Report 2/2023 - Update on the Jaworzno project - receipt of a payment notice from TAURON Wytwarzanie S.A.
The Mostostal Warszawa S.A. Management Board (the "Company") announces that today it has acknowledged that on 11 January 2023 the Company received from TAURON Wytwarzanie S.A. with its registered office in Jaworzno ("Tauron"), addressed to the Company and RAFAKO S.A. with its registered office in Raciborz ("Rafako") and E003B7 sp. z o.o. with its registered office in Racibórz ("E003B7"), payment notice of contractual penalties and damages ("Summons") for the total amount of PLN 1,312,440,218.91 (one billion three hundred and twelve million four hundred and forty thousand two hundred and eighteen zlotys and 91/100), within 30 days of the delivery date of the Summons. The Management Board of the Company indicates that it received information on receipt of the Tender Offer on 12 January 2023.
The Summons indicates that it includes, according to Tauron's claims:
1. contractual penalties from Contract No. 2013/0928/Ri for "Construction of new capacities in coal technologies at TAURON Wytwarzanie S.A. - Construction of a power unit with a capacity of 910 MW for supercritical parameters in Jaworzno III Power Plant - Power Plant II – with the scope of: steam boiler, turbine set, main building, electrical and Control and Measurement Instruments and Automation part of the block" ("Contract" and the block subject to the Contract "Block") in the total amount of PLN 1,136,920,336.41 (one billion one hundred and thirty-six million nine hundred and twenty thousand three hundred and thirty-six zlotys and 41/100), which would include, according to Tauron's claims:
i. contractual penalties in the total amount of PLN 682,152. 201.85 PLN (six hundred and eighty-two million one hundred and fifty-two thousand two hundred and one zloty and 85/100), on the basis of the provisions of the Contract concerning: a) delay in meeting the deadline for commencing the removal of defects or the deadline for removing defects within the guarantee period, b) delay in signing the Protocol of Completion of the Transition Period due to failure to meet the Guaranteed Technical Parameters of Group A (as defined in the Contract), and c) delay in signing the protocol of completion of the stage of Contract completion defined as "Performance of acceptance tests of PSE Group II Part 3";
ii. contractual penalties in the amount of PLN 469,411,684.43 (four hundred sixty nine million four hundred eleven thousand six hundred eighty four zlotys and 43/100), on the basis of the provisions of the Contract concerning the failure of the Unit to operate in excess of the amount resulting from the guaranteed availability of the Unit (as defined in the Contract);
2. damages in the total amount of PLN 175,519,882.50 (one hundred and seventy-five million, five hundred and nineteen thousand, eight hundred and eighty-two Polish zlotys and 50/100), which, according to Tauron's statements, would include: a) damages for the damage incurred due to the existence of physical defects (PLN 7,845. 420.00 PLN), b) compensation for non-remediation of non-limiting defects described in the Report of Acceptance of the Block for Operation (7,116,000.00 PLN), c) compensation for costs of substitute performance in the scope of repair of defects of the boiler hopper and mills (558,462.50 PLN), d) compensation for design and execution errors of the subject of the Contract (160,000,000.00 PLN).
The Company announces the following in connection with the receipt of the Tender Offer:
1. the Company is a passive member of the Consortium that executed the Contract, while the leader of this Consortium and the actual contractor of the works was and still remains exclusively Rafako. The Company's share in the consortium formally amounts to 0.01%. The Company - pursuant to the Consortium Agreement entered into in 2014. ("Consortium Agreement")- did not perform any works, services or deliveries. In addition, the Company points out that the Company's status as a passive member of the Consortium, as well as the content of the Consortium Agreement, were already known to Tauron at the stage prior to the conclusion of the Contract.
2 Due to the fact that the Company was a passive member of the Consortium, it has no knowledge related to the circumstances and reasons for issuing the note for the amount of penalties and damages indicated in the Request. Consequently, the Company indicates that all issues raised by Tauron in the Summons, as well as the Summons itself, should be addressed exclusively to the entities actually performing the Contract, i.e. Rafako and E003B7.
3 The Company indicates that Rafako is obliged, pursuant to the Consortium Agreement concluded prior to the commencement of the design works, to indemnify the Company against all liabilities associated with Rafako's non-performance or improper performance of the Contract.
Under the current circumstances, the Company indicates, having regard to the contents of this report, that receipt of the Tender Offer does not jeopardise the Company's legal or financial position.