WDX : CR 28/2017 – Purchase of shares in a company belonging to the WDX Group and the end of cooperation with Feralco SAS

The Management Board of WDX Spółka Akcyjna, seated in Warsaw, ('the Company', 'the Issuer') informs that on 4 December 2017 the Company entered with Feralco SAS, Route de Troyes, Zone Industrielle, 51120 Sezanne, France ('Feralco SAS'), into a purchase agreement under which WDX S.A. purchases 27,770 (twenty seven thousand seven hundred seventy) shares in the company's share capital under the business name of Wandalex-Feralco spółka z ograniczoną odpowiedzialnością, having its registered office in Zgierz at ul. Szczawińska 54/58, KRS no. 0000118283 ('Wandalex-Feralco'), for the total amount of EUR 728,000, constituting 50% of this share capital ('the Purchase Agreement'), as well as into an agreement terminating the previous cooperation between WDX S.A. and Feralco SAS ('the Termination Agreement').

Wandalex-Feralco Sp. z o.o. , based in Zgierz, was established in 2000 under the shareholders' agreement: Wandalex S.A. (now acting under the business name of WDX S.A.) and FL&CO (now acting under the business name of Feralco SAS). It should be indicated that both of these companies, as of the date of establishing WANDALEX-Feralco, until the day of signing the aforementioned agreement for the sale of shares for the benefit of WDX S.A. had 50% of shares in the share capital of WANDALEX-Feralco.

The main objective of WANDALEX-Feralco, already from the moment of its establishment, was to conduct operations with regard to production of elements of warehouse racks, including high storage racks, and their sale for the benefit of their shareholders for further distribution. Wandalex-Feralco rents from WDX S.A. rooms for production purposes in the real estate in Zgierz. The Company and Feralco SAS determined in the shareholder's agreement a principle that WDX S.A. would be responsible for distribution of these products on Eastern European markets, while Feralco SAS would have the exclusive right in this respect in other countries. In 2016 sales of WANDALEX-Feralco to WDX S.A. constituted 91%, and in three quarters of 2017 - 99% of the sales revenues of Wandalex-Feralco.

The above purchase of 50% of shares in the share capital of Wandalex-Feralco by WDX S.A., resulting in acquisition of 100% of these shares (as indicated above, WDX S.A. had 50% of these shares so far), is compatible with the strategy of the WDX Group and will allow it to further develop its operations in production and distribution of high storage racks. The previous shareholder of Wandalex-Feralco, i.e. Feralco SAS, did not show active interest in developing and broadening operations of Wandalex-Feralco, in particular it avoided further participation in investment expenditures aimed at renovation of the machinery.

There is a probability of that, in the future, it would hinder maintenance of competitiveness of the WDX Group on a constantly growing market of these goods. The Company's takeover of full control over Wandalex-Feralco should have a positive impact on functioning of the entire WDX Group, in particular in the scope of freedom of decisions in the context of the WDX Group that will be made in the future.

The amount of EUR 728,000 constitutes a full remuneration under the purchase of these shares. The investment is financed from the Issuer's own funds.

In the consolidated statements of the WDX Group, until the day of signing the aforementioned purchase agreement under which the Issuer acquires shares in the share capital of Wandalex-Feralco, this investment was a common project of the WDX Group and Feralco SAS, which was reflected in application of valuation consolidated using the equity method. From the day of entering into the aforementioned for purchase of shares by the Issuer, it will constitute a sole investment of the WDX Group and will fully consolidated.

Financial documents of Wandalex-Feralco Sp. z o.o. for the years 2014-2016, as well as 3 quarters of 2017 have been appended to this report.

As a consequence of entering into the aforementioned agreement for purchase of shares in the share capital of Wandalex-Feralco between the Issuer and Feralco SAS, the parties made a decision on termination of their cooperation in the previous form and scope, in consequence of which on 4 December 2017 they concluded the Amendment and Restatement Agreement terminating three following agreements:

- the Shareholders' Agreement defining, in particular, principles of cooperation between the parties in the scope of managing a joint venture, i.e. Wandalex-Feralco Sp. z o.o. and distribution of its products;

- the Trademark License Agreement concerning the right to make use of trademarks, previously exercised by Feralco SAS;

- the Distribution Agreement, under which the Issuer acquired the exclusive right in the field of distribution of products of Feralco SAS and Wandalex-Feralco in Eastern Europe. The termination agreement in the scope concerning the Trademark License Agreement was concluded with participation of Wandalex-Feralco owing to the fact that Wandalex-Feralco was one of the parties to this agreement.

The effect of conclusion of this agreement was termination of three agreements mentioned above. Moreover, according to its provisions, Feralco SAS is obliged, e.g. to provide for the Issuer for the period until the end of 2020: - access to elements for further production; -access to calculation software and its updates.

At the same time, the Issuer intends to solve the above issues on his own.

It should be indicated that, as a result of conclusion of the termination agreement, the scope of potential operations of the Issuer was extended with the possibility to distribute products of Wandalex-Feralco without territorial limitations, like for Feralco SAS, for which a temporary prohibition period was established in this respect, concerning the territory of Poland and different types of possible operations, for a period of 1 to 3 years (depending on the type of operation).

The above provision does not limit direct distribution of Feralco from France. Moreover, WDX will cease to use names related to Feralco SAS and trademarks owned by Feralco SAS, and as the only shareholder will change the business name of Wandalex-Feralco within the next six months. At the same time, the agreement determined that Wandalex-Feralco (and its legal successor) will still be able to conduct the present activities, in particular production (and its methodology, methods, technical aspects, knowledge and product range), and distribution of elements and systems of warehouse racks, retaining all its rights to use know-how, knowledge and experiences that this company acquired prior to the date of concluding this agreement.

All the above agreements are subject to and are construed in accordance with the Polish law, and each of them has immediate effect as of the date of signature. None of these agreements provides for contractual penalties.

The remaining conditions of each of the aforementioned agreements do not differ from the conditions commonly applied for this type of agreements.