ELISA'S PUBLIC TENDER OFFER FOR SAUNALAHTI SHARES COMMENCES
ELISA CORPORATION STOCK EXCHANGE RELEASE 17 AUGUST 2005 AT 5.00pm
ELISA'S PUBLIC TENDER OFFER FOR SAUNALAHTI SHARES COMMENCES On 7 July 2005, Elisa announced a public tender offer for all shares issued by Saunalahti Group Oyj. Elisa's tender offer for Saunalahti shares will commence on 23 August 2005 at 9.30 a.m. Finnish time and terminate on 19 September 2005 at 4.00 p.m. Finnish time unless the tender offer period is extended. The consideration offered by Elisa in the tender offer is 1 Elisa share for 5.6 Saunalahti shares. Elisa will also make an offer for Saunalahti option holders, offering EUR 1.53 in cash for each share option of the 2002 option programme and EUR 1.82 in cash for each share option of the 2003 option programme. The Finnish Financial Supervision Authority has today, 17 August 2005, approved the Finnish version of the tender offer document relating to Elisa's public tender offer for Saunalahti shares. The printed Finnish version of the combined tender offer document and listing particulars will be available as of 19 August 2005 at Elisa's head office, at the address Kutomotie 18, 00380 Helsinki. The electronic version is available on the internet at www.elisa.fi/esite. The tender offer document will also be available at OMX way, at the address Fabianinkatu 14, 00130 Helsinki, and electronically on the internet at www.mandatum.fi. The English translation of the tender offer document is available electronically on the internet at www.elisa.fi/esite and www.mandatum.fi. The tender offer document contains the following information relating to the increase in Elisa's share capital, preconditions for consummating the tender offer, agreements concerning the Saunalahti shares and Elisa after the consummation of the tender offer: In order to pay out the share offer consideration pursuant to the terms and conditions of the tender offer, Elisa's Board of Directors decided on 17 August 2005 to increase the share capital on the basis of the authorisation issued at the Annual General Meeting on 14 March 2005. According to the decision, the share capital will be increased by not more than EUR 12,689,955.50 by issuing a maximum of 25,379,911 new Elisa shares. The new shares are offered for subscription to Saunalahti shareholders so that 5.6 Saunalahti shares entitle to subscribe for one new Elisa share. The new shares give right to a dividend and other rights in Elisa, effective of the registration of the increase in the share capital. The execution of Elisa's tender offer requires that Elisa's ownership exceeds two- thirds (2/3) of Saunalahti. The consummation of the tender offer also requires the approval of the competition authorities so that the conditions regarding the mobile business are reasonably acceptable to Elisa. Furthermore, the consummation of the tender offer requires that no material adverse change has taken place in Saunalahti's position, with a change in the mobile business outside of Saunalahti's sphere of influence, however, not regarded as such, and that Saunalahti has not taken actions that could lead to an increase in the share capital, excluding subscriptions made on the basis of options. Elisa may waive the 2/3 ownership precondition only on the consent of Novator Finland Oy. On 7 July 2005, Elisa signed a combination agreement with major Saunalahti shareholders, Novator Finland Oy, Burdaras hf, Keaton Industries Corp. and Ajanta Oy, according to which these Saunalahti shareholders are committed to participate in Elisa's tender offer. According to the terms of the combination agreement, the shareholders are committed not to sell or otherwise assign, without the consent of Elisa's Board of Directors, the new shares they receive as share offer consideration within 12 months of gaining ownership of the new shares. The above- mentioned restriction on assignment does not, however, apply to an assignment which occurs on the basis of a public tender offer possibly made with respect to Elisa's shares. Elisa is committed to redeem the approximately EUR 11 million loan granted by Novator One L.P. to Saunalahti with a six per cent annual interest until the end of September 2005. In addition, Elisa is also committed, after the tender offer is consummated, to convene an extraordinary general meeting in which a proposal will be made to increase the number of members in Elisa's Board of Directors by two (2) members. Novator Finland Oy will propose two (2) new members to Elisa's Board of Directors. The purchase cost of Saunalahti shares will be computed for the shares exchanged in the share exchange using the stock exchange price of the Elisa share on the transaction day. The total purchase cost includes related fees and other direct acquisition costs pertaining to the arrangement. Had the total purchase cost of Saunalahti been computed using the closing price of the Elisa share on 30 June 2005, i.e. EUR 12.94, at an exchange ratio of 1:5.6, the total purchase cost would have been approximately EUR 325 million. Under IFRS, the purchase cost of Saunalahti shares is allocated to tangible and intangible assets and to goodwill. The deferred tax liability is recognized on that part of the purchase cost that is allocated to depreciable or amortizable assets. Had Elisa's and Saunalahti's consolidated balance sheets been combined as of 30 June 2005 and had the tender offer been accepted by all Saunalahti shareholders at that time, the total assets of Elisa would have increased from approximately EUR 1.84 billion to approximately EUR 2.27 billion. The most significant factors contributing to the increase in the balance sheet total are the total acquisition cost and a deferred tax liability caused by the valuation difference and approximately EUR 68 million liabilities included in Saunalahti's consolidated balance sheet. The part of the acquisition price allocated to tangible assets will be valued at fair market value. According to preliminary estimates, this does not materially differ from the book values in Saunalahti's consolidated financial statements reported in the interim report of 30 June 2005. The part of the acquisition price allocated to intangible assets will be the value estimated at the time of consummation of the tender offer. Intangible assets include, among others, patents, trademarks and customer relationships. That part of the acquisition price will be recognized as goodwill that is not allocated to tangible or intangible assets. In accordance with IFRS, the purchase cost of Saunalahti shares will be allocated to tangible and intangible assets and to goodwill. The part of the purchase cost that is allocated to depreciable or amortizable assets will be expensed over the expected useful life of such assets. Any intangible assets without a specified useful life and goodwill generated in connection with the acquisition will be tested annually for impairment in accordance with Elisa's testing principles. Saunalahti's goodwill will be tested at the time of acquisition. The acquisition of Saunalahti is also estimated to produce EUR 70 million in annual cost savings, of which a significant portion is dependent on the telephone communications of Saunalahti's customers being transferred largely to Elisa's mobile network. Other cost savings targets include purchases and data systems. The savings will be achieved for the most part during 2006 and in full by the beginning of 2007. ELISA CORPORATION Vesa Sahivirta Director, IR and Financial Communication ADDITIONAL INFORMATION: Ms Tuija Soanjärvi, CFO, tel. +358 50 382 2606 Mr Jyrki Arjanne, Senior Legal Counsel, tel. +358 10 262 4627 DISTRIBUTION: Helsinki Stock Exchange Major media The tender offer document shall not be delivered or distributed in the United States, Canada, Australia, Japan, Great Britain or in any country where the legislation requires any other document, registration or other measure in addition to what is required under Finnish laws and regulations.