Wärtsilä's Annual General Meeting 12 March 2002

Wartsila Corporation
  • Stock exchange release
12 March 2002 at 2:01 AM E. Europe Standard Time

Wärtsilä Corporation STOCK EXCHANGE RELEASE 12.3.2002 at 6.30 p.m.

Wärtsilä's Annual General Meeting approved the financial statements and discharged the members of the Board of Directors and the President and CEO from liability for 2001. The AGM approved the proposal of the Board of Directors that in addition to a dividend of EUR 0.50 per share (0.65) the Company will pay an extra dividend of EUR 3.50 per share (2.00), totalling 4.00 euro/share (2.65).

Commenting on the Group’s goals and prospects, Mr Ole Johansson, Wärtsilä’s President and CEO, said:

“In 2001 we made several decisions that will take our Group towards our vision to lead the ship power and distributed power generation markets by providing the most competitive, reliable and environmentally sound solutions. We aim to support our marine and power plant customers throughout the lifetime of their equipment with high-quality service, operation and maintenance.
 
Our aim is to expand the Power Divisions in these areas so that in 2003 our net sales will reach three billion euros and our profitability will almost double from today’s level of roughly 4% to 7-8%.”

Elections
The AGM decided that the Board would have six members. Board members Mr Göran J. Ehrnrooth, Mr Georg Ehrnrooth and Mr Vesa Vainio who were in turn to retire, were re-elected for the term of office ending at the Annual General Meeting in 2005. Mr Christoffer Taxell had notified the Board that he was not available for re-election.

The other Board members are Mr Robert G. Ehrnrooth, Mr Jaakko Iloniemi and Mr Paavo Pitkänen.

The firm of authorized public accountants KPMG Wideri Oy Ab was elected as the company’s auditors.

Other issues
With respect to the extra dividend the AGM decided that the conversion ratio of the 1994 convertible subordinated debentures and the subscription price of the Wärtsilä shares subscribable under the warrants attached to the 1996 bond with warrants be changed corresponding to the amount of the extra dividend.

The AGM decided to authorize the Board for one year to repurchase the company’s own shares in public trading on the Helsinki Exchanges at the prevailing price, and other than in proportion to the holdings of the shareholders. At most 5% of all the shares and votes may be repurchased. This authorization also includes the right to dispose of the company’s shares repurchased in this manner at a price at least equal to the share price prevailing on the Helsinki Exchanges at the time of surrender, disapplying
shareholders’ pre-emptive rights of subscription. At the same time the authorization granted to the Board by the AGM on 20 March 2001
to repurchase and dispose of the company’s own shares, was revoked.

The AGM decided to issue warrants to key personnel of Wärtsilä Group. Altogether 800,000 warrants will be issued allowing subscription of the same number of Wärtsilä Corporation B shares. The shares subscribable under the warrants will represent 1.3% of the share capital and 0.4% of the votes. The share subscription with warrants will begin provided that the company will reach the minimum profitability targets set by the Board of Directors for the year 2003. The purpose of the share option programme is to encourage key employees to work on a long-term basis in order to raise shareholder value and to increase their commitment to the company.

The AGM approved the share option programme after a vote. All other decisions were made unanimously.

The Board of Directors reconvened directly after the AGM. Robert G. Ehrnrooth was re-elected Chairman of the Board, and Vesa Vainio was re-elected Deputy Chairman.

ATTACHMENTS: Proposals by the Board of Directors approved by the Annual General Meeting, 4 in number.

 

Wärtsilä Corporation  Attachment 1 to the Stock Exchange Release 12.3.2002 


PROPOSAL OF THE BOARD OF DIRECTORS TO THE ANNUAL GENERAL MEETING ON 12 MARCH 2002 TO CHANGE THE CONVERSION RATE OF THE CONVERTIBLE SUBORDINATED DEBENTURES AND THE SHARE SUBSCRIPTION PRICE OF THE BOND WITH WARRANTS

The extra dividend of EUR 3.50 proposed by the Board of Directors on the financial year ended 31 December 2001 differs significantly from the normal dividend paid annually by the company. For this reason the Board proposes that the conversion rate of Wärtsilä Corporation’s 1994 convertible subordinated debentures and the subscription price of the Wärtsilä Series B shares subscribable under Wärtsilä Corporation’s 1996 bond with warrants be changed corresponding to the amount of the extra dividend.

