The decision to merge Stalprofil S.A. and ZRUG Zabrze S.A.

The Board of STALPROFIL S.A. with its registered office in the Dąbrowa Górnicza on 29 July 2016 adopted a resolution on the intention of the merger: STALPROFIL S.A. in Dąbrowa Górnicza (Acquiring Company) and ZRUG Zabrze S.A. in Zabrze (Acquired Company).
Both Companies on 29 July 2016 agreed on the Merger Plan, which is attached to this report. Merger Plan will be made ​​available on the website of STALPROFIL S.A. at www.stalprofil.com.pl, starting from 29 July 2016, continuously until the end of the Extraordinary General Meeting of Shareholders at which a resolution on the merger will be taken. According to the art. 500 § 2(1) of the Code of Commercial Companies, the Acquiring Company waives the requirement to advertise the Merger Plan in MSiG, to providing free access to the public the Merger Plan on its website.

Characteristics of entities that are to be connected:

Acquiring Company:
The core business of STALPROFIL S.A. is wholesale trade of steel products. Sales of steel products, both domestic and foreign, company runs through two own trade depots located in Katowice-Panewniki and Dąbrowa Górnicza. STALPROFIL S.A. is the parent company of the four subsidiaries, through which diversifies its core business. STALPROFIL S.A. Group operates in the segment of trade and steel processing and infrastructure segment of gas transmission networks.

Target Company:
The core business of ZRUG Zabrze S.A. is carrying out works related to construction of transmission pipelines and distribution networks, mainly execution pipelines for gaseous fuels, gas network repairs, building connections for gas customers and construction of reduction-measurement. The Company also performs construction and assembly works in the field of manufacturing heating networks, water and sewerage.

Connection method:
The merger will be in accordance with art. 492 § 1 point 1) of the CCC, ie. a transfer of all assets of the Acquired Company to the Acquirer. Acquiring Company after the merger will continue to operate under the name of STALPROFIL S.A. and its headquarters will remain Dąbrowa Górnicza, ul. Roździeńskiego 11a. Acquiring Company is the sole shareholder of the Acquired Company, ie. holds 100% of the shares of the Acquired Company.

Accordingly:
- the merger will be carried out under the simplified procedure in accordance with art. 516 § 6 of the CCC;
- Plan of Merger will not be submitted for examination to an expert appointed by the Court of Registration and report of the Management Boards of the merging companies, referred to in art. 501 of the CCC, will not be made;
- taking into account art. 515 § 1 of the CCC, the merger will take place without increasing the share capital;
- the merger will not imply share exchange of ZRUG Zabrze S.A. to shares of Stalprofil S.A., so the Plan omitted the information referred to in art. 499 § 1 point 2)-4) of the CCC, as irrelevant (art. 516 § 6 of the CCC);
- announcement or release of the Merger Plan and access to documents referred to in art. 505 of the CCC will be at least one month before the date of application for registration of the merger;
- the connection is not required to notify the intention of concentration to the President of the Office of Competition and Consumer Protection (art. 14 point 5 of the Act of 16 February 2007 on competition and consumer protection - Dz. U. 2015.184 amended. D.).
The resolution on the merger of the companies will be taken by the General Assembly of each of the merging companies, in accordance with the procedure set out in art. 506 of the CCC.
The transfer of the assets of the Acquired Company to the Acquiring Company will be made on the day of the merger in the Register of Entrepreneurs.

Reason and purpose of the decision to merge:
In connection with the worsening financial situation in the subsidiary ZRUG Zabrze S.A., the Management Board of STALPROFIL S.A. analyzed possibility of speeding up the process of restructuring ZRUG Zabrze S.A., according to several alternative scenarios. Finally the "Action Plan of the Group, supporting the restructuring of the services pipeline" (the Company informed about the adoption of the "Action Plan ..." by the Supervisory Board CR 17/2016 dated 07.05.2016) obtained acceptance of the Supervisory Board, which in the first order assumes cost restructuring and organizational ZRUG Zabrze S.A., including making the reduction of unused production capacity, and its connection to the STALPROFIL S.A.
The aim of the merger of STALPROFIL S.A. with its registered office in Dąbrowa Górnicza and ZRUG Zabrze S.A. seated in Zabrze is the effective use of the potential of the combined company and obtain effects of economic and financial direct and indirect synergies, including among other things: reduction of operating costs, more efficient use of the assets of the merged companies, better allocation of funds and more rational financial flows.
After a successful connection ZRUG will get in the organizational structure of STALPROFIL S.A. with a status of a self-balancing branch, conducting business as usual on the market of construction of pipelines. Furthermore, the combination should significantly improve the speed of decision-making procedures in the management of this sphere of activity of the Group.
According to the Board's knowledge possessed at the date of this announcement there is a real chance that after the completion of the corrective actions the condition of the Group's activities in the sphere of services execution pipelines will improve. However, the level of efficiency of the Group's operations in this sector will depend on the scope and pace of commissioning of new investments in the gas market, planned by OGP Gaz-System S.A. and PSG sp. z o.o.