With reference to the current report no. 14/2020 of 24 June 2020 the Management Board of Izostal S.A. (Company) informs that the Consortium of companies comprising: Izostal S.A. (Consortium Partner) and Ferrum S.A. (Consortium Leader) on 14 July 2020 concluded with PERN S.A. with its registered office in Płock (Contracting Authority) the Contract for "Supply and Storage of Pipes and Bends for the Purposes of Construction of the Boronów-Trzebinia Product Pipeline".

 

The subject of the Contract covers obligatory deliveries and 6-month storage of coated steel pipes: DN250, DN500 and DN700, as well as DN250 bends. The Contract gives PERN S.A. the right to extend the subject of the Contract with regard to optional supplies and storage for a period of up to 24 months from the date of selected supplies, however, the decision to use this right should be communicated by the Contracting Authority to the Consortium in writing before the expiry of the 6-month obligatory storage period.

 

According to the Contract, obligatory deliveries will be made by 31 March 2021.

 

The maximum remuneration for the execution of the subject matter of the Contract including obligatory deliveries and storage as well as optional deliveries and storage is about PLN 34.33 million net, which is PLN 42.23 million gross (of which the value of obligatory deliveries is PLN 31.32 million net, or PLN 38.52 million gross).

 

The participation of the Consortium parties in the execution of the Contract will result from the actual involvement of Izostal S.A. and Ferrum S.A. respectively in particular stages of preparation and execution of the deliveries. As of the date of conclusion of the Contract, the majority participation of the Consortium Leader in the execution of the Contract is predicted; however, taking into account the time perspective of delivery as well as logistical requirements, the involvement of the Consortium parties in the execution of the Contract is not fixed and may change.

 

The Contract provides for contractual penalties for the benefit of PERN S.A: for delays not exceeding 30 days in the execution of deliveries or optional deliveries in the amount of 0.1% of the net remuneration due to the Consortium for the execution of these deliveries, for each day of delay; for delays exceeding 30 days in the execution of deliveries or optional deliveries in the amount of 0.2% of the net remuneration due to the Consortium for the execution of these deliveries for each day of delay; for delays in the removal of defects found on acceptance in the amount of 0.1% of the net remuneration due to the Consortium for the execution of these deliveries. The total amount of contractual penalties may not exceed 20% of the net value of obligatory deliveries. Moreover, the Contract provides for a contractual penalty for withdrawal from the Contract by the Consortium for reasons attributable to the Consortium in the amount of 20% of the net value of obligatory deliveries.

 

The subject of the Contract is covered by a 48-month quality guarantee. In order to ensure proper performance of the Contract, the Consortium will lodge a performance bond in the amount constituting 10% of the Remuneration specified in the Contract.