Wärtsilä’s Board of Directors proposes to the Annual General Meeting to be convened on 19 March 2008 that in addition to the dividend of EUR 2.25 per share proposed on 4 February 2008, an extra dividend of EUR 2.00 per share be paid on the 2007 financial period for a total dividend of EUR 4.25 per share.
In addition, the Board of Directors proposes that the company’s A and B share series be combined. Following the measures taken to combine the share series the Company would have only a single class of shares. All shares would carry one (1) vote each and would have equal rights. The combination of share series involves a directed free share issue for holders of Series A shares. The free share issue is directed in such a way that, disapplying the pre-emptive right of the shareholders, holders of Series A shares would receive one (1) share free of charge for each nine (9) Series A shares. In this way holders of nine (9) Series A shares would hold ten (10) of the company’s shares following the measures taken to combine the share series (“exchange ratio”).
Listed companies are increasingly switching to having just one share series. Combining the two share series is expected increase interest towards the Company’s shares and to improve the liquidity. In addition the arrangement clarifies of the ownership structure.
Shareholders representing more than half of the Company´s A-shares have in advance announced in writing that they support this proposal and they have given their consent to the arrangement.
The Board has obtained a fairness opinion from UBS Limited and according to the opinion the exchange ratio is fair from a financial point of view to the Company’s shareholders. The auditor of the Company, KPMG Oy Ab, has given a statement confirming that the grounds for not applying the pre-emptive rights of the shareholders in the directed free share issue as per this proposal are in accordance with the Finnish Companies Act.
The Board of Directors proposes also that the Articles of Association be amended in their entirety.
Each holder of Series A shares as of the record date 26 March 2008 would have the right to receive the new shares.
The invitation to the Annual General Meeting to be convened on 19 March 2008 shall be published today in a separate stock exchange release.
Wärtsilä Corporation
Ole Johansson
President & CEO
Further information: President & CEO Ole Johansson, tel. +358 (0)10 7095 601 and Executive Vice President & CFO Raimo Lind, tel. +358 (0)10 7095 640.
ATTACHMENTS WHICH YOU ARE ADVICED TO READ
Proposal of the Board of Directors for the distribution of profits
Proposal of the Board of Directors to combine the share series and pertaining to the related directed free share issue and amendments to the Articles of Association
UBS disclaimer
Proposal of the Board for distribution of an extra dividend
The parent company’s distributable funds total 361,451,221.40 euros taking into consideration the Board’s previous proposal for a dividend of 2.25 euros/share made on 4 February 2008. There are 95,969,561 shares with dividend rights.
In addition to the proposal made on 4 February 2008, the Board proposes to the Annual General Meeting that the company’s distributable earnings be disposed in the following way:
EUR
An extra dividend of 2.00 per share be paid, making a total of 191,939,122.00
To be retained in shareholders’ equity 169,512,099.40
Total 361,451,221.40
No significant changes have taken place in the company’s financial position since the end of the financial year. The company’s liquidity is good and in the opinion of the Board of Directors the proposed extra dividend will not put the company’s solvency at risk.
Helsinki, 27 February 2008
Board of Directors
PROPOSAL OF THE BOARD OF DIRECTORS TO COMBINE THE SHARE SERIES AND PERTAINING TO THE RELATED DIRECTED FREE SHARE ISSUE AND AMENDMENTS TO THE ARTICLES OF ASSOCIATION
In accordance with the Articles of Association the Company’s shares belong to Series A or Series B, which differ in that Series A shares carry ten (10) votes while Series B shares carry one (1) vote. The total number of Series A shares is 23,579,587 and Series B shares 72,389,974. Both Series A and Series B shares are traded publicly on the OMX Nordic Exchange Helsinki Main List.
The Board of Directors proposes to the Annual General Meeting that the two share series be combined so that following the measures taken to combine the share series the Company would have only a single class of shares that is traded publicly and whose shares carry one (1) vote each and have in all other ways equal rights. The combination of share series involves a directed free share issue for holders of Series A shares and partial amendment to the Articles of Association.
The condition for the adoption of the proposal of the Board of Directors is that the Annual General Meeting has resolved to amend the Articles of Association in accordance with Item 2 in the Summons to the Shareholders' General Meeting in such a way that the Company’s shares no longer carry a nominal value. The following itemized proposals of the Board of Directors form an entirety that requires the adoption of all its individual items.
Shareholders representing more than half of the Company´s A-shares have in advance announced in writing that they support this proposal and they have given their consent to the arrangement.
The Board of Directors proposes to the Annual General Meeting the following measures to combine the share series:
Combination of share series
The Board of Directors proposes that the Company’s share series be combined without increasing share capital by removing the relevant sections in the Articles of Association pertaining to the share series as described below, wherein each Series A share would be converted into a share corresponding to the current Series B share. In connection with combining the share series, the Series A shares that have been converted into shares corresponding to the current Series B shares would be incorporated in the book-entry securities system and are estimated to become traded publicly as of 27 March 2008. The record date for the combination of share series would be 26 March 2008. The combination of share series would not require any actions by shareholders.