After the proposed change each bond of nominal value EUR 1,681.88 convertible into Series A and B shares may be exchanged for 62 Wärtsilä Series A shares and 62 Wärtsilä Series B shares, compared to a conversion rate of 49 Series A shares and 49 Series B shares as stipulated by the existing terms and conditions. Similarly, each bond of nominal value EUR 1,681.88 convertible into Series B shares may be exchanged for 124 Series B shares, instead of 98 Series B shares according to the current conversion rate.

Wärtsilä’s right to redeem the bonds, based on the share performance, will after the proposed change be determined by the new conversion rate. The other terms and conditions of the convertible subordinated debentures remain unchanged.

After the change of the conversion rate, the company’s share capital may be increased with respect to the debentures
convertible into Series A and B shares by exchanging them for Series A shares totalling at most EUR 7,595,000 and for Series B shares totalling at most EUR 7,595,000. With respect to the debentures convertible into Series B shares, the share capital may be increased correspondingly by exchanging them for Series B shares totalling at most EUR 15,190,000.

The subscription price of the Wärtsilä Series B shares pursuant to
the bond with warrants will decrease following the proposed change from EUR 11.49 to EUR 7.99. The other terms and conditions of the bond with warrants remain unchanged.

The Board of Directors further proposes that the Board be
authorized to resolve on other matters and practical measures related to these changes.

Helsinki, 6 February 2002

BOARD OF DIRECTORS

 

Wärtsilä Corporation  Attachment 2 to the Stock Exchange Release 12.3.2002


PROPOSAL OF THE BOARD OF DIRECTORS TO THE ANNUAL GENERAL MEETING 12 MARCH 2002 TO AUTHORIZE THE BOARD OF DIRECTORS TO DECIDE ON THE REPURCHASE AND DISPOSAL OF THE COMPANY'S OWN SHARES

The Board proposes to the Annual General Meeting:

1) that the Annual General Meeting would authorize the Board during a period of one year from the resolution of the Annual General Meeting to repurchase the Company's own shares of series A and series B in proportion to the number of shares in each class of shares. Such repurchase shall be carried out in public trading at the prevailing market price by using distributable funds, and it may be completed in other than the proportion of the shareholdings of the shareholders. The aggregate nominal value and voting rights of the shares repurchased shall not exceed 5% of the share capital and of all voting rights. The authorization may be used for repurchasing shares for the purpose of being used as consideration in future mergers and acquisitions or industrial reorganizations or for the development of the capital structure of the Company or as part of its management incentive system. Shares may be acquired for other consideration than cash. The corresponding previous authorisation given by the Annual General Meeting on 20 March 2001 would be revoked.

2) that the Annual General Meeting would authorize the Board during a period of one year from the resolution of the Annual General Meeting to dispose any or all the shares repurchased by virtue of the above mentioned authorization in one or several lots, and by deviating from the pre-emptive rights of the shareholders. The aggregate nominal value and voting rights of shares to be disposed shall not exceed 5% of the share capital and of all voting rights. Shares may be disposed as consideration in mergers and acquisitions or industrial reorganizations or in order to develop the capital structure of the Company or as part of its management incentive system. Shares must be disposed at the market price prevailing in public trading. Shares may be disposed for other consideration than cash. The corresponding previous authorisation given by the Annual General Meeting on 20 March 2001 would be revoked.

Helsinki 6 February 2002

BOARD OF DIRECTORS

 


Wärtsilä Corporation  Attachment 3 to the Stock Exchange Release 12.3.2002


PROPOSAL OF THE BOARD OF DIRECTORS TO THE ANNUAL GENERAL MEETING ON 12 MARCH 2002 CONCERNING THE ISSUE OF WARRANTS

The Board of Directors proposes that warrants be issued by the Annual General Meeting of Shareholders to the key personnel of the Wärtsilä Group on the terms and conditions attached hereto.

