The shareholders of Grupa LOTOS S.A. (“Grupa LOTOS”, the “Company”) will acquire all of the Company new issue shares offered on a pre-emptive basis. They submitted primary and additional subscription orders for the total of 109,222,917 shares, whose combined value approaches PLN 2bn. Thanks to the successful public offering, the Company has been able to raise its target gross proceeds of PLN 995.5m.

Under the public offering (the “Offering”), the Company was to issue 55,000,000 Series D shares on a pre-emptive basis at the price of PLN 18.10 per share. In the subscription period, i.e. from November 20th to November 28th 2014, the Company’s shareholders placed 7,104 primary subscription orders for 54,079,149 shares and 1,359 additional subscription orders for 55,143,768 shares. The reduction rate for the additional orders was 98.33%. As provided for in the Offering schedule, allotment of all the shares subscribed for under the Offering took place on December 9th 2014.

“The offering was a complete success. Not only were all of the offered shares subscribed for, but the demand was nearly twice the supply. For me, this is a sign of support and trust in the Company’s strategy and management board, which is responsible for setting the Company’s course for development. The proceeds will ensure timely delivery of projects critical to strengthening our position on the market and creating shareholder value,” said Paweł Olechnowicz, President of the Grupa LOTOS Management Board. 

With all of the offered shares having been acquired by the shareholders, the Company will be able to pursue its capital expenditure programme for the coming years as planned. The issue proceeds will be applied towards co-financing of the EFRA Project (i.e. construction of a delayed coking unit with auxiliary infrastructure at the Gdańsk refinery) and towards the development of the B4/B6 gas fields in the Baltic Sea.

Once completed, the EFRA Project will enable the Company to significantly improve distillate yields. As a result, the share of low-margin heavy fuel oils produced from heavy residue in the total output will be reduced or even eliminated, while the share of high-margin final products will increase, all of which is expected to drive the LOTOS Group’s refining margin up by ca. USD 2 per barrel.

The Company estimates the total cost of the EFRA Project, including costs to service the project’s financing during the construction stage and costs to maintain reserve deposits required by the banks, at ca. PLN 2.34bn. The issue proceeds are expected to contribute PLN 530m−650m to the project’s financing. The EFRA Project is to be completed in the first quarter of 2018.

The best estimate (2C) of the gas reserves in the B4/B6 fields is ca. 4.3bn m³. Development of the fields should help diversify the LOTOS Group’s natural gas supplies, which should in turn translate into more varied revenue streams, in addition to helping the Group realise its margins on natural gas projects and improving Poland’s energy security.

Grupa LOTOS’s estimated total expenditure on the development of the gas fields will be PLN 800m, with the Group’s interest in the project amounting to 51%. The Company intends to apply PLN 350m−470m from the issue proceeds towards co-financing of the project. Production from the B4/B6 fields is planned to commence at the end of 2017 or at the beginning of 2018.

Legal disclaimer:

This material is not for release, publication or distribution, directly or indirectly, in the United States, Australia, Canada, and Japan.

This material has been prepared for promotional purposes only, it is not an offer or a solicitation of any offer, and it is not to be relied upon in making any decisions on investment in the securities issued by Grupa LOTOS S.A. (the “Company”). The prospectus prepared in connection with the rights issue and public offering of the Company shares (“Shares”) (“Prospectus”) was approved by the Polish Financial Supervision Authority on November 7th 2014 and is the only legally binding document containing information on the Company and the public offering of its Shares in Poland. The Prospectus has been made public in electronic form on the Company’s website (www.lotos.pl) and, for information purposes, on the website of Powszechna Kasa Oszczędności Banku Polskiego S.A. Oddział − Dom Maklerski PKO Banku Polskiego w Warszawie (www.dm.pkobp.pl).

This material is not a recommendation within the meaning of the Minister of Finance’s Regulation on information which constitutes recommendations concerning financial instruments or their issuers, dated October 19th 2005.

This material (and any information presented herein) does not contain or constitute an offer to sell, or a solicitation of an offer to buy, any securities in the United States of America, Australia, Canada, Japan or in any other jurisdiction. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (“US Securities Act”), and may not be offered or sold in the United States of America unless they are registered, or exempt from the registration requirements, under the US Securities Act. The securities will not be offered to the public in the United States.

The Company, its subsidiaries and other related entities disclaim any liability for any loss or damage arising from the use of this material, any part hereof or any information contained herein, or for any loss or damage arising otherwise in connection with this material.

Société Générale, Powszechna Kasa Oszczędności Bank Polski S.A. – Dom Maklerski PKO Banku Polskiego of Warsaw (Branch), BZ WBK, ING Securities and Unicredit act in connection with the Offering for the sole benefit of the Company and will not treat any other person (whether or not a recipient of this document) as their client in connection with the Offering, and will not be held responsible towards any other entity for providing protection to their clients or for any advice in connection with the Offering.

Communications Office

Grupa LOTOS S.A.
ul. Elbląska 135,
80-718 Gdańsk,
tel. 58 308 87 31, 58 308 83 88, 58 308 83 55,
e-mail: media@grupalotos.pl