STORA refinances Kopparkraft AB

In 1986 STORA implemented a partnership-financing whereby the company's hydro power assets were transferred to Kopparkraft AB. A number of agreements concluded at that time assured the financing partners a real return of slightly more than 4 percent on invested capital. STORA is a minority shareholder in Kopparkraft, together with a consortium of 18 Swedish insurance companies and pension institutions. Effective December 31, 1996, STORA has now refinanced Kopparkraft AB; the former partnership-financing arrangement has been dissolved in accordance with the option agreement and the partners have been replaced by new ones. The new financing partners comprise a consortium with a much smaller number of participants, headed by Nordbanken. In addition, STORA is contributing approximately SEK 2 billion of the financing. Under terms of the new agreement, the STORA Group is establishing the repurchase price for the power assets at their current value (SEK 8.3 billion, equal to approximately SEK 2.30 per kWh). All the earlier basic agreements remain unchanged, although in simplified form. The years in which STORA may repurchase the assets - 1998, 2003 or 2007 - also remain unchanged. At current levels of interest rates, and with the current distribution between fixed and floating interest rates, the new agreement will result in an im- provement of approximately SEK 150 million per year in Stora Power's operating income, beginning in 1997, in the form of lower costs for the purchase of electricity.