AssiDomän distributes forest shares
AssiDomän distributes forest shares to shareholders AssiDomän's board of directors has decided to propose to the next annual general meeting of shareholders that all shares in a company provisionally called Vasaskog be distributed to the shareholders. Vasaskog will be given title to 900,000 hectares (ha) of productive forest land mainly located outside of AssiDomän's core areas. The shares in the company will be distributed in accordance with the principle of Lex Asea. The decision has been preceded by a review of the Group's capital structure. After the distribution the Swedish state, which owns 50.2% of the shares in AssiDomän, will make a public offer to the shareholders in 1999 to exchange their shares in Vasaskog for shares in AssiDomän. If the offer is accepted, Vasaskog will be wholly owned by the Swedish state. The offer will be made on terms that are commercially acceptable and reasonable for the shareholders in Vasaskog. The state will hereby take into account the pricing of the shares in the two companies, fundamental principles for appraisal of forest land in Sweden, and other factors that can be regarded as essential in determining an exchange ratio. As the majority shareholder in AssiDomän, the Government has declared its approval of the board's proposal to distribute the shares and intends to direct a public offer to the shareholders in Vasaskog, as is evident from the press release from Anders Sundström, Minister of Industry and Trade. AssiDomän will prepare a detailed proposal regarding the distribution of Vasaskog shares to be submitted to the shareholders prior to the annual general meeting in April 1999. The proposed transaction is deemed to entail: that the liquidity in the share will increase due to the fact that the state's stake in AssiDomän decreases from the present 50.2%. The level of decrease is depending on the exchange ratio at the time of the offer that the hidden values in AssiDomän's timber assets are rendered visible that the Group's capital structure is improved that a balance is achieved between the industrial and forest operations that coincides more closely to the rest of the Swedish forest industry. "At the same time as this measure increases the value for the shareholders, it brings about a further concentration to AssiDomän's core areas without jeopardizing the Group's strategic raw material supply," says AssiDomän's CEO Lennart Ahlgren. "AssiDomän still aspires to become the leading company in Europe in sawn timber, fibre-based packaging and packaging materials. Efforts continue to realize integration and synergy gains for the purpose of significantly boosting profitability." Effects for AssiDomän The transaction affects all of AssiDomän's forest management regions. By far most of the forest holdings outside of AssiDomän's core areas will be transferred to Vasaskog. But even some lands within the core areas with high natural values will be included in the new company. Most of the forest land that is of strategic importance to AssiDomän's raw material supply will remain in the company's ownership. The transfer of the forest land in question, about 900,000 ha, reduces the total area held by AssiDomän by about 27% and the total felling volume by about 23%. As a result of the transaction, AssiDomän's self sufficiency will decline from 65 to about 49%. The following forest management regions are included (estimate): Transferred area Present area Kalix 255,000 ha 790,000 ha Älvsbyn 95,000 673,000 23 % reduction of felling volume in northern Lycksele 170,000 712,000 Sweden Östersund 105,000 175,000 Hedemora 210,000 368,000 Örebro 15,000 253,000 23 % reduction of felling volume in southern Växjö 5,000 137,000 Sweden Värnamo 45,000 171,000 Total 900,000 ha 3,278,000 AssiDomän's gross turnover will decline by about MSEK 630 and profit after depreciation by about MSEK 400, of which integration losses amount to about MSEK 80 in the form of additional marginal costs for external raw material purchases and quality losses. Based on the balance sheet as per 30 June 1998, AssiDomän's debt/equity ratio will increase from 61 to about 67% and the equity ratio will decrease from 47 to about 45%. Vasaskog Vasaskog, which is intended to be listed on the Stockholm Stock Exchange, will act as an independent company and be operated on a commercial basis with an independent management and board of directors. The concerned operation, as well as personnel, will be transferred to the new company. About 250 persons may be affected. Vasaskog's forest assets will have a book value of about MSEK 1,000. The 3 annual wood sales volume is 1.4 million sm ub (solid cubic metres under bark). On Vasaskog's lands, as well as on AssiDomän's other lands, there is a potential for progressively increasing felling of about one percent per annum for the next few decades. Turnover is currently about MSEK 630 and profit about MSEK 320 after depreciation. No financial liabilities are being assumed by the new company. Effects for AssiDomän's shareholders During 1999 the state will offer the shareholders an opportunity to exchange their shares in Vasaskog for shares in AssiDomän after the distribution of Vasaskog shares. The offer will be made on terms that are commercially acceptable and reasonable for the shareholders in Vasaskog. The state will hereby take into account the pricing of the shares in the two companies, fundamental principles for appraisal of forest land in Sweden, and other factors that can be regarded as essential in determining an exchange ratio. The board intends to propose a distribution of the shares in accordance with the Lex Asea principle, which means that the distribution does not entail any immediate tax consequences for Swedish shareholders at the time of the distribution nor for AssiDomän. It is the judgement of AssiDomän's board of directors that Lex Asea will be applicable. Timetable The planned restructuring is provisional on the following approvals: i) permit for private companies (Vasaskog) to acquire land ii) Lex Asea's applicability in the judgement of the board iii) the approval from the Swedish Parliament (Riksdagen) to reduce the state's shareholding in AssiDomän. Activity Time Transfer of forest land and operation to Vasaskog Dec. 1998 Information to AssiDomän's shareholders March 1999 Annual General Meeting in AssiDomän April 1999 Distribution of shares in Vasaskog May 1999 Listing of Vasaskog on stock exchange May/June 1999 Offer to exchange shares During 1999 AssiDomän AB Corporate Communications September 4, 1998 For further information, please contact: AssiDomän's CEO Lennart Ahlgren, tel. +46 8 655 92 80 or AssiDomän's chairman Olof Lund, tel. +46 70 658 6648. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1998/09/04/19980904BIT00280/Vasaskeng.pdf http://www.bit.se/bitonline/1998/09/04/19980904BIT00280/Vasaskeng.doc