INSIDE INFORMATION: Tietoevry’s strategic review of its Banking business: Tietoevry’s Board of Directors has approved a demerger plan

Tietoevry Corporation   INSIDE INFORMATION   15 February 2024, 9:00 a.m. EET

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INSIDE INFORMATION: Tietoevry’s strategic review of its Banking business: Tietoevry’s Board of Directors has approved a demerger plan

• Separation process of Tietoevry Banking continues: demerger plan concerning a partial demerger of Tietoevry approved by the Board of Directors
• Tietoevry Banking proposed to be separated as a standalone company to be listed on Nasdaq Helsinki
• The demerger is subject to shareholder approval in an Extraordinary General Meeting, expected to be held in June 2024
• Preliminary target to complete the demerger on 30 June 2024
• Tietoevry’s Board of Directors retains the optionality to pursue other alternatives for Tietoevry Banking before completion of the demerger, if in the best interests of Tietoevry and its shareholders

On 22 July 2022, Tietoevry Corporation (“Tietoevry” or the “Company”) announced a strategic review of its Banking business (the “Banking Business”), including a process to study the potential separation of the Banking Business into an independent company that would be listed on a stock exchange. Following the progress of the strategic review, the Company has decided to continue the separation process of the Banking Business from the Tietoevry Group. As part of the implementation of the separation, the Company’s Board of Directors has approved a demerger plan concerning a partial demerger of Tietoevry (the “Demerger”).

Pursuant to the demerger plan, all of the assets, rights, debts and liabilities which relate to, or primarily serve the Company’s Banking Business would, upon the completion of the Demerger, be transferred into a new independent company to be incorporated in the Demerger, proposed to take the trade name Tietoevry Banking Corporation (“Tietoevry Banking”). The demerger plan is attached to this stock exchange release.

The Tietoevry Board of Directors retains the optionality to pursue other alternatives for the Banking Business before completion of the Demerger, should this be considered to be in the best interests the Company and its shareholders. The Company sees market interest towards the Banking Business, and a sales process is ongoing in parallel.

“After a thorough evaluation of different alternatives, we are pleased to confirm the next steps in the strategic review. With the decision to approve the demerger plan, we are proceeding to separate Tietoevry Banking into an independent company. According to our evaluation, Tietoevry Banking would be able to accelerate its growth and competitiveness and create shareholder value in line with its fintech peers as a standalone company”, says Tomas Franzén, Chairperson of Tietoevry’s Board of Directors.

Strategic rationale of the Demerger

The purpose of the Demerger is to execute the separation of the Banking Business into an independent company, with the aim to realize its value as a specialized Software as a Service (SaaS) provider for the financial services industry to achieve a valuation in line with fintech peers. The separation also aims at accelerating the growth profile, scale and profitability of the Banking Business and enhancing its strategic and financial flexibility to drive value creation for all stakeholders.

“The separation of the Banking Business follows the Tietoevry specialization-based strategy to reconfigure our business portfolio and reposition us as a leading software and digital engineering company with the aim to accelerate value creation for shareholders”, says Kimmo Alkio, CEO of Tietoevry.

Upon completion of the Demerger, Tietoevry Banking is expected to be positioned as a leading SaaS provider for the financial services sector with a strong market presence across its markets, offering a modern modular SaaS portfolio to financial institutions in the Nordics and beyond. Tietoevry’s Banking segment had a revenue of approximately EUR 567 million in 2023 and around 3 500 employees serving more than 400 customers globally. With its comprehensive and competitive product portfolio, Tietoevry Banking would be well positioned to address customer needs across its markets, including needs related to digitalization of financial services, compliance and automation, as well as the continuous need for technology modernization.

