OUTOKUMPU AND BOLIDEN IN A MAJOR ZINC AN
OUTOKUMPU OYJ STOCK EXCHANGE RELEASE September 8, 2003 at 9.00 am
OUTOKUMPU AND BOLIDEN IN A MAJOR ZINC AND COPPER RESTRUCTURING Outokumpu of Finland and Boliden of Sweden are negotiating a major industry restructuring whereby Outokumpus zinc mining & smelting and copper smelting & refining operations will transfer to Boliden, and Bolidens copper fabrication and technology sales business will be acquired by Outokumpu. The transaction releases significant financial resources for Outokumpu and marks another move forward in the metals value chain with a focus on growing stainless steel and selected value-added copper and technology businesses. Outokumpu will become a major (49 %) owner in New Boliden. The transaction is subject to, among others, final documentation, completion of Bolidens financing negotiations, regulatory clearances as well as approvals by both companies Boards of Directors and Bolidens general meeting of shareholders. The target is to complete the transaction by the end of 2003. According to a Letter of Intent signed by the parties, the Outokumpu assets and businesses to be transferred to Boliden include: - Outokumpus Zinc division, comprising Outokumpu Zinc Commercial in the Netherlands, the Kokkola smelter in Finland and the Odda smelter in Norway, - The Tara zinc mine in Ireland, and - Harjavalta Metals, comprising the Harjavalta copper smelter and the Pori refinery in Finland. These zinc and copper assets represent some 10% of the external net sales of the Outokumpu Group and some 12% of the capital employed. Based on a due diligence process completed in August by the parties, the Outokumpu assets to be transferred to Boliden are valued at EUR 736 million, of which Outokumpu will receive EUR 373 million in cash and EUR 56 million in the form of a subordinated vendor note. The remaining EUR 307 million will be paid in new Boliden shares, representing a premium of 25% compared to the closing price of the Boliden share on the Stockholm Stock Exchange on September 5, 2003. This results in a 49% ownership for Outokumpu, and thus makes New Boliden an associated company of the Outokumpu Group. The capital employed of the assets to be transferred to Boliden was EUR 552 million on January 1, 2003. The transaction value will be adjusted on closing and any changes in the capital employed will be taken into account. It is estimated that Outokumpu will book a capital gain from the transaction and the Groups gearing will be reduced by some 40-50 percentage points from the end-June level of 158%. As a result of the transaction, New Boliden will become one of the worlds leading mining and smelting companies with increased financial and operational flexibility. The pro-forma net sales of New Boliden in 2003 are estimated to be some EUR 1.6 billion and it employs 4 800 people. Annual synergies, relating primarily to raw materials and commercial optimization, are estimated at EUR 25-30 million. Furthermore, New Boliden will have a possibility to benefit from investment synergies in the future. The assets and businesses to be acquired from Boliden by Outokumpu are: - Copper fabrication units in Sweden, Belgium, the Netherlands and Britain, and - Boliden Contech, technology sales business. In 2002, these businesses generated net sales of some EUR 270 million. As a consideration for the above-mentioned assets, Boldien will receive 5 000 000 shares in Outokumpu Oyj, resulting in a 2.8% ownership. Outokumpu and Boliden have also agreed on extensive technology and R&D co-operation. After the transaction, New Boliden is also planning to arrange a EUR 150 million rights issue. Outokumpu is committed to participate in such a rights issue. The parties are proposing, that the Board of Directors of New Boliden will initially comprise four Outokumpu nominees, three nominees of present Boliden shareholders as well as personnel representatives. The Board chairman will be elected amongst Outokumpu nominees and Mr. Carl Bennet, currently Chairman of the Boliden Board, will be appointed Vice Chairman. Mr. Jan Johansson, CEO of Boliden will continue as CEO of New Boliden and also be a member of the Board. Mr. Tom Niemi from Outokumpu will be appointed Deputy CEO. There will be no shareholders agreement between Outokumpu, Boliden or its shareholders. About the rationale of the deal for Outokumpu, CEO Jyrki Juusela stated: - Outokumpus strategy emphasizes profitable growth in market growth businesses and moving in the metals chain towards more value-adding products and services. This transaction will release financial resources for Outokumpu and be a major step to reach our goal of 75% gearing by the end of 2004. It also enables us to focus on future growth in stainless steel and in