Sappi rights offer fully subscribed

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Sappi announced today that the rights offer to facilitate the funding of the acquisition of the coated graphic paper business of M-real, as announced on 29 September 2008, has been fully subscribed. This follows receipt of shareholder approval for the acquisition on 03 November 2008 and competition clearance from the European Commission on 31 October 2008.

Sappi shareholders strongly supported the rights offer with initial subscriptions of approximately 99.6% of the available shares and applications for approximately 42.5 million excess allocations. The fully subscribed rights offer will result in Sappi issuing 286,886,270 new ordinary shares of ZAR1.00 each. The gross proceeds to Sappi from the rights offer will be approximately ZAR5,815 million (€450 million based on an exchange rate of ZAR12.925/€). Sappi will use the net proceeds to pay for a portion of the acquisition consideration payable to M-real.

While the rights offer had been fully underwritten by Citigroup Global Markets Limited and J.P. Morgan Securities Limited, they were not required to place or take up any shares. Indeed, of the new shares to be issued, 285,621,333 will be issued pursuant to initial subscriptions and 1,264,937 will be issued pursuant to excess allocations. Sappi’s Board of Directors has determined that the 1,264,937 rights offer shares in respect of excess applications will be allocated in an equitable manner and cognisance has been taken of the number of Sappi shares held by each applicant prior to such allocation and the number of rights offer shares for which application was made by such applicant.

The Sappi share price closed on Friday 12 December at R36.94 per share compared to the theoretical ex-rights price of R 36.80 at the time the rights offer was launched on 7 November 2008.

Commenting on the rights offer, Sappi chief executive Ralph Boëttger said:
“The rights offer has been a huge success and has vindicated management’s decision to pursue this strategically important acquisition despite the turmoil in global financial markets. Sappi shareholders clearly understand the value to the company of this deal and we would like to thank them for their strong support throughout the transaction. Our next objective is to secure the successful integration of the M-real business into Sappi and the realisation of the significant synergies that have been identified.”

The transaction to acquire M-real’s coated graphic paper business meets Sappi’s strategic and financial criteria for acquisitions as it enhances Sappi’s global presence, provides an opportunity to increase Sappi’s customer base, improves Sappi’s strategic flexibility in regards to capacity utilisation, increases the range of products offered and provides anticipated growth and cost synergies. Sappi also expects benefits from increased profitability and returns and improved cash flows for the Sappi group. The acquisition allows Sappi to strengthen its competitive position in the coated graphic paper industry in Europe and globally.

Sappi expects the acquisition to be completed on 31 December 2008.

ENDS