LPP statement regarding false information about alleged outstanding payments to factories in Bangladesh

LPP continues to meet all of its obligations to suppliers in Bangladesh on time. Information appearing in the public domain suggesting that the Company has outstanding payment liabilities toward local factories is false and constitutes disinformation.

Such claims are being disseminated by a small group of manufacturers seeking to protect their particular interests. They do not reflect the position of the majority of our business partners, many of whom have, in recent days, repeatedly expressed their support for LPP and highlighted our long-standing commitment and reliability as a business partner, both on social media and in their interactions with local institutions.

The matter referred to in media reports concerns orders placed by FES, a separate legal entity to which LPP sold its stake in the Russian business in 2022 as part of its withdrawal from that market. FES operates independently and on its own account and bears full responsibility for its liabilities. The orders that are the subject of the dispute were fulfilled during the period when FES functioned as an independent and autonomous organization.

LPP is therefore not a party to this dispute and bears no responsibility for obligations incurred by another entity. It is important to emphasize that none of the Bangladeshi suppliers claiming losses has ever brought any formal payment claim against LPP, either through court proceedings or arbitration.

We understand the difficult situation faced by FES’s business partners and recognize the challenges confronting them. Nevertheless, any claims should be directed solely to the entity responsible for the obligations in question.

At the same time, we would like to point out that LPP is also among the parties adversely affected by FES’s failure to fulfill its financial obligations. To date, the investor has not met its payment obligations to LPP related to the acquisition of the Russian company and related merchandise. As a result, LPP was required to recognize impairment charges totaling PLN 1.1 billion, which had a negative impact on the Company’s financial performance.

Despite repeatedly providing explanations regarding this matter, LPP continues to face attempts to improperly attribute responsibility for FES’s obligations toward Bangladeshi factories to the Company. This situation has created uncertainty regarding the conditions for conducting business in Bangladesh and has adversely affected our local employees, who have become the target of unfounded accusations and administrative actions.

In order to protect the safety of our employees and safeguard the interests of the Company, its customers and shareholders, we have decided to temporarily reduce certain LPP sourcing operations in Bangladesh. The scale and scope of these measures will be continuously assessed in light of developments in the situation, with the aim of mitigating any potential business risks to the Company. This decision has been taken with great care and consideration, as Bangladesh has been an important business partner for LPP for many years.

At the same time, we remain in close contact with the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the country’s leading industry organization, as well as with other institutions, to support a thorough and objective clarification of the circumstances surrounding this matter and to counter the spread of false information. We trust that dialogue among all stakeholders will help bring about a constructive resolution to the situation and create conditions for the continued development of our operations in the region.