54/2019 – Subscription and offering of series B ordinary bearer shares and series C ordinary registered shares and conclusion by the Company of an agreement on the placement of series B shares and series C shares

With reference to the current report no. 48/2019, the Management Board of Trakcja PRKiI S.A. (“Company“) containing information on the resolutions adopted by the Extraordinary General Meeting of the Company of 27 September 2019, including Resolution No. 5 on increasing the Company’s share capital through the issue of series B ordinary bearer shares and series C ordinary registered shares through private subscription, excluding in full the pre-emptive rights of the existing shareholders, dematerialization and applying for admission and introduction to trading on the regulated market operated by Giełda Papierów Wartościowych w Warszawie S.A. of the rights to series B shares, series B shares, series C shares and amendments to the Articles of Association (“Resolution on the Share Capital Increase“), the Management Board hereby announces that on 4 October 2019 the Company and mBank S.A. concluded an agreement on the placement of New Issue Shares (as defined below). (“mBank“) (“Placement Agreement“) and to commence the offering of 10,279,909 (ten million, two hundred and seventy-nine thousand, nine hundred and nine) of ordinary series B bearer shares with a nominal value of PLN 0.80 (eighty groszy) per share (“Series B Shares“), and not less than 13,014,209 (thirteen million, fourteen thousand, two hundred and nine) but not more than 25,014.209 (in words: twenty-five million, fourteen thousand, two hundred and nine) Series C ordinary registered shares with a nominal value of PLN 0.80 (in words: eighty groszy) each (“Series C Shares“) (Series B Shares and Series C Shares shall be jointly referenced to as “New Issue Shares“) in the form of a private subscription within the meaning of Article 431 § 2 (1) of the Commercial Companies Code, excluding the pre-emptive right of the existing shareholders of the Company addressed to no more than 149 selected investors (“Offering“)

The Offering, which will be launched immediately after the publication of this current report, will be conducted by way of book-building for New Issue Shares pursuant to the rules set forth in the Share Capital Increase Resolution and the Placement Agreement.

In accordance with the Share Capital Increase Resolution, the Offering will be addressed to selected investors, including, on a pre-emptive basis, the so-called Eligible Shareholders specified in the Share Capital Increase Resolution, which will enjoy priority to acquire New Issue Shares on the terms specified in the said Resolution. Furthermore, the Management Board shall at the same time offer the New Shares to a key investor in accordance with the criteria established by the Management Board and approved by the Supervisory Board (“Eligible Investor“). If the initial allotment of Series B Shares and Series C Shares results in the remaining Series B Shares or Series C Shares not being taken up by the Eligible Shareholders or the Eligible Investor, the Company’s Management Board shall be entitled to offer the New Shares not taken up by the Eligible Shareholders or the Eligible Investor to other investors, which shall be selected by the Management Board as per the criteria determined at the discretion of the Management Board and approved by the Supervisory Board.

For the purposes of the Offering and admission of the Series B Shares and if the regulatory requirements for such admission and introduction of Series B Shares are met, rights to Series B Shares to trading on the regulated market of the Warsaw Stock Exchange, no prospectus or information memorandum must be made available to the public by the Company. At the same time, Series C Shares shall be subject to application for admission to trading on the regulated market run by the GPW, after previous conversion of Series C Shares into bearer shares, and, if required by mandatory legal provisions, after previous approval and publishing the prospectus, which will be developed and submitted for approval by the Polish Financial Supervision Authority.

The Management Board of the Company, subject to the prior consent of the Supervisory Board of the Company, will be authorized to determine the final terms of the offer to take up Series B Shares and Series C Shares, with the reservation that the issue price has been determined in the Resolution on the Share Capital Increase and shall stand at PLN 1.70 (in words: one zloty and seventy grosz) for one New Issue Share. The final number of New Issue Shares to be offered for subscription shall be determined by the Company’s Management Board following the process of book-building for New Issue Shares, which is expected to be completed on 7 October 2019. It is anticipated that the New Issue Shares acquisition agreements will be concluded by 9 October 2019.

Under the terms of the Agreement, mBank undertook to render, with due diligence stemming from the professional nature of its business and services to the Company, services necessary to arrange for and conduct the Offering and to place the New Issue Shares among investors under the terms of the Placement Agreement. The Agreement contains customary conditions precedent and conditions for termination. Pursuant to the Placement Agreement, mBank shall be entitled to terminate the Agreement in the cases specified therein, including in particular when any of the Company’s representations or warranties made in the Placement Agreement prove to be inconsistent with the actual or legal situation or when the situation on the financial markets changes significantly, adversely affecting the ability to conduct the Offering. The Placement Agreement does not constitute an obligation of mBank to purchase or sell any financial instruments and does not guarantee the successful preparation or performance of the introduction of the Company’s financial instruments to an organised trading system, the performance of the Offering or the placement of any part of the Company’s other financial instruments. In particular, the Placement Agreement does not constitute a guarantee for the sale of New Issue Shares or rights to Series B Shares, nor does it constitute an obligation on the part of mBank to underwrite (on an underwriting basis or any other basis) subscription orders from investors for the New Issue Shares.

The Agreement also contains representations and warranties regarding the Company, its capital group and their operations, to the extent typically submitted by issuers of securities in agreements of this type concluded in transactions similar to the Offering.

In the Placement Agreement, the Company undertook to indemnify mBank against any liability and the obligation to provide compensation for specific claims, liabilities or costs that may be claimed against or incurred by mBank or certain persons in respect of the Offering (the so-called indemnification clause).

The Agreement contains the Company’s commitment – customary in the offers similar to the Offering – to limit the transferability of the Company’s shares. In particular, the Company agreed that for a period of 360 days from the date of allocation of the New Issue Shares, neither the Company nor any of its Management Board members, acting for and on behalf of the Company, will not without the prior consent of the Offeror: a) directly or indirectly offer or issue, purchase, pledge, sell, enter into sale agreements, grant options or enter into agreements to sell options, rights, warrants or purchase agreements, exercise put, call or other options or sale agreements, lend or otherwise transfer or dispose of any shares of the Company or any other convertible, exchangeable or other securities incorporating other rights to purchase shares of the Company; (b) enter into any swap agreements or other agreements or transactions which transfer, in whole or in part, directly or indirectly, the economic consequences of holding any Company shares, regardless of whether any such transaction described in (a) above is to be settled through the issue of Company shares or other securities, in cash or otherwise, or (c) publicly announce any intention which will result in any of the above, subject to the exceptions provided for in the Placement Agreement.

Legal basis:

Article 17(1) of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (the Market Abuse Regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC.

Disclaimer: This current report has been made in accordance with the requirements of Article 17(1) of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC. This current report is for information purposes only and the purpose of its publication by the Company is solely to provide information on the commencement of private placement of series B ordinary bearer shares and series C ordinary registered shares of the Company and the conclusion of the Placement Agreement by and between the Company and mBank S.A. This current report is not intended in any way, directly or indirectly, to promote the subscription of new shares and is not a promotional material prepared or published by the Company for the purpose of promoting or encouraging, directly or indirectly, the subscription of new shares or new issue shares. This material, or any portion thereof, is not for distribution, directly or indirectly, in or into the territory of the United States of America or other countries in which the public dissemination of information for the benefit of the public is prohibited.