As a standalone company, Tietoevry Banking is expected to be able to accelerate its performance and create shareholder value through a sharper focus on its own strategic priorities. These would include, among others, a positioning with customers as an independent fintech software company, global fintech-specific talent attraction, and building its own investments for growth and scale in the growing financial services software market. In addition, strategic priorities would include optimized ways of working for a faster transition of operations into a SaaS -optimized set-up, as well as an increased strategic focus on streamlining product and services development to deliver value to customers. The separation of the Banking Business would enable the Banking Business to achieve these goals more efficiently, while supporting growth opportunities by enabling wider options than are available at present.

Overview of the Demerger

The Demerger would be executed in accordance with the attached demerger plan as a partial demerger, as set out in the Finnish Companies Act (624/2006, as amended) (the “Finnish Companies Act”). The shares of Tietoevry Banking would be issued as demerger consideration to the shareholders of Tietoevry in proportion to their existing shareholding with a ratio of 1:1, whereby shareholders in Tietoevry would receive as demerger consideration one (1) new share in Tietoevry Banking for each share owned in the Company. Tietoevry Banking’s shares are intended to be listed on the official list of Nasdaq Helsinki Ltd ("Nasdaq Helsinki"), while Tietoevry Corporation would continue as a Nasdaq Helsinki-listed company with its existing parallel listings on Nasdaq Stockholm and Oslo Børs.

The Demerger is subject to, among others, the approval by shareholders in an Extraordinary General Meeting of the Company (the "EGM") and the registration of the completion of the Demerger with the Finnish Trade Register, following a creditor hearing process in accordance with the Finnish Companies Act. The approval of the Demerger requires that it has been supported by qualified majority of two-thirds (2/3) of the votes cast and shares represented in the EGM.

The planned effective date of the Demerger is 30 June 2024 (the “Effective Date”), and the Company intends to convene the EGM to resolve on the Demerger in June 2024, pursuant to a separate notice. The trading in Tietoevry Banking shares on Nasdaq Helsinki is expected to commence on or about 1 July 2024, or as soon as reasonably possible thereafter. The Company will publish a demerger and listing prospectus, which will contain more detailed information on the contemplated Demerger and Tietoevry Banking prior to the EGM. The demerger and listing prospectus is currently expected to be made available during late May 2024. The planned timeline and the above-mentioned preliminary dates may change, for example if required due to circumstances relating to the Demerger or if the Board of Directors of Tietoevry otherwise decides to apply for the Demerger to be registered prior to, or after, the planned Effective Date.

The Company’s Board of Directors considers a partial demerger and subsequent listing to be an effective way to separate Tietoevry Banking from the Tietoevry Group. A demerger under the Finnish Companies Act is a well-established process that enables efficient separation of assets, rights, debts and liabilities relating to the Banking business.

Management of Tietoevry Banking

The first President and CEO of Tietoevry Banking shall be appointed by the Board of Directors of Tietoevry with a separate decision prior to the Effective Date. It is anticipated that Klaus Andersen, who was appointed as the CEO of the Banking Business effective 1 February 2023, shall be appointed as the first President and CEO of Tietoevry Banking, in accordance with his consent.

Minna Smedsten has been appointed as the CFO of the Banking Business as of 1 February 2024.

Financing arrangements

The Company has also taken certain steps to secure the future financing for both the Company and Tietoevry Banking in preparation for the contemplated Demerger in the form of term and credit facilities in an aggregate amount of EUR 852 million with certain Nordic banks.

In order to facilitate the Demerger, the Company's Board of Directors considers launching a consent solicitation process in respect of the Company's EUR 300 million bond falling due in 2025 and requesting waivers from the lenders under certain of the Company's syndicated and bilateral financing arrangements. The consent solicitation process is expected to be launched in early March 2024 and will in such case be announced by a separate stock exchange release. The Company has also arranged adequate back-up facilities to support the consent solicitation and waiver processes in an aggregate amount of EUR 452 million from certain Nordic banks. In addition, the Company has secured financing from certain Nordic banks in an aggregate amount of EUR 220 million that is not conditional upon the completion of the Demerger for the partial refinancing of its syndicated term loan facility (the “Term Facility”) and EUR 100 million bond, both of which fall due in September 2024.

