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Paranapanema : Material Fact – Arbitration 02/2015 – Arbitration Award

MATERIAL FACT

DIAS D‘ÁVILA/BA, AUGUST 10, 2018. PARANAPANEMA SA (“Company”, B3: PMAM3), the largest Brazilian non-integrated producer of refined copper, rebar, drawn wire, rolled wire, bars, pipes, fittings and alloys, in compliance with the provisions of paragraph 4 of article 157 of Law 6,404/76, as amended, and CVM Instruction No. 358/02, as amended, hereby informs its investors and the market in general that it was served with notice, on this date, of a judgment instructed in arbitration proceeding No. 02/2015 (“Decision” and “Arbitral Proceeding”), in the process at the Arbitration and Mediation Center of the Brazil-Canada Chamber of Commerce (“Arbitral Tribunal”), filed by Banco Santander (Brasil) S.A. (“Santander”) against the Company, as described in item 4.3 of the Reference Form and in the Company‘s Notes to the Financial Statements.

In accordance with the terms of the Decision, the Arbitral Tribunal accepted the main argument given by the Company in its defense, ruling that certain liabilities set forth in the Credit Agreement entered into with Santander and BTG Pactual S.A. (“BTG”, and, with Santander, the “Banks”) are null and void, mainly amounts relating to Swap Agreements and that expose the Company to the risk of a judgement of R$ 731 million, as described in item 4.3 of the Reference Form and in the Company‘s Notes to the Financial Statements.

The Ruling also determined the partial maintenance of the Credit Agreement, where the debtor balance, for the historical amount of R$ 206 million (“PMA debt”), was paid by the Company on 08/21/08 (“Payment Date”), through the payment of 44,469,884 million PMAM3 shares it issued (“Shares”), which on 08/21/08 had a closing price of R$ 5.02, which were sold by the Banks at B3 SA – Brasil, Bolsa Balcão (“B3”) through trading on different dates (“Sale of Shares”). Consequently, the Arbitral Tribunal decided that the settlement of amounts owed by one party to the other will be calculated based on the difference between (i) the value of the PMA Debt and (ii) the total amount received by the Banks from the Sale of the Shares, both to be corrected using criteria to be defined at a later date by the Arbitral Tribunal, when liabilities and amounts relating to losses and related costs for the loss of the lawsuit must also be defined.

Notwithstanding the Judgment, the Company emphasizes that the Binding Terms of the Agreement (“Agreement”) entered into with Santander in order to terminate all disputes relating to and/or arising out of the Arbitration Proceeding, in accordance with a material fact disclosed on June 13, 2018, is still in force, although all its conditions precedent have not yet been verified (“Conditions Precedent”). The last date to verify the Conditions Precedent is August 13, 2018, under penalty of full resolution of the Agreement, unless otherwise agreed by both parties.

The Company will keep its shareholders and the market in general informed in case of new developments in relation to the Arbitration Procedure and to the Agreement, in accordance with the applicable regulations. More information can be obtained from the Investor Relations department of the Company, through the telephone number +55 (11) 2199-7604, or by e-mailri.br.

Dias d‘Ávila/BA, August 10, 2018.

André Luís da Costa Gaia

Chief Financial and Investor Relations Officer

Management makes statements on future events that are subject to risks and uncertainties. These statements are based on Management‘s beliefs and assumptions and on information to which the Company has current access. Statements on future events include information on your current intentions, estimates or expectations, as well as those of Company‘s Directors. Exceptions to statements and information on the future also include information on possible or assumed operating results, as well as statements that are preceded, followed of that include the words “believes”, “may”, “will”, “continues”, “waits”, “provides”, “intends”, “plans”, “estimates” or similar expressions. Statements and information on the future are not guarantees of performance. They involve risks, uncertainties and assumptions because they refer to future events, thus depending on circumstances that may or may not occur. Future results and the creation of value for shareholders may significantly differ from those expressed or estimated by statements on the future. Many of the factors that will determine these results and values are beyond Company‘s control or foresight capacity.

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ParanaPanema SA published this content on 10 August 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 11 August 2018 01:34:02 UTC