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05 November 2014

Definitive settlement of disputes between Netia Group and Orange Polska Group (74/2014)

Warsaw, Poland – 5 November 2014 - Netia S.A. (“Netia” or the “Company”) (WSE: NET), Poland’s largest alternative provider of fixed-line telecommunications services, announced that today 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 one side, and Orange Polska S.A. (“Orange Polska”) acting in its own name and on behalf of its subsidiaries (together with Orange Polska, the “Orange Polska Group Companies”), on the other, entered into an out-of-court settlement agreement (the “Settlement Agreement”).

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 of VAT. This amount was paid on the date of the signing of the Settlement Agreement. Under the Settlement Agreement Netia will, under defined circumstances, receive 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.

As stated above, under the Settlement Agreement the Netia Group Companies undertook to take actions aimed at the discontinuation of the relevant court proceedings. If any Netia Group Companies take legal actions which are contrary to such goal, Netia may be required to pay to Orange Polska a contractual penalty totaling up to PLN 25,750,000. In addition, if contrary to the goal of the Settlement Agreement a court grants a certain amount in favour of any of the Netia Group Companies and provided that such Netia Group Companies commence enforcement proceedings against any Orange Polska Group Companies relating to such amount, Netia may be required to pay to Orange Polska a contractual penalty in the amount equal to the amount granted by the court, increased by awarded court fees. Orange Polska is not entitled to claim damages in excess of the contractual penalties.The Settlement Agreement is governed by Polish law.

The Settlement Agreement has been classified as a significant agreement as its value exceeds 10% of equity of Netia. 

Legal basis:
Art. 56, clause 1, item 2 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).