The Company has also arranged new financing for Tietoevry Banking from certain Nordic banks, including a EUR 130 million term loan to be applied towards refinancing external long-term financial liabilities relating to Tietoevry Banking by refinancing the remaining part of the Term Facility and a EUR 50 million revolving credit facility, both of which have a maturity of three years. The Company may use the EUR 130 million term loan facility for the refinancing of the Term Facility regardless of whether the Demerger is completed or not.

If all the contemplated consents/waivers are received, Tietoevry Corporation’s loan portfolio would consist at the time of the completion of the Demerger of EUR 300 million unsecured bonds, a total of EUR 440 million term loans and a revolving credit facility of EUR 250 million to cover short-term funding needs. Tietoevry Banking's loan portfolio would consist of EUR 130 million term loans and the EUR 50 million revolving credit facility for short-term funding needs.

Financial effects of the proposed Demerger

The financial effects of the Demerger will be determined according to the situation on the date of registration of the completion of the Demerger. A description of the effects of the proposed allocation of Tietoevry’s assets, rights, debts and liabilities in accordance with the demerger plan to the separate balance sheets of Tietoevry and Tietoevry Banking has been described in the demerger plan and the preliminary illustration of the balance sheets of Tietoevry and Tietoevry Banking attached thereto.

Tietoevry will publish further illustrative financial information in due course in connection with the consent solicitation in relation to its bond, as well as in connection with the demerger and listing prospectus.

Advance tax ruling

The Company has obtained a legally binding advance tax ruling from the Finnish Tax Administration, according to which the Demerger will be treated as a tax neutral transaction as defined in Section 52 c of the Finnish Business Income Tax Act (360/1968, as amended) for Finnish tax purposes. No immediate tax consequences are expected for Finnish-resident shareholders when receiving Tietoevry Banking’s shares.

Advisors to the Company

Morgan Stanley & Co. International plc and Nordea Bank Abp act as the Company's lead financial advisors in the Demerger. Roschier, Attorneys Ltd. acts as the legal advisor to the Company in the Demerger. PricewaterhouseCoopers Oy acts as the financial, tax and operational advisor to the Company in the Demerger.

For further information, please contact:

Tomi Hyryläinen, Chief Financial Officer, tel. +358 50 555 0363, tomi.hyrylainen (at) tietoevry.com

Tommi Järvenpää, Head of Investor Relations, tel. +358 40 576 0288, tommi.jarvenpaa (at) tietoevry.com

Tietoevry Corporation

DISTRIBUTION

NASDAQ Helsinki

NASDAQ Stockholm

Oslo Børs

Principal Media

Tietoevry creates purposeful technology that reinvents the world for good. We are a leading technology company with a strong Nordic heritage and global capabilities. Based on our core values of openness, trust and diversity, we work with our customers to develop digital futures where businesses, societies, and humanity thrive.

Our 24 000 experts globally specialize in cloud, data, and software, serving thousands of enterprise and public-sector customers in more than 90 countries. Tietoevry’s annual turnover is approximately EUR 3 billion and the company’s shares are listed on the NASDAQ exchange in Helsinki and Stockholm, as well as on Oslo Børs. www.tietoevry.com

Important notice

This release does not constitute a notice to convene a general meeting of shareholders nor does it constitute a demerger or listing prospectus. Any decision with respect to the proposed Demerger of Tietoevry Corporation should be made solely on the basis of information to be contained in the actual notice to convene the general meeting of shareholders of Tietoevry Corporation, and the demerger and listing prospectus as well as on an independent assessment of the information contained therein. Investors are directed to consult the demerger and listing prospectus for more comprehensive information on Tietoevry Banking Corporation, its shares and the proposed Demerger.

This release does not constitute an offer of securities for sale or a solicitation of an offer to purchase the securities described in such release in the United States. In particular, any securities referred to in this release have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and may not be offered, sold or delivered, directly or indirectly, in or into the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There will be no public offering of securities in the United States.

