STOCKHOLM, Sweden, Sept. 08, 2003 (PRIMEZONE) -- Boliden (TSE:BLS) (Other OTC:BDNNF) and Outokumpu (Other OTC:OUTOF) have signed a Letter of Intent whereby Boliden intends to acquire Outokumpu's mining and smelting operations within zinc and copper and to sell its Fabrication and Technology Sales units to Outokumpu. Through the transaction, Outokumpu will become a major shareholder in New Boliden.
As a result of the transaction, New Boliden will become one of the world's leading smelting companies and the fourth largest zinc mining company in the world. The combination will also create a stronger company with increased financial and operational flexibility and potential for future growth.
The assets, which Boliden intends to acquire from Outokumpu will double the size of Boliden, and are: -- Tara zinc mine in Ireland; -- Zinc smelters in Kokkola, Finland and in Odda, Norway; -- Outokumpu Zinc Commercial in the Netherlands; -- Copper smelter in Harjavalta, Finland; and -- Copper refinery in Pori, Finland.
The assets to be acquired from Outokumpu are valued at EUR 736 million (SEK 6.7 billion) and Boliden will pay for the transaction by: -- A directed rights issue to Outokumpu representing 49 percent of all shares and votes in New Boliden and valued at EUR 307 million (SEK 2.8 billion), corresponding to a premium of 25 percent compared to the closing price of the Boliden share on the Stockholm Stock Exchange on September 5, 2003; -- A bank loan of EUR 373 million (SEK 3.4 billion); and -- A subordinated loan of EUR 56 million (SEK 500 million) to Outokumpu. In addition, New Boliden is planning a guaranteed rights issue, in the order of EUR 150 million (SEK 1.4 billion) as an integral part of the deal. The transaction will strengthen Boliden's financial position, providing New Boliden with a gearing (net debt/shareholders' equity) of less than 100 percent.
In order to streamline its operations Boliden intends to sell itsFabrication and Technology Sales units to Outokumpu. These assetsgenerated net sales of EUR 270 million (SEK 2.5 billion) in 2002, andcomprise:- Boliden Fabrication (copper tubes and brass products) in Sweden,Belgium, the Netherlands and Britain; and- Boliden Contech (technology sales) in Sweden.
As a consideration for the assets to be sold to Outokumpu, Boliden will receive 5 million shares in Outokumpu Oyj, corresponding to 2.8 percent of all shares and votes. This shareholding is valued at some EUR 49 million (SEK 450 million) based on the closing price of the Outokumpu share on the Helsinki Exchanges on September 5, 2003.
The New Boliden's pro forma net sales for 2003 are estimated to be EUR 1.6 billion (SEK 14.7 billion), of which 80 percent is coming from smelting and refining and 20 percent from mining. As a result of the transaction 2,200 Outokumpu employees will join New Boliden. The total number of employees in New Boliden will be 4,800, a net increase of 1,000.
Annual synergies, relating primarily to raw materials and commercial optimization, are estimated at EUR 25 -- 30 million (SEK 225 -- 275 million). Furthermore, New Boliden will have a possibility to benefit from investment synergies in the future, particularly in the smelting area.
"The transaction is industrially logical and is fully justified in view of the continuing consolidation of the global mining and smelting industry. In New Boliden, world-class assets are now being combined, which with increased competitive strength from a strong Nordic base, will be able to create long-term profitability and substantial growth potential. New Boliden will also get a strong industrial owner with long experience and extensive knowledge of the mining and smelting industry. All this will create added value for shareholders, customers and employees", says Jan Johansson, President and CEO of Boliden.
"Outokumpu's strategy emphasises profitable growth in market growth businesses and moving in the metals chain towards more value added products and services. Through this transaction, we will further focus on growth within our main areas of activity -- stainless steel and value- added copper products -- with enhanced financial flexibility. At the same time, we see significant potential in our ownership in New Boliden", says Jyrki Juusela, Outokumpu CEO.
The parties are proposing, that the Board of Directors of New Boliden will initially comprise four Outokumpu nominees, three nominees of present Boliden shareholders as well as personnel representatives. The Chairman of the Board will be elected amongst Outokumpu nominees. Mr. Carl Bennet, currently Chairman of the Boliden Board, will be appointed Vice Chairman. Mr. Jan Johansson, CEO of Boliden will continue as CEO of New Boliden and also be a member of the Board. Mr. Tom Niemi from Outokumpu will be appointed Deputy CEO.
The operative management team of New Boliden is proposed to comprise the following persons: CEO Mr. Jan Johansson, Deputy CEO Mr. Tom Niemi, CFO Mr. Jan Ohman, President Copper Mr. Jukka Jarvinen, President Zinc Mr. Harri Natunen, President Mining Mr. Svante Nilsson and Commercial Director Mr. Lars-Goran Bjorkqvist.
A final sales and purchase agreement is expected to be signed by the parties when the final terms and financing of the transaction have been settled. This is expected to take place in October 2003. As a whole the transaction is expected to be completed by year-end 2003. The transaction is subject to, among others, approvals by the Boards of Directors of Boliden and Outokumpu, approval from Boliden's shareholders and financing being in place. In addition, approval will have to be obtained from the relevant competition authorities.
Enskilda Securities is acting as financial advisor to Boliden and Alfred Berg is acting as financial advisor to Outokumpu in connection with the transaction.
Invitation to press conferences and conference calls
Stockholm, Sweden
CEO of Boliden and Mr. Risto Virrankoski, Deputy CEO of Outokumpu, will be presenting the transaction at a press conference today, September 8, 2003 at 10.00 am (Stockholm time) at Berns. Address: Berns salonger, Kammarsalen, Berzelii Park, Stockholm. The presentation will be delivered in Swedish. You can also participate via conference call by dialing from Sweden 08 5052 0114 (dial the area code to enter the conference) and from abroad +44 (0) 207 1620 182.
Espoo, Finland
Dr. Jyrki Juusela, CEO of Outokumpu, will be presenting the transaction at a press conference today, September 8, 2003 at 2.00 pm (Helsinki time) at Outokumpu's head office in Espoo, Finland. Address: Riihitontuntie 7 B, 02201 Espoo. The presentation will be delivered in Finnish.
Conference calls
Boliden
An open conference call in English hosted by Boliden CEO Mr. Jan Johansson starts at 5.30 pm (Stockholm time). Those wanting to participate are kindly asked to call in the numbers 08 505 20 114 (Sweden, dial the area code to enter the conference) or +44 (0) 20 7162 0192 (the UK, US and Canada) 10 minutes before the opening of the conference call. The password for the conference call is "Boliden".
For those who are not able to participate, there will be an instant reply service available for five working days until September 15, 2003. The number for instant reply is +44 (0) 20 8288 4459. The access code is 352 412.
Outokumpu
An open conference call in English hosted by Outokumpu CEO Dr. Jyrki Juusela starts at 5.00 pm (Helsinki time). Those wanting to participate are kindly asked to call in the numbers +44 20 7162 0190 (Europe) or +1 334 420 4951 (the US and Canada) 10 minutes before the opening of the conference call. The password for the conference call is "Outokumpu".
For those who are not able to participate, there will be an instant reply service available for two working days until September 10, 2003. The numbers for instant reply are +44 20 8288 4459 (Europe), +1 334 323 6222 (the US and Canada). The access code for both is 967 682.
Representatives of the media, analysts, banks and shareholders are welcome to join all events.
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