Directed free share issue
The Board of Directors proposes that, in connection with the combination of share series, a free share issue be directed to holders of Series A shares in such a way that, disapplying the pre-emptive right of the shareholders, holders of Series A shares would receive one (1) share free of charge for each nine (9) Series A shares. Based on the combination of the share series and the directed free share issue the ownership of nine (9) Series A shares changes to be the ownership of ten (10) ordinary shares (“exchange ratio”).
Each holder of Series A shares as of the record date 26 March 2008 would have the right to receive new shares.
The new shares would be distributed among holders of Series A shares in proportion to ownership and recorded directly to the holder’s book-entry securities account on the basis of information on the record date and in accordance with the regulations and procedures of the book-entry securities system.
If the number of Series A shares held by the holder of Series A shares is not divisible by nine (9), the remaining shares will be given to Nordea Bank Finland Plc to sell for the account of the holders of Series A shares whose number of Series A shares is not divisible by nine (9), as specified in more detail by the Board of Directors and in accordance with the agreement between the Company and Nordea Bank Finland Plc. The directed free share issue would not require any actions by shareholders.
A maximum of 2,619,954 shares would be released in directed free share issue.
The new shares will carry full rights from the moment they are registered. For the sake of clarity it should be noted that the new shares do not convey the right to the dividend to be decided by the Annual General Meeting on 19 March 2008.
The Company’s Board of Directors is authorized to resolve about other terms and practical aspects of the directed free share issue.
In considering the grounds for a directed free share issue, the Board of Director has taken into consideration also the following factors: that (i) listed companies in both Finland and internationally are increasingly switching to the practice of having just one class of shares, and combining the two share series is expected to improve the trading turnover of the Company’s shares when trading is focused on one class of shares; (ii) the turnover of Series A shares has been just 9% that of Series B shares over the past 12 months; (iii) the combination of share series as proposed by the Board of Directors would decrease the voting rights of previous Series A shares from approximately 76.5% to approximately 26.6% and increase the voting rights of previous Series B shares correspondingly from approximately 23.5% to approximately 73.4%; (iv) the premium that would be given to holders of Series A shares in connection with the combination of share series is customary and reasonable; and (v) the dilution effect of the proposed share issue on the ownership proportion for holders of Series B shares would be approximately 2.7%, which can also be considered customary and reasonable in connection with the combining of the share series.
The combination of share series and the connected directed free share issue would simplify and clarify the Company’s ownership structure and standardize the rights connected with the shares. This is expected to increase interest in the Company’s shares and lead to an increase in the turnover of the Company’s shares. In addition, the clarification of the ownership structure is expected to improve the opportunities to use the Company’s shares for raising financing.
It is the view of the Board of Directors that combining share series is in the interests of the Company and all its shareholders. The Board of Directors considers that, taking into consideration the above, there are exceptional financial grounds in terms of the Company and taking into consideration the interests of all its shareholders for a directed share issue in order to combine the share series.
The Board of Directors believes that the combination of share series and the connected directed free share issue would create benefits for holders of Series B shares and for the Company that are equal to those for holders of Series A shares through the directed free share issue. It is the view of the Board of Directors that combining share series and the connected directed free share issue can be considered reasonable in terms of the overall benefit for the Company and all its shareholders.
The Board has obtained a fairness opinion from UBS Limited and according to the opinion the exchange ratio is fair from a financial point of view to the Company’s shareholders. The auditor of the Company, KPMG Oy Ab, has given a statement confirming that the grounds for not applying the pre-emptive rights of the shareholders in the directed free share issue as per this proposal are in accordance with the Finnish Companies Act.
Amendments to the Articles of Association
The Board of Directors proposes that the Annual General Meeting resolve to remove the stipulations in the Articles of Association concerning the different share series from Article 3 of the Articles of Association in accordance with the changes to the Articles of Association proposed in Item 2 in the Summons to the Shareholders' General Meeting in such a way that Article 3 “The Shares” would read as follows:
“The shares of the company are incorporated in the book-entry securities system.”
Helsinki, 27 February 2008
Board of Directors
UBS Disclaimer
In connection with the Transaction, UBS Limited ("UBS") rendered an opinion to the Board of Directors of the Company, as of 27 February 2008, and based upon and subject to the factors, assumptions, procedures, limitations and qualifications set forth in such opinion, relating to the Exchange Ratio. In rendering its opinion, UBS assumed and relied upon (without assuming any responsibility therefor), among other things, at the direction of the Company, the assessments by the Board of the Directors of the commercial benefits of the Transaction. UBS’s opinion did not address the relative merits of the Transaction as compared to other business strategies or transactions that might be available with respect to the Company's underlying business decision to effect the Transaction. UBS’s opinion is confidential and was provided solely for the benefit of the Company's Boards of Directors (acting in their capacity as such) in connection with the Transaction and was not provided for the benefit of, and may not be relied upon by, the shareholders of the Company or any other person. UBS will receive a fee upon delivery of the opinion. In the past, UBS and its predecessors have provided investment banking services to the Company and received compensation for the rendering of such services.
