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5/2012 Definitive settlement in the TP S.A. vs. DPTG dispute - Orange Polska

Pursuant to art. 56, clause 1, item 1 of the Law of July 29, 2005 on public offering and the conditions for introducing financial instruments to the organised trading system and on public companies (Journal of Laws of 2005, No. 184, item 1539 with amendments), the Management Board of Telekomunikacja Polska S.A. (“TP S.A”, the “Company”) informs about signing a settlement in Telekomunikacja Polska S.A vs. Danish Polish Telecommunications Group (“DPTG”) dispute.

Compromise brings a definitive settlement in the TP S.A. vs. DPTG proceedings, totalling €550mn for the entire dispute

The settlement should not have any impact on TP S.A.’s dividend and targeted benefits of its medium term action plan, as disclosed on February 23, 2010

January 12, 2012: acting in the best interest of the Company and its shareholders, on 12 January 2012 TP S.A.’s Management Board signed a settlement in the TP S.A. vs. DPTG dispute (described in TP S.A.’s financial statements and current reports). This compromise ends a dispute lasting from 2001 in relation to a contract signed in 1991.

According to the settlement, TP S.A. will pay DPTG a total of €550mn (approx. PLN 2,455mn) and  DPTG will without any delay withdraw all its claims with regards to this long lasting dispute, including enforcement procedures regarding €396mn awarded by the Arbitration Tribunal in Vienna (Austria) for Phase 1 of the dispute, its approx. €320mn claim (including interest) submitted to the Arbitration Tribunal for Phase 2, as well as any other claims, damages or legal fees with relation to the legal actions taken by any of the sides. The amount will be transferred to DPTG in two payments; €275mn (approx. PLN 1,228mn) will be paid no later than January 13, 2012 and the remaining €275mn (approx. PLN 1,228mn) will be transferred as soon as DPTG withdraws all its motions in the ongoing enforcement proceedings.

The above-mentioned settlement will not materially impact TP S.A.’s EBITDA for 2011, as in the past the Company has made a risk provision for the dispute, totalling €542mn (approx. PLN 2.4bn); therefore only the PLN 36mn difference will be included in EBITDA for 2011. TP S.A.’s balance sheet will remain solid, as including this cash outflow, its pro-forma net gearing after hedging ratio will remain below 25% at the end of 2011.

The final settlement of this long lasting dispute should not have any impact on TP S.A.’s dividend and targeted benefits of the medium term action plan, as disclosed on February 23, 2010. TP Group’s 2011 outlook and guidance realisation will not be affected, as it was given excluding any impact of claims and litigation.



 

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