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CR#73_2014 Definitive settlement of disputes between Orange Polska Group and Netia Group

 

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 (restated and amended Journal of Laws of 2013, item 1382), the Management Board of OrangePolska S.A. informs about the signing today of an out-of-court settlement agreement between Orange Polska S.A. (“Orange Polska”), acting in its own name and to the benefit of its subsidiaries (together with Orange Polska, the “Orange Polska Group Companies”), on one side, and Netia S.A. (“Netia”) and its subsidiaries, Telefonia Dialog sp. z o.o., Petrotel sp. z o.o., Internetia sp. z o.o., Netia 2 sp. z o.o., and Netia Brand Management sp. z o.o. (together with Netia, the “Netia Group Companies”), on the other (the “Settlement Agreement”).

 

Definitive settlement of disputes between Orange Polska Group and Netia Group

 

The Settlement Agreement definitively settles claims of the Netia Group Companies against the Orange Polska Group Companies as well as claims of the Orange Polska Group Companies against the Netia Group Companies. Under the Settlement Agreement, the Netia Group Companies and the Orange Polska Group Companies:

  • waived mutual monetary and certain other claims resulting from contractual relationships, other arrangements (including ones resulting from decisions issued by the President of the Office of Electronic Communications) and other non-contractual relationships, whether resulting from or connected with telecommunications or other activities; and

  • waived the claims which have been brought against each other before the relevant courts and undertook to take actions aimed at the discontinuation of the relevant court proceedings.

 

As a result of mutual concessions, the parties to the Settlement Agreement have agreed to settle their mutual claims by way of Orange Polska paying to Netia PLN 145,000,000 net. This amount was paid on the date of the signing of the Settlement Agreement. Under the Settlement Agreement Orange Polskawill, under defined circumstances, pay to Netia an additional amount: such amount will be paid if the fine imposed by the European Commission on Orange Polska in Case No. COMP/39.525 (EUR 127,554,194) is decreased to an amount below EUR 112,000,000 or the decision issued by the European Commission in the above-mentioned case is annulled in its entirety or in the part relating to the imposition of the fine. The additional amount will be equal to either (i) 45% of the difference between EUR 112,000,000 and the final amount of the fine imposed on Orange Polska or (ii) EUR 50,400,000 if the fine is annulled in its entirety.

 

The Settlement Agreement is governed by Polish law.

 

The above-mentioned settlement was provided for in the full amount in Orange Polska’s financial statements as of the 30th September 2014, appropriate provisions having been made in prior periods. Therefore it will have no impact on Orange Polska’s EBITDA going forward. The dispute with Netia was described in the notes to the 2012 and 2013 financial statements, as a part of the note relating to “Proceedings by the European Commission related to broadband access”. Orange Polska has also in prior periods fully provided for the fine from the European Commission.

 

Cash outflow related to the Settlement Agreement constitutes 3.7% of annual restated EBITDA and will not impact the strength of Orange Polska’s balance sheet. Orange Polska’s outlook and guidance for 2014 will not be affected, as it was given excluding any impact of claims and litigation.

 

 

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