Cell Network makes cash offer in compulsory redemption procedure

Cell Network makes cash offer in compulsory redemption procedure Cell Network is now taking the next step in its programme of measures. Shareholders who did not accept the public offer made at the time of the merger between Mandator and Cell Network are to be given a new cash offer of SEK 20 per share. At the same time, Cell Network is undertaking measures to suspend the ongoing compulsory redemption procedure. The benefit of the offer to those minority shareholders concerned is that they will get a chance to receive an immediate cash payment, substantially above current valuation levels. The benefit to Cell Network will be fundamentally reduced future commitments which, in turn, will increase clarity within the Group. "Our aim is to make a fast, simple and clear offer in what is a highly complex legal matter", comments Chairman of the Board Lars O Pettersson. "Our starting point was to find a fair value which balances the interests of Cell Network, its current shareholders and the minority shareholders." The merger between what was then known as Mandator and Cell Network during the first half of 2000 was carried out by offering Cell Network shareholders the chance to exchange 10 shares for 17 shares in Mandator. By the time the offer deadline had expired, the offer had been accepted by the holders of 96.7 per cent of the shares in what was then Cell Network. Mandator then changed its name to Cell Network. What used to be Cell Network changed its name to Cell Network Frölunda. In Cell Network Frölunda today there are shareholders who hold about 663,000 shares (representing 3.3 per cent of the total number of shares) and who did not accept the public offer. On 13th June 2000, Cell Network called for the compulsory redemption of these shares. The compulsory redemption proceedings are currently before an arbitration panel. The arbitration panel's task of determining the level of compensation for the compulsorily redeemed shares is a complex one and it is unclear when it will be possible to arrive at a final legal decision. According to practice, the minority shareholders in a compulsory acquisition procedure should receive consideration equivalent to a consideration which those who accepted the offer received. Just as those who accepted the public offer should not be favoured over others, there is no reason to favour shareholders who are the subject of the acquisition process over those who accepted the offer. Cell Network's motion in the first instance has earlier been to make the minority shareholders the same offer as that offered to those who had accepted the offer, in other words to continue to offer an exchange of 10 shares in Cell Network Frölunda for 17 shares in Cell Network. At today's rate this would mean a value of approximately SEK 2 per compulsorily redeemed share. Since a full judicial examination of the issue may take considerable time, Cell Network is to give the minority shareholders in Cell Network Frölunda the chance to obtain immediate cash payment for their shares. Cell Network intends, via a subsidiary, to offer the minority shareholders cash of SEK 20 per share. Cell Network has also undertaken measures aimed at suspending the ongoing compulsory redemption procedure. Cell Network has withdrawn its request for a compulsory redemption and has transferred all its shares in Cell Network Frölunda to the newly set up subsidiary, Cell Network Frölunda Holding. It is Cell Network's position that the preconditions for the compulsory redemption are therefore no longer in place. "We are trying to find a reasonable balance between the interests of the minority shareholders, the interests of the company and the interests of the current shareholders, comments CEO Niklas Flyborg. We are looking for a fair value. The minority shareholders who do not share this view can then choose not to accept our offer. They will then have to put off finding out about their compensation for this until the legal proceedings are concluded. We are aware that the measures we are taking are unusual but the circumstances which brought them about are also unusual." The minority shareholders have a trustee who claimed a redemption price in the first instance of SEK 224 per share in Cell Network Frölunda, which for Cell Network would mean an outlay of SEK 150 million. The Board of Cell Network feels that it would be unreasonable and an injustice against the company, its current shareholders and its customers to have to pay out SEK 150 million, over two thirds of the company's total stock exchange value, for 3.3% of the shares in a subsidiary. An outcome in accordance with the claim of the trustee could not in any acceptable manner balance the interests on the one hand of Cell Network's current shareholders who recently injected into the company SEK 270 million in a new share issue and, on the other hand, the minority shareholders who, for various reasons, did not accept the public offer which would have given them a liquid share. For further information, please contact: Robert Karlsson, Dir. Corporate Communications, Cell Network AB, phone: +46 (0)709-565141 Lars O Pettersson, Chairman of the Board, Cell Network AB, phone: +46 (0)70-555 2690 Cell Network AB is a leading IT consulting company focused on convergence, business modelling and communication. The company delivers business-critical solutions taking full responsibility for strategy, technology, design and content. Clients include Ericsson, Volvo, the Swedish Defence Material Administration (Försvarets Materielverk), Telia, General Electric, AstraZeneca, Telenor and Statoil. Cell Network is listed on the Stockholm stock exchange's Attract 40/ O- list and has about 1.400 employees in 10 countries. Read more about Cell Network AB at www.cellnetwork.com ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2001/10/09/20011009BIT00980/bit0001.doc http://www.waymaker.net/bitonline/2001/10/09/20011009BIT00980/bit0001.pdf