This release is not intended for and shall not be published, distributed or disseminated, in whole or in part, directly or indirectly, to persons resident or physically present in Australia, Canada, Hong Kong, Japan, New Zealand, South Africa or Singapore or any other jurisdiction where publication, distribution or dissemination would be unlawful. This release is not an offer to sell or solicitation of an offer to sell, buy or acquire securities in Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Singapore or any such jurisdiction where such offer, solicitation or sale would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any such jurisdiction.

The shares in Tietoevry Banking Corporation have not been and will not be listed on a US securities exchange or quoted on any inter-dealer quotation system in the United States. Neither Tietoevry Corporation nor Tietoevry Banking Corporation intends to take any action to facilitate a market in Tietoevry Banking Corporation shares in the United States. Consequently, it is unlikely that an active trading market in the United States will develop for the Tietoevry Banking Corporation shares.

The Tietoevry Banking Corporation shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission or any other regulatory authority in the United States, nor have any of the foregoing authorities passed comment upon, or endorsed the merit of, the partial demerger or the accuracy or the adequacy of this release. Any representation to the contrary is a criminal offence in the United States.

This release is for information purposes only and is not intended to and does not constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security. This release is not a prospectus, product disclosure statement or other offering document for the purposes of Regulation (EU) 2017/1129 as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 (as amended, the “UK Prospectus Regulation”), and the contemplated distribution of Tietoevry Banking Corporation shares is expected to be carried out in circumstances that do not constitute “an offer to the public” within the meaning of the UK Prospectus Regulation.

This release includes “forward-looking statements” that are based on present plans, estimates, projections and expectations and are not guarantees of future performance. Words such as “intend”, “assess”, “expect”, “may”, “plan”, “believe”, “estimate” and other expressions entailing indications or predictions of future developments or trends, not based on historical facts, constitute forward-looking information. They are based on certain expectations and assumptions, which, even though they seem to be reasonable at present, may turn out to be incorrect. Shareholders should not rely on these forward-looking statements. Numerous factors may cause the actual results of operations or financial condition of Tietoevry Corporation or Tietoevry Banking Corporation to differ materially from those expressed or implied in the forward-looking statements. Neither Tietoevry Corporation, Tietoevry Banking Corporation, nor any of their affiliates, advisors or representatives or any other person undertakes any obligation to review, confirm or to release publicly any updates or revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of this release other than as required by applicable laws and regulations.

This release contains financial information regarding the businesses and assets of Tietoevry Corporation and Tietoevry Banking Corporation and their consolidated subsidiaries. Such financial information may not have been audited, reviewed or verified by any independent auditor. Certain financial data included in this presentation may consist of “alternative performance measures.” These alternative performance measures, as defined by Tietoevry Corporation and Tietoevry Banking Corporation, may not be comparable to similarly titled measures as presented by other companies, nor should they be considered as an alternative to the historical financial results or other indicators of Tietoevry Corporation’s and Tietoevry Banking Corporation’s cash flows based on IFRS. Even though such alternative performance measures may be used by the management of Tietoevry Corporation and Tietoevry Banking Corporation to assess the financial position, financial results and liquidity and these types of measures are commonly used by investors, they have important limitations as analytical tools and should not be considered in isolation or as substitutes for analysis of Tietoevry Corporation’s or Tietoevry Banking Corporation's financial position or results of operations as reported under IFRS.

This release includes estimates relating to the benefits expected to arise from the proposed Demerger, which are based on a number of assumptions and judgments. The assumptions relating to the estimated benefits and costs arising from the proposed Demerger are inherently uncertain and are subject to a wide variety of significant business, economic, regulatory and competitive risks and uncertainties that could cause the actual benefits and costs arising from the proposed Demerger to differ materially from the estimates in this publication. Further, there can be no certainty that the proposed Demerger will be completed in the manner and timeframe described in this announcement, or at all.