selected value-added copper products, both being businesses where Outokumpu has a strong market position and where the markets are expected to grow much faster than the GDP. - The creation of an integrated up-stream base metals company, New Boliden, makes it a major player in its business, particularly in zinc. New Boliden will be operationally strong with high-quality assets and be financially able to develop its businesses in order to create value for its customers and shareholders. Due to operational and strategic synergies, the transaction enables Outokumpu shareholders to benefit more from copper and zinc mining and smelting businesses under New Boliden compared to keeping the assets in Outokumpus full control. - Close co-operation with New Boliden and its integrated up- stream businesses enables our technology arm, Outokumpu Technology, to leverage the full metals chain in future technology and knowledge transfer projects. - In addition, the acquisition of Bolidens copper fabrication assets offers significant potential to improve productivity and profitability of these businesses by way of merging them with Outokumpus copper fabrication in Europe and utilizing synergies and streamlining possibilities. - As a major shareholder of New Boliden Outokumpu will in the first place contribute to the success of the new company. This will be achieved through active participation in the Board work and by technology and possible other co-operation agreements. We do not seek a majority position in New Boliden. We may in time, in a controlled manner, reduce our shareholding for example in the form of private placements or other one-time transactions. - The industrial rationale of this transaction has always been there. I am pleased that it can be executed now. A final sales and purchase agreement between Outokumpu and Boliden is expected to be signed in October. Soon thereafter the transaction will be filed with relevant competition authorities. Bolidens extraordinary general meeting of shareholders is expected to take place in November and the transaction as a whole to be fully completed by the end of 2003. For further information, please contact: Eero Mustala, Senior Vice President - Corporate Communications tel. +358 9 421 2435, e-mail: eero.mustala@outokumpu.com OUTOKUMPU OYJ Corporate Management Johanna Sintonen Manager - Investor and Media Relations tel. + 358 9 421 2438, mobile +358 40 530 0778, fax + 358 9 421 2429 e-mail: johanna.sintonen@outokumpu.com www.outokumpu.com Invitation to press conferences and conference calls Stockholm, Sweden Mr. Jan Johansson, CEO of Boliden and Mr. Risto Virrankoski, Deputy CEO of Outokumpu, will be presenting the transaction at a press conference today, September 8, 2003 at 10.00 am (Stockholm time) at Berns. Address: Berns salonger, Kammarsalen, Berzelii Park, Stockholm. The presentation will be delivered in Swedish. You can also participate via conference call by dialing from Sweden 08 5052 0114 (dial the area code to enter the conference) and from abroad +44 (0) 207 1620 182. Espoo, Finland Dr. Jyrki Juusela, CEO of Outokumpu, will be presenting the transaction at a press conference today, September 8, 2003 at 2.00 pm (Helsinki time) at Outokumpus head office in Espoo, Finland. Address: Riihitontuntie 7 B, 02201 Espoo. The presentation will be delivered in Finnish. Conference calls Outokumpu Later today there will be an open conference call in English hosted by Outokumpu CEO Dr. Jyrki Juusela. The conference call starts at 5.00 pm (Helsinki time). Those wanting to participate are kindly asked to call in the numbers +44 20 7162 0190 (Europe) or +1 334 420 4951 (the US and Canada) 10 minutes before the opening of the conference call. The password for the conference call is "Outokumpu". For those who are not able to participate, there will be an instant reply service available for two working days until September 10, 2003. The numbers for instant reply are +44 20 8288 4459 (Europe), +1 334 323 6222 (the US and Canada). The access code for both is 967 682. Boliden An open conference call in English hosted by Boliden CEO Mr. Jan Johansson starts at 5.30 pm (Stockholm time). Those wanting to participate are kindly asked to call in the numbers +46 (0) 8 505 20 114 (Sweden, dial the area code to enter the conference) or +44 (0) 20 7162 0192 (the UK, US and Canada) 10 minutes before the opening of the conference call. The password for the conference call is "Boliden". For those who are not able to participate, there will be an instant reply service available for five working days until September 15, 2003. The numbers for instant reply are +44 (0) 20 8288 4459. The access code is 352 412. Representatives of the media, analysts, banks and shareholders are welcome to join all events.