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ENERGO-PRO, a.s. an independent power producer based in the Czech Republic, is expanding its operations to Galicia, Spain. ENERGO-PRO has completed the acquisition of 100% of the share capital in Xallas Electricidad y Aleaciones, S.A.U. ("Xeal") and Feroe Ventures & Investments S.L.U. ("Feroe") from Sixth Street, a leading global investment firm. This is one of the largest Czech investments in Spain. To finance the transaction, ENERGO-PRO has obtained a EUR 300 million bridge loan from J.P. Morgan and Goldman Sachs.

Xeal operates ten hydropower plants with a total capacity of 167 MW and two ferroalloy plants. Feroe has applied for the grant of a concession for a new pumped-storage plant with a planned capacity of 400 MW.

ENERGO-PRO has been specializing in hydropower generation for almost 30 years. The company owns and operates 34 hydropower plants in Bulgaria, Georgia and Trkiye with a total installed capacity of 859 MW. It is also active in Latin America and is currently constructing a new hydropower plant in Colombia. The group operates electricity distribution networks in Bulgaria and Georgia, serving more than 2.5 million customers. It is a major employer with more than 9,000 employees.

"The acquisition of hydropower plants in Galicia is part of the diversification of our activities which aims to spread macroeconomic and geopolitical risks. For the first time, we are targeting one of the largest electricity markets in the eurozone which we consider to be promising in terms of our strategic focus," said Petr Milev, Chief Executive Officer of ENERGO-PRO Group.

At the same time, the volume of sales denominated in euros will increase which correlates positively with ENERGO-PRO's capital structure. Part of the acquisition financing debt is denominated in euros. The Prague-based group is entering the eurozone market, with Spain's credit rating higher than that of Bulgaria, Georgia and Trkiye, where ENERGO-PRO has most of its assets.

Galicia, in the north-western part of Spain, is the rainiest region of the country. With an annual rainfall of more than 2,100 litres per square metre, it offers favourable conditions for operating hydropower plants. Nine of Xeal's ten hydropower plants are located on the Xallas River. "Our goal is to diversify our portfolio of hydropower plants also in terms of hydrology. ENERGO-PRO will be less dependent on the hydrology of the countries around the Black Sea," adds Petr Milev.

Thanks to four dams and a cascade system, the hydropower plant operator will be able perfectly to exploit the potential of the Xallas River, to optimize revenue and power generation according to the needs of the transmission system, and to offer support services, the need for which will grow with a larger share of variable renewables in the grid.

Xeal is thus also a major player in the market of support services for the transmission system operator Red Elctrica de Espaa which is responsible for grid stability in times of fluctuating photovoltaic and wind generation.

According to the relevant concession agreement, all power plants on the Xallas River will remain in operation until at least 2060. The importance of existing water resources is reinforced by the fact that no new dams are planned to be developed in Spain.

The acquisition in Spain also includes two plants for the production of ferroalloys, which are used in the metallurgical and metalworking industries, and that currently operate under a long-term offtake contract. Final customers of the ferroalloy business are main steelmakers in Spain and Europe.

ENERGO-PRO Group would like to introduce our first Sustainability Report for 2021. This report describes our sustainability strategy and ESG/Sustainability performance across our Business Units. It also describes our governance structure, results achieved and provides data on our Key Performance Indicators. We invite all our stakeholders to share any questions or suggestions via email address in...@energo-pro.com.

The Chorreritas project achieved good practices in 11 social and environmental topics, and the assessment identified areas for improvement in the Communications and Consultation section due to the delay of communication with local communities leading to a lack of information. The report provides an action plan to address this gap.

The Prague-based multinational energy group ENERGO-PRO will start the construction of the Chorreritas hydropower plant in Colombia this year. The 20 megawatt hydropower plant with two Francis turbines is expected to be operational in 2025. Construction costs will amount to just under USD 40 million.

Chorreritas will become the first hydropower facility to be operated by ENERGO-PRO Group on the American continent. "Colombia is an attractive market with interesting potential in hydro energy. It has the sixth largest potential in this field in the world, particularly for high-gradient power plants," Petr Milev, the CEO of ENERGO-PRO Group, said.

Generadora Chorreritas, a fully owned subsidiary of ENERGO-PRO Colombia, is the investor and developer. In the initial phase, the construction will be financed by its own resources, but later, according to Peter Milev, external financing may be considered.

ENERGO-PRO Group acquired the Chorreritas project from a local developer in autumn 2020 and had the opportunity to optimize it based on its experience. Modifications to the design and overall layout of the project will lead to cost optimization and faster construction.

ENERGO-PRO is building a new hydropower plant on the Ro San Andrs near the town of San Andrs de Cuerquia in the department of Antioquia. It will be a run-of-the-river hydropower plant without a reservoir. It will have a water gradient of 186 meters. The construction of the entire plant includes an intake structure, an inlet tunnel, the plant itself and the connection to the power transmission system. The Czech Energy Group is carrying out the construction in accordance with environmental and social standards to ensure that the entire project's impact on nature and the local community is as positive as possible. In this respect, ENERGO-PRO benefits, among other things, from the experience of the construction of the Alpaslan 2 hydropower plant in Turkey, which was implemented in accordance with the "IFC Environmental & Social Performance Standards".

For ENERGO-PRO Group, the Colombian market represents an interesting opportunity to diversify its activities. "The Chorreritas project fits perfectly into our strategy for diversification of our hydropower portfolio in terms of both hydrology and macroeconomic and political risks," Petr Milev emphasizes.

Energo-Pro Group owns and operates 38 hydropower plants in four countries - Bulgaria, Georgia, Turkey and the Czech Republic. In addition to hydropower, it is also involved in the sale of electricity to retail customers, with two and a half million clients using its distribution networks in Bulgaria and Georgia. The group also comprises the Litostroj Group, a manufacturer of turbines and machinery for the hydropower industry.

ENERGO-PRO Group, together with Litostroj Group and all other affiliates, introduces Global Code of Conduct. Code describes how we conduct business and how we engage with our stakeholders. It also describes our expectations regarding human rights, sustainability and ESG.

ENERGO-PRO Group, together with Litostroj Group and all other affiliates, introduces "Sustainability Policy". The purpose of this document is to describe our sustainability commitments. It describes leadership, environment and biodiversity, communities, governance, and human resource commitments.

The Company would like to announce changes in its management and governance bodies effective as of 1 May 2021.The Company\'s Board of Directors has appointed Petr Zafirov Milev to serve as Group Chief Executive Officer. This appointment follows the decision by Jaromir Tesar, the Company\'s founder, to step down from his management role and focus primarily on strategy and business development in his position as Chairman of the Board of Directors, which he will retain.

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