Agreement on the sale of shares of Polkomtel

Warsaw, 30.06.2011 - Polski Koncern Naftowy ORLEN S.A. (“PKN ORLEN”), Polska Grupa Energetyczna S.A. (“PGE”), KGHM Polska Miedź S.A. (“KGHM”), and Węglokoks S.A. (“Węglokoks”) announce that, together with Vodafone Americas Inc. and Vodafone International Holdings B.V. (together „Vodafone”), they agreed to sell their respective shareholdings in Polkomtel S.A., a leading telecommunications operator in Poland, in accordance with a preliminary agreement for the sale of 100% of shares in Polkomtel S.A. (the “Agreement”), which PKN ORLEN, PGE, KGHM, Węglokoks (together “Polish Shareholders”) and Vodafone as the sellers (“Sellers”), and Spartan Capital Holdings Sp. z o.o. (“Spartan Capital”), the special purpose vehicle controlled by Mr. Zygmunt Solorz-Żak, as the purchaser (“Purchaser”) agreed to enter into and signed on 30 June 2011. Until the Agreement is consummated, Polkomtel S.A. will remain jointly owned by PKN (24.39%-equity stake), KGHM (24.39%), PGE (21.85%), Węglokoks (4.98%) and Vodafone (24.39%).

The total consideration is payable in cash and implies an enterprise value of approximately PLN 18.1 billion, which represents a multiple of 6.4x EBITDA for the year ended 31 December 2010. After deductions attributable to debt of Polkomtel and dividend payable for the benefit of the selling shareholders, the net proceeds amount to PLN 15.1 billion. The above mentioned dividend will be payable by 31st July in the amount of PLN 1.0 billion.

In relation to the Agreement, PKO Bank Polski SA is acting as settlement agent and security bank.

The transaction is subject to approval by the Polish Office of Competition and Consumer Protection which, based on the Agreement, must be obtained till the end of year 2011, otherwise the Agreement will be ceased unless parties agree differently. Following the completion of the transaction and the acquisition by Spartan Capital of 100% of shares in Polkomtel S.A., PKN ORLEN, PGE, KGHM, Vodafone and Węglokoks will no longer hold any shares in Polkomtel S.A.

Commenting on the signing of the agreement, Jacek Krawiec, CEO of PKN ORLEN, said: “This transaction was long-awaited and is a big success which would not be possible without an exceptionally good cooperation between all shareholders of Polkomtel. It is in full accordance with PKN ORLEN’s strategy which focuses on debt reduction and building a strong multi-utility concern by investing in upstream and electricity generation sector. The achieved price is in line with our expectations”.

Commenting on the transaction, Tomasz Zadroga, CEO of PGE said: “Thanks to impeccable cooperation and determination of the shareholders the entire sale process was carried out efficiently and resulted in obtaining a very favourable transaction conditions. The Company has gained an investor, who will help the Company realise its full potential and enable the Company to act effectively in the highly competitive environment." 
Commenting on the transaction, Herbert Wirth, CEO of KGHM said: “We are pleased with the professional and transparent sales process conducted in accordance with the standards expected of a transaction of this scale. In accordance with KGHM strategy, funds raised from the sale of shares in Polkomtel will increase the volume of investment in the exploitation of mineral deposits, in metallurgy and in the energy sector."

Commenting on the transaction, Jerzy Podsiadło, CEO and General Director of Węglokoks said: “Thanks to close and very good cooperation of all shareholders the transaction was successful, both for the Sellers and the Company. I am convinced that thanks to the prominent strategic investor, Polkomtel will maintain its position in the highly competitive market. Also, from the perspective of the company that I manage, this transaction is good. It will enable us to faster realise our strategic objectives, including those in the mining industry and in development of innovative environmentally-friendly coal technologies.”

Advisors 
Sellers were advised by ING, Nomura, Rothschild and Goldman Sachs as financial advisers and by Allen & Overy, Clifford Chance, Gide Loyrette Nouel and K&L Gates as legal advisors.