HNA/HNB - Merger Hafslund ASA and Viken Energinett AS
Hafslund ASA and the City of Oslo have concluded a framework agreement to merge Hafslund ASA ("Hafslund") and Viken Energinett AS ("Viken"). At the same Hafslund has entered into a Letter of Intent to acquire Oslo Energi AS. ( see separate press release). The merger and the acquisition of Oslo Energi AS will create a leading Norwegian energy group.
As the owner of 67% of Viken, City of Oslo will receive 40,497,796 A shares and 27,974,237 B shares in Hafslund in the merger, corresponding to 35.1% of the shares in the merged company after the acquisition of Oslo Energi AS. In addition City of Oslo will receive a cash payment of NOK 550 mio. The City of Oslo and E-CO AS (100% owned by the City of Oslo) will have an ownership stake of 53,7% of the new company.
Hafslund's CEO, Rune Bjerke, will continue as CEO of the merged company while Viken's CEO, Morten Grødahl, will play a central role in the corporate management of the group. The current chairman of the board of Hafslund, Bjørn Eidem, will be nominated as new chairman, and Arvid Moss, current chairman of the Viken board, will be nominated as the deputy chairman of the new board. Other management posts in the merged company and its subsidiaries will be assessed and appointed by the new board and the CEO.
"This move represents a breakthrough in Hafslund's efforts to develop new value-adding structures within the Norwegian energy industry. The new company will be Norway's largest grid company, a leader within production, maintenance, infrastructure construction and the development of new services and products. On the basis of the new company's customer base and infrastructure, extensive investments will be made in the development of new products and services to provide added value and increased value for the owners," says Hafslund ASA's CEO, Rune Bjerke.
"The merger represents a necessary consolidation of the downstream business in Eastern Norway. If we are to realise our goals, we will need to have access to fresh capital. Merging with Hafslund, a listed company, will give us such access. Moreover, Hafslund will complement our expertise in a number of areas," says Viken's CEO, Morten Grødahl.
Before the merger Viken will be demerged, such that Viken's district heating business and properties not used in operations will be owned by separate companies. Hafslund already has a 33% holding in Viken and will have the same stake in the district heating and property companies. All employees will still be with Viken and management agreements will be established between Viken and the companies. The new company will have industrial ambitions and work actively to develop its ownership in the new district heating company.
The new company will have nearly 1,100 employees. It will include Hafslund's production businesses in Norway and the United States with a total annual output of approximately 3.0 TWh, Viken's energy grid in Oslo and Asker and Bærum, Hafslund's power trading business and venture and investment portfolio. The company will have stakes in Østnett (74%), Mjøskraft (49%) and Elverum Energi Nett (49%) and in the electricity companies Tindra Energi (36%) and Øko Kraft (63%). New business areas will encompass Kankan (100%), Nodenet (83%) and 67% of Vekterselskapet and Varslingssystemer.
The merger proposal will be considered by Oslo City Parliament in August/September and put to extraordinary general meetings of Viken Energinett AS and Hafslund ASA in September/October.
The attached pro forma accounts for the "new" Hafslund for the year 2000 and the first quarter 2001 are based on the following assumptions:
The merger will be accounted for according to the purchase method. Adjustments will be made for the fact that 33% of Viken was formerly included in Hafslund's accounts in accordance with the equity method. The stock exchange price of the Hafslund share has been applied for the purpose of calculating the value of the amount payable in the merger. The added value resulting from the transaction has provisionally been applied to operating assets and depreciated over their respective estimated economic lives. Account has been taken in the pro forma figures of the effects of the demerger of the distance heating business and the properties.
The financial statements for Viken Energinett AS for 1999 and 2000 and the pro forma accounts for the first quarter 2001 are attached. Also attached are pro forma shareholders list, pro forma accounts for the Hafslund Group including Viken Energinett AS and the purchase of the shares in Oslo Energi AS (see separate notification to the Stock Exchange).
A press conference will be held at 10 a.m. on Friday, 13 July at Viken Energinett's offices at Sommerrogata 1.