Dividend and exchange offer for shares in Sveaskog

Dividend and exchange offer for shares in Sveaskog * The Board of Directors proposes a dividend of shares in Sveaskog AB on a 1:1 ratio * The Swedish State offers three shares in AssiDomän AB for each full number of ten shares in Sveaskog AB * If the offer is fully accepted, the Swedish State's ownership in AssiDomän will fall to around 35% * The acceptance period is expected to be from 11 May to 9 June * The record date for the dividend is expected to be 17 June 1999 * In accordance with conditions set by Sweden's National Board of Agriculture, the transaction will not be completed if the offer is not accepted by at least 90% of the shareholders in AssiDomän * Further information will be included in a prospectus to be published around 7 May 1999 * See also a separate press release from Sweden's Ministry of Industry and Commerce As previously announced, Sweden's National Board of Agriculture has reconsidered its earlier rejection and has approved Sveaskog's application for acquisition permission in accordance with the Land Acquisition Law. In total, the transaction covers 883,000 hectares of productive forestland divided among eight administration districts throughout Sweden. The Board of Directors of AssiDomän will therefore propose to the Annual General Meeting 1999 that a decision be taken regarding the dividend of all the shares in Sveaskog to AssiDomän's shareholders. With 50.2% of the shares and votes, the Swedish State is the largest shareholder in AssiDomän, and it will initially receive a corresponding ownership in Sveaskog. The Swedish State has today announced its decision regarding a public offer for all of the minority shares in the distributed Sveaskog with compensation to be in the form of part of the Swedish State's current shareholding in AssiDomän. Benefits of the transaction The transaction is expected to provide several benefits for AssiDomän. The value of forest assets outside the core region would be realised and transferred in a tax-efficient way to AssiDomän's shareholders. In this way the hidden value of AssiDomän's remaining forest assets would be exposed. Furthermore, the transaction would mean that AssiDomän achieves a balance between forestland and industrial operations more in line with the rest of the Swedish forest industry. Liquidity would also increase with the reduction of the Swedish State's shareholding. Conditions for the transaction A dividend of the shares in Sveaskog is proposed at a 1:1 ratio, i.e. for each share held in AssiDomän, one share is received in Sveaskog. For each full number of ten shares in Sveaskog, the Swedish State offers three shares in AssiDomän. The value of the State's offer is determined by AssiDomän's share price after the dividend of Sveaskog. The conditions for the offer have been structured against the background that a precondition for the National Board of Agriculture's decision to approve acquisition permission is that Sveaskog will be a company wholly owned by the Swedish State. If the offer is not accepted to the extent that the Swedish State owns at least 90% of the shares in Sveaskog, and will thereby be able to implement measures regarding a compulsory purchase of remaining shares, then the proposal by the AssiDomän Board of Directors concerning a dividend of shares in Sveaskog will be withdrawn and the transaction will not be completed. The proposed share exchange and full acceptance of the offer will mean that the Swedish State will reduce its shareholding in AssiDomän from the current 50.2% to around 35.3%. Independent assessment AssiDomän has commissioned an independent forestry consultant, LRF Konsult, which has experience of evaluating this type of forestland, to make an assessment of the value of a direct sale of Sveaskog's forestland in various amounts on the open market. LRF Konsult has estimated that the pre-tax gross value of Sveaskog's forestland is in the range of MSEK 6,250-7,550. This amount should be adjusted however by an estimated risk factor of around MSEK 1,050 due to the long period of time required for a direct sale of these forests and due to the fact that the characteristics of the forestland would limit demand on the open market. In addition, this type of direct sale would entail transaction costs estimated at around MSEK 250. Considering this risk deduction and associated costs, LRF Konsult has assessed that the value before tax of Sveaskog's forestland in the event of a direct sale on the open market would be in the range of MSEK 4,950-6,250. Since the taxable acquisition value of the land within AssiDomän is low in relation to its assessed market value, a direct sale would incur considerable capital gains tax for AssiDomän of up to MSEK 1,400. Further taxation would also arise in the event of a dividend of the net balance to AssiDomän's shareholders Tax consequences The share dividend will be made under the so-called Lex Asea tax regulation and is expected to be tax-free for AssiDomän and AssiDomän's Swedish shareholders. The share exchange following acceptance of the Swedish State's offer would incur capital gains tax. AssiDomän intends to apply to Sweden's National Tax Board for recommendations regarding the allocation of the acquisition value for AssiDomän shares between shares in Sveaskog and remaining