A Heads of Agreement has been signed for determining the main commercial principles between our Company and the Stellantis Group, as well as the acquisition of the shares of Stellantis Otomotiv Pazarlama A.Ş. ("Stellantis Otomotiv"). 

According to the Heads of Agreement, which was signed to define the principles regarding our Company's acquisition of 100% of Stellantis Otomotiv shares owned by the Stellantis N.V., to take over Stellantis Otomotiv's operations for the Stellantis brands in Turkey, and to determine the main commercial principles between our Company and the Stellantis Group and also to evaluate the principles of cooperation between Stellantis Group and Koç Group;

·         Following the satisfactory completion of due diligence on Stellantis Otomotiv by Tofaş, a Stock Purchase Agreement will be signed between the parties. 

·       Provided that the acquisition price is consistent with the value to be determined in the valuation report that will be prepared in accordance with the CMB regulations on related party transactions, the acquisition price has been determined as (i) €400 million to be paid in cash upon closing of the acquisition, subject to customary net cash and working capital closing adjustments, and (ii) as additional contingent performance consideration, an amount corresponding to 77.5% of the cash flows generated by Stellantis Otomotiv's operations in excess of the reference projections considered for the valuation as specified in the relevant agreement in each of the initial eight financial years following the closing of the acquisition. The transaction is intended to be financed with the available resources of Tofaş. 

·    The acquisition will be conditional upon certain conditions precedent to the closing including the relevant merger clearances and other requisite regulatory approvals. Unless agreed otherwise by the parties, the Stock Purchase Agreement will automatically be terminated if the closing conditions have not been satisfied within eight months as of the signing of the Stock Purchase Agreement. 

·        Subject to completion of the acquisition of Stellantis Otomotiv, Tofaş will be the importer and distributor in Turkey of the Stellantis branded vehicles currently distributed in Turkey by Stellantis Otomotiv (Peugeot, Citroen, Opel and DS Automobiles) and of the relevant spare parts. 

·      It was resolved to extend the production of the Tipo/Egea model for local distribution and export until 31 December 2025; and to grant Tofaş the exclusive right to manufacture and distribute in Turkey the new vehicle model "K0", light commercial vehicle and "combi" versions, planned for five brands, with target production launch as of 2025 and to start the investments accordingly. Until the beginning of the preparations for the new model, which is expected to take place in July 2023, production of the Doblo model will continue for local distribution, and the agreements related to the manufacturing of the Tipo and Doblo models currently in force will be amended accordingly. Production of the Fiorino model will end on 31 December 2024. The parties have also decided to cooperate in order to develop mutual business areas.

·      The main terms of the commercial relationship between Tofaş and Stellantis Group applicable to all vehicles to be produced by Tofaş have been outlined and the parties have started to prepare the detailed implementation agreements accordingly. 

·      The amendments to the current Shareholder Agreement and the current manufacturing agreements are targeted to be finalized within three months, the import and distribution agreements are targeted to be finalized until the closing date, and the agreement related to the K0 vehicle is targeted to be entered into within five months.

As the acquisition price is above the thresholds defined in Article 9 of CMB's Corporate Governance Communique, an independent valuation report will be prepared as defined above, in accordance with the CMB regulations on related party transactions. A review on the mutually agreed commercial terms for related party transactions will further be disclosed in accordance with Article 10 of CMB's Corporate Governance Communique. The Tofaş Board resolution related to the transaction has been approved unanimously, including the independent members.

Material developments will be disclosed to our investors in due course.