The warrants shall, with deviation from the shareholders’ pre-emptive right to subscription, be issued to the present key personnel of the Wärtsilä Group. A small part of the warrants will be reserved for new key persons which will be nominated later and shall for this purpose be issued to a wholly-owned subsidiary of the Company. It is proposed that the shareholders’ pre-emptive right to subscription be deviated from since the warrants are intended to form a part of the incentive program for the key personnel. The purpose of the warrants is to encourage the personnel of the Company to work on a long-term basis to increase the shareholder value. The purpose of the warrants is also to commit the personnel to the Company.

The number of warrants issued will be 800.000. The warrants entitle to subscription of a maximum of 800.000 B-shares in Wärtsilä Corporation. The share subscription with warrants will begin provided that the company will reach the minimum profitability targets set by the Board of Directors for the year 2003. The share subscription time begins on April 1, 2004 and ends on March 31, 2008.

The share subscription price shall be the trade volume weighted average price of the B-share at the Helsinki Exchanges during the period of 13 May - 17 May, 2002.

From the share subscription price shall be deducted the amount of any extra dividends which may be distributed after May 17, 2002 but before the subscription for shares. Such deduction shall be effected as per the respective dividend record date.

A part of the persons eligible for subscription belongs to the inner circle of the Company. The persons in this category who are eligible for subscription own less than 0.03% of the Company’s shares and less than 0.02% of the voting rights of the shares. In total the shares that can be subscribed for on the basis of the warrants now issued correspond to 1.3% of the Company’s shares and 0.4% of the voting rights of the shares.

Helsinki, 6 February 2002

The Board of Directors

ENCL. Terms and Conditions of the Warrants

 

Wärtsilä Corporation Attachment 4 to the Stock Exchange Release 12.3.2002


WARRANTS IN WÄRTSILÄ CORPORATION 2002

I TERMS AND CONDITIONS OF WARRANTS

1 Number of warrants

The number of warrants issued will be 800,000, which entitle to subscribe for a total of 800,000 B-shares in Wärtsilä Corporation.

2 Issuing of Warrants

The persons to which warrants will be issued will be notified in writing by the Company about the issue of warrants free of charge. The warrants will be issued to the recipient when he or she has accepted the offer within the time specified by the Company. Warrant certificates shall upon request be delivered to the warrant holder at the beginning of the subscription period unless the warrants have been transferred to the book-entry system.

3 Right to warrants

The warrants shall, with deviation from the shareholders’ pre-emptive right to subscription, be issued to the key personnel of the Wärtsilä Group. A small part of the warrants will be reserved for new key persons which will be nominated later and shall for this purpose be issued to a wholly-owned subsidiary of Wärtsilä Corporation. It is proposed that the shareholders’ pre-emptive right to subscription be deviated from, since the warrants are intended to form part of the Group’s incentive program for the key personnel.

4 Distribution of warrants

The Board of Directors decides upon the distribution of the warrants to the different categories of the key personnel. The warrants which are reserved for new key persons which will be nominated later shall be issued to a subsidiary specified by the Board of Directors. The Board of Directors shall later on decide upon the distribution of these warrants to the key personnel.

5 Transfer of warrants and obligation to offer warrants

The warrants are freely transferable when the share subscription period has begun. The Board of Directors may, as an exception to the above, permit the transfer of warrants also at an earlier date.

Should a subscriber cease to be employed by the Wärtsilä Group before April 1, 2004 for any other reason than retirement or death, such person shall without delay transfer the warrants to the Company free of charge.

 

II TERMS AND CONDITIONS OF THE SHARE SUBSCRIPTION

1 Right to subscribe new shares

Each warrant entitles its holder to subscribe for one (1) B-share in Wärtsilä Corporation. The nominal value of each share is 3.50 euro. As a result of the subscriptions the share capital of Wärtsilä Corporation may be increased by a maximum of 800,000 new B-shares i.e. by a maximum of 2,800,000 euro.