AssiDomän shares. As a result of this allocation, it is expected that capital gains tax will be significantly limited. Timetable The prospectus for the offer is expected to be delivered to AssiDomän shareholders around 7 May 1999. The acceptance period would run from 11 May up to and including 9 June 1999. Since the acceptance period runs before AssiDomän's Annual General Meeting on 14 June 1999, and therefore before the record date for the dividend of Sveaskog shares, acceptance of the Swedish State's offer will be made on the basis of shareholders' ownership of AssiDomän shares. Provided that the offer from the Swedish State is implemented, with an announcement to this effect expected on 11 June 1999, the proposed record date for the dividend will be 17 June 1999. The proceeds, in the form of existing shares in AssiDomän, would then be received by shareholders starting on 24 June 1999. Statement by the AssiDomän Board of Directors Based on an assessment of the fundamental factors affecting the valuation of forestland in Sweden, the relation in value between forestland in Sveaskog and the payment form offered by the Swedish State, and including other significant assessment criteria, AssiDomän's Board of Directors believes that the conditions of the Swedish State's offer are reasonable and recommends AssiDomän's shareholders to accept the Swedish State's offer. Goldman Sachs International are financial advisors to AssiDomän in this transaction. AssiDomän AB Corporate Communications March 31, 1999 For further information, please contact Berit Hallberg, Senior Vice President Corporate Communications. Tel. +46 8 655 91 06 Frans Benson, Vice president Investor Relations. Tel. +46 8 655 92 78 Roger Asserståhl, President and CEO. Tel. +46 8 655 92 26 Or call +46 8 655 90 00 SUPPLEMENT SUPPLEMENT Sveaskog Sveaskog's total assets as of 1 January 1999 had a book value of MSEK 755 and a taxable value of around MSK 3,000. The annual wood sales volume is 1.2 3 Mm fub. On Sveaskog's land there is potential for successively increased extraction volumes of around 1% per year in the coming decades. Proforma net sales turnover and operating income for 1998 amounted to around MSEK 560 and around MSEK 255 respectively. An interest-bearing net debt, excluding financing needs for working capital, of MSEK 288 will be taken on by the new company. The following forest administration districts are included: Area, Ha 1) District Sveaskog AssiDomän Total % Kalix 258,000 538,000 796,000 32 Älvsbyn 96,000 576,000 672,000 14 Lycksele 167,000 540,000 707,000 24 Östersund 97,000 75,000 172,000 56 Hedemora 212,000 155,000 367,000 58 Örebro 11,000 240,000 251,000 4 Värnamo 33,000 104,000 137,000 24 Växjö 9,000 161,000 170,000 5 Total 883,000 2,389,000 3,272,000 27 3 1998 sold volumes (m fub) 1) District Sveaskog AssiDomän Total % Kalix 83,000 731,000 814,000 10 Älvsbyn 62,000 769,000 831,000 7 Lycksele 149,000 1,229,000 1,378,000 11 Östersund 301,000 132,000 433,000 70 Hedemora 407,000 608,000 1,015,000 40 Örebro 35,000 965,000 1,000,000 4 Värnamo 174,000 468,000 642,000 27 Växjö 19,000 661,000 680,000 3 Total 1,230,000 5,563,000 6,793,000 18 1) Sveaskog, as % of total. SUPPLEMENT Effects for AssiDomän The transaction affects all of AssiDomän's forest administration districts. The predominant part of the forest holding outside AssiDomän's core regions has been transferred to Sveaskog, but some areas within the core regions with high natural value are included in the new company. Forestland that is strategically important for AssiDomän's raw material supply will remain within the company. The transferred forest area, amounting to 883,000 hectares, represents an approximate 27% reduction of the total area and an approximate 18% reduction of the volume sold in 1998. As a result of the transaction, AssiDomän's self- sufficiency level, based on normal volumes, will fall from around 60% to 48%. During 1998, Sweden's National Tax Board revised the tax value of AssiDomän's forestland, as it did with other major Swedish forest companies. The new tax value is MSEK 17,051 (MSEK 20,607). The result of the proposed transaction would be to reduce the tax value by around MSEK 3,000. AssiDomän's net sales turnover and operating income would fall by around MSEK 560 and around MSEK 255 respectively, excluding effects from additional marginal costs for external purchases of raw materials and quality losses. Estimated as of 31 December 1998, Sveaskog would reduce the Group's equity by MSEK 687 and interest-bearing loans by MSEK 288. The balance sheet total would be reduced in total by MSEK 1,055. Based on the balance sheet as of December 31, 1998, AssiDomän's debt/equity ratio would increase only marginally and solidity would fall from 47% to 46%. The dividend of Sveaskog will not change AssiDomän's financial goals. The information contained in this press release is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that will contain detailed information about the company and management as well as financial statements. ------------------------------------------------------------ Please visit http://www.bit.se for further information The following files are available for download: http://www.bit.se/bitonline/1999/03/31/19990331BIT00410/bit0001.doc http://www.bit.se/bitonline/1999/03/31/19990331BIT00410/bit0002.pdf