the Project and construction of the Plant, as well as regulation of 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.  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 of the abovementioned authorisations and permits.

 

According to the arrangements, the Project is going to be managed and financed entirely by a special purpose vehicle (hereinafter referred to as: SPV) 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 has 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.

 

In view of the current schedule for the Project implementation, the expected date of obtaining all the permits required for the Project implementation is the fourth quarter of 2023. The expected start-up of the system is planned for mid 2026.

 

The Second Letter of Intent is binding upon the Parties until 10 December 2023, provided, however, that a real property lease agreement (hereinafter referred to as: “Lease Agreement”) is concluded between CIECH Soda Polska S.A. and the SPV by 10 September 2021. If the Lease Agreement is not concluded within this period, the Second Letter of Intent shall expire on 10 September 2021.

 

Also, on 26 March 2021, the Second Memorandum of Understanding (“MOU”) was concluded by and between CIECH S.A., CIECH Soda Polska S.A., EEW, EEW Polska and FBSerwis. The First MoU, which was referred to in the above-mentioned current report No 21/2020 of 23 March 2020, expired on 1 February 2021. Similarly, as in the case of the Second Letter of Intent, due to changing Legal Circumstances, the Parties have decided to continue their cooperation on the basis of the newly signed Second MoU after the expiry of the First MoU, and the purpose of the Second MoU is the assessment of profitability and feasibility, as well as preparation of the conditions for a decision on the engagement in the Project and construction of the Plant. The Second MoU is binding upon the Parties until 10 December 2023, provided, however, that the Lease Agreement is concluded by 10 September 2021. If the Lease Agreement is not concluded within this period, the Second MoU shall expire on 10 September 2021.

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