The Management Board of Mostostal Warszawa S.A. announces that on 10 October 2016, the Company signed a contract with HENNIGER INVESTMENT Spółka Akcyjna for construction of a residential building with service functions on the ground floor, an underground garage, with unfinished interiors, infrastructure and area management, area levelling and construction of access roads, networks and any connections as part of an investment under the working name of “KBR_CE1” (second stage of the “Mieszkaj w Mieście” housing estate).

The deadline for implementation of the object of the contract was determined at 18 months from the date of signing the contract by the Parties, however not later than 6 April 2018.

The value of the contract amounts to: PLN 34.25 million net.

Payment deadline: 7 days from presentation of an invoice along with required documents.

Warranty period: 72 months of quality guarantee and warranty for defects in the performed work, excluding the building structure, tightness of the roof and insulation of the underground garage for which the period of warranty amounts to 120 months.

Performance bond: deposit or bank guarantee constituting 10% of the accepted net contractual amount.  

The Management Board of Mostostal Warszawa S.A. informs that yesterday it received a decision of the Court of Appeal in Szczecin, 1^st Civil Division which, having examined the case on 13 October in Szczecin during a closed session, dismissed an application for granting security for Performance Bond No. GWU/2012/118023 for the Contract (“Performance Bond”) issued on 16 July 2012 for the amount of PLN 33,309,939.80 constituting performance bond for the contract under the name “Construction of Thermal Waste Neutralisation Facility in Szczecin.” On 14 June 2016, the Issuer terminated implementation of this contract due to reasons attributable to the Employer and informed about it in current report No. 20 on 14 June 2016. On 27 June 2016, by means of its decision, the District Court in Szczecin prevented the Employer (Zakład Unieszkodliwiania Odpadów Sp. z o.o.) from collecting any monetary services under the guarantee from RBS Bank (Polska) S.A., as well as forbade RBS Bank Polska S.A. with its registered office in Warsaw to disburse any amounts to Zakład Unieszkodliwiania Odpadów Sp. z o.o. resulting from the bond in relation to the summons for payment issued by Zakład Unieszkodliwiania Odpadów Sp. z o.o.

Zakład Unieszkodliwiania Odpadów Sp. z o.o. filed an appeal to the Court of Appeal in Szczecin, 1^st Civil Division against the decision of the District Court. The Court of Appeal decided to change the decision appealed against by dismissing the claim for security. The Issuer sustains its standpoint that termination of the contract was exclusively due to the Employer’s fault and any negative consequences related to it encumber the Employer. On account of the above, as well as due to absence of any bases for the Employer’s demand for payment under the bond, the Issuer has not established any reserves in the books on account of this. Simultaneously, reserving a right to seek compensation in the amount of the damage, the Issuer, if RBS Bank Polska S.A. processes the payment, shall undertake any legal steps for recovering the guarantee used groundlessly byZakład Unieszkodliwiania Odpadów Sp. z o.o.