Vattenfall acquires further 25.1 per cent of HEW - Hansa City of Hamburg exercises its put option

Vattenfall acquires further 25.1 per cent of HEW - Hansa City of Hamburg exercises its put option Vattenfall AB, Stockholm, will acquire from the City of Hamburg its shareholding in Hamburgische Electricitäts-Werke AG (HEW) amounting to 25.1 per cent at a purchase price of EUR 869 million. The transfer of the shares will take place after the Annual Shareholders' Meeting of HEW in August. In an additional agreement the City of Hamburg gives its consent to restructuring measures on the formation of Vattenfall Europe AG, on condition that certain business activities remain in Hamburg. "With the current agreements we are completing the good and successful collaboration between the City of Hamburg and Vattenfall as active owners of HEW", said Lars G. Josefsson, President and CEO of Vattenfall AB: "At the start of our partnership we decided jointly on a growth strategy for HEW, in order to form a leading energy company on the German market. We are achieving this aim with the creation of Vattenfall Europe AG, which will be based on a restructuring of HEW, Bewag, LAUBAG and VEAG." "We welcome the agreements with the City of Hamburg", added HEW CEO Klaus Rauscher. "They establish the basis for securing HEW's position long term as part of Vattenfall Europe on the German electricity market. For over 100 years HEW has played an important part in the history of the City of Hamburg and we look forward to continuing to be a major player in the local economy and a partner for our electricity and heat customers." With the sale the City of Hamburg has exercised a put option, which was agreed in the master agreement between both parties signed in November 1999. Vattenfall had at that time acquired a first tranche of 25.1 per cent in HEW and concluded a partnership with Hamburg. Subsequently Vattenfall acquired further HEW shares from Sydkraft, E.ON, institutional and private investors and extended its holding to a current 73.8%. With a view to the restructuring measures which will take place for the creation of the new Vattenfall Europe AG, Vattenfall and the City of Hamburg have reached agreement on the safeguarding of the interests of Hamburg. Thus Vattenfall will be responsible to Hamburg for ensuring that important business divisions of Vattenfall Europe will have their offices in Hamburg and that by the end of 2005 at least a staff of 3,000 male and female workers, including 250 trainees, will be employed in Hamburg. The operative business of HEW will remain on site, and in addition energy trading, IT functions and the sales force for major national customers of the Vattenfall Europe Group will be located in Hamburg. The agreements reached are in full accordance with the Master Plan on the creation of Vattenfall Europe AG. In order to offset financial and other disadvantages which arise for the City of Hamburg out of the premature termination of the agreement in principle, Vattenfall will pay compensation amounting to EUR 96.4 million to the city by the end of the coming year The agreements are subject to approval of the Supervisory Board of Vattenfall AB and of the Senate and Parliament of the Free Hansa City of Hamburg. From Vattenfall's Press Office, telephone: +46 8 739 50 10 For more information, please contact: Karl-Erik Olsson, press manager, Vattenfall, phone +46 705-388 138 Martin May, Vattenfall Deutschland, phone: +49 40 37 47 22-14, mobile +49 172 42 91 248 ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/06/11/20040817BIT21450/wkr0001.pdf