2 Shares subscription and payment

The share subscription with warrants will begin provided that the company will reach the minimum profitability targets set by the Board of Directors for the year 2003. The subscription period is from April 1, 2004 to November 30, 2004 and thereafter annually from 2 January to 30 November until March 31, 2008 which is the last day for subscription.

The share subscription shall take place at the head office of Wärtsilä Corporation and possibly at an other location to be determined later. Payment of shares subscribed shall be effected on subscription.

3 Share subscription price

The share subscription price shall be the trade volume weighted average price of the B-share at the Helsinki Exchanges during the period of May 13 - May 17, 2002.

From the share subscription price shall be deducted the amount of any extra dividends which may be distributed after May 17, 2002 but before the subscription for shares. The Board of Directors shall in its proposal for dividend to the General Meeting of Shareholders determine, which part of the distribution, if any, is extra dividend. The share subscription price shall nevertheless always amount to at least the nominal value of the share. The deduction from the share subscription price shall be effected as per the respective dividend record date. 

4 Registration of shares

Shares subscribed for and fully paid shall be registered in the book-entry account of the subscriber.

5 Shareholder rights

The shares shall entitle to dividend for the financial year during which the subscription takes place. Other shareholder rights shall commence when the increase of the share capital has been entered into the Trade Register.

6 Share issues, convertible bonds and warrants before share subscription

Should the Company, before the subscription for shares, increase its share capital through an issue of new shares, or issue convertible bonds or warrants, a warrant holder shall have the same or equal right as the shareholder to participate in such issue. Equality is reached in the manner determined by the Board of Directors by adjusting the amount of shares available for subscription, the subscription price or both of these.

Should the Company, before the subscription for shares, increase its share capital by way of a bonus issue, the subscription ratio shall be amended so that the ratio to the share capital of shares to be subscribed for by virtue of warrants remains unchanged. If the number of shares that can be subscribed for by virtue of one warrant should be a fraction, the fractional part shall be taken into account by reducing the subscription price.

7 Rights in certain cases

If the Company reduces its share capital before the subscription of shares, the subscription right accorded by the terms of the warrant shall be adjusted accordingly as specified in the resolution to reduce the share capital.

If the Company is placed in liquidation before the subscription of shares, the warrant holder shall be given an opportunity to exercise his subscription right before the liquidation begins within a period of time determined by the Board of Directors.

If the Company resolves to merge in an other company as the company being acquired or in a company to be formed in a combination merger or if the Company resolves to be divided, the warrant holder shall before the merger or division be given the right to subscribe for the shares within the period of time determined by the Board of Directors. After such date no subscription right shall exist.

If the Company, after the beginning of the period of subscription, resolves to acquire its own shares by an offer made to all shareholders, the warrant holder shall be made an equivalent offer. In other cases acquisition of the Company’s own shares does not require the Company to take any action in relation to the warrant holder.

In case of a situation as referred to in Chapter 14 Article 19 of the Finnish Companies Act, in which a shareholder possesses over 90% of the shares of the Company and therefore has the right and obligation to redeem the shares of the remaining shareholders, the warrant holders shall be entitled to use their right of subscription by virtue of the warrant within a period of time defined by the Board of Directors.

If the nominal value of the share is changed but the share capital remains unchanged, the subscription terms shall be amended so that the total nominal value of the shares available for subscription and the total subscription price of such shares remain the same.

Converting the Company from a public company into a private company will not affect the terms and conditions of the warrants.

8 Settlement of disputes
Disputes arising in relation to the warrants shall be settled by arbitration in accordance with the Arbitration Rules of the Finnish Central Chamber of Commerce.

9 Other matters

The Board of Directors may decide on the transfer of the warrants to the book-entry system at a later date and on the resulting technical amendments to the terms and conditions. The Board of Directors may also decide on other matters relating to the warrants. The warrant documentation is available for inspection at the head office of Wärtsilä Corporation in Helsinki.