Wärtsilä Corporation’s Annual General Meeting

Wartsila Corporation
  • Stock exchange release
28 February 2008 at 2:02 AM E. Europe Standard Time

Wärtsilä Corporation, Notice to convene annual general meeting, 28 February 2008 at 9.45 am EET

The shareholders of Wärtsilä Corporation are hereby invited to the Company's Annual General Meeting on Wednesday, 19 March 2008, starting at 4.00 pm. The meeting will be held in the Congress Wing of the Helsinki Fair Centre, Messuaukio 1, 00520 Helsinki, Finland. Shareholders who have registered to attend the Annual General Meeting shall be received from 2.30 pm onwards.

Agenda:

1. The matters stipulated in § 12 of the Articles of Association and in Finnish Companies Act.

2. Proposal to amend the Articles of Association.

The Board of Directors proposes to the Annual General Meeting that the Articles of Association be amended in their entirety. The primary content of the amendments is as follows:

- The Object of the Company shall be amended to read as follows:

“The company shall engage, either directly or through its subsidiaries and associated companies, in the machine construction and engineering industries, as well as in activities related to energy production and distribution and in other industrial and commercial business activities, including service, financing, design and consulting activities related thereto. The company may deal in securities and engage in other investment activities.”

- The provisions concerning the Company’s minimum and maximum share capital, the nominal value of each share and the record date shall be removed, and Articles 3, 4 and 11 concerning the Company’s shares shall be combined into a single article that shall read as follows:

“The company’s shares belong to Series A or Series B. The total amount of shares of Series A may not be higher than 100,000,000 and the total amount of shares Series B may not be higher than 200,000,000.

At the General Meeting, each Series A share shall carry ten (10) votes, and each Series B share one (1) vote. The method of voting shall be determined by the chairperson of the meeting.

 The shares of the company are incorporated in the book-entry securities system.”

- The Article concerning one or several Executive Vice Presidents shall be amended to refer to a single President’s Deputy.

- The wording of the Article concerning the right to represent the company shall be amended to conform with the new Finnish Companies Act. The provisions concerning procuration shall be combined in the same article.

- The article concerning Auditors shall be amended so that the Company shall have one CPA-authorized auditor.

- The Summons to the Shareholders' General Meeting shall be published not later than seventeen (17) days prior to the Meeting instead of the period defined according to the old Finnish Companies Act.

- The list of matters to be covered by the Annual General Meeting shall be amended to conform with the new Finnish Companies Act.

3. Proposal to combine the share series and pertaining to the related directed free share issue and
amendment to the Articles of Association

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 amendments 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 entity 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 share series and the directed free share issue a holding of nine (9) series A shares becomes a holding of ten (10) company shares (“exchange ratio”).

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.

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.

Amendment 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.”

Display of documents

The documents concerning the financial statements and the proposal of the Board of Directors for the decisions mentioned in items 2 and 3 above will be available for inspection by shareholders for one week before the meeting at the Company’s head office. The Annual Report for the financial period 2007 will be available as of 3 March 2008 on the company's website, www.wartsila.com/investors.

The Annual Report and copies of the documents and proposals mentioned above will be available at the Annual General Meeting. They will also be mailed to shareholders on request.

Election of the Board of Directors

The Nomination Committee of the Board of Directors proposes that the Board of Directors should continue to have six (6) members. The Nomination Committee proposes that Ms Maarit Aarni-Sirviö, Mr Kaj-Gustav Bergh, Mr Kari Kauniskangas, Mr Antti Lagerroos, Mr Bertel Langenskiöld, and Mr Matti Vuoria be elected as members.

Election of the Auditors

The Board of Directors recommends to the Annual General Meeting that the firm of public auditors KPMG Oy Ab be appointed as the Company’s auditors for the financial year 2008.

Right to Attend

Shareholders registered no later than 7 March 2008 in the Company’s list of shareholders maintained by the Finnish Central Securities Depository Ltd have the right to attend the Annual General Meeting.
Notification of Attendance

Shareholders wishing to attend the Annual General Meeting are required to inform the Company thereof not later than 4.00 pm on 14 March 2008:

- either in writing to Wärtsilä Corporation, Share Register, P.O. Box 196, FIN-00531 Helsinki
- by e-mail yk@wartsila.com
- via the internet: www.wartsila.com/agm_register
- by fax +358 10 7095 283, or
- by telephone (09.00 am to 12.00 noon on weekdays) + 358 10 7095 282/Rahola.

Notification of participation must reach the Company before the notification period expires at 4.00 pm on Friday 14 March 2008.

Letters authorizing a proxy to exercise a shareholder's voting right at the Annual General Meeting should reach the Company before the notification period expires.

Dividend Payment

The Board of Directors has proposed to the Annual General Meeting on 4 February 2008 that a dividend of EUR 2.25 per share be paid on the 2007 financial period. In addition the Board of Directors proposes that an extra dividend of EUR 2.00 be paid on the 2007 financial period.

The dividends will be paid to shareholders who are registered in the list of shareholders maintained by Finnish Central Securities Depository Ltd on the record date, which is 26 March 2008. The payment date proposed by the Board for the dividends is 2 April 2008.

Helsinki, Finland, 27 February 2008

Board of Directors

ATTACHMENTS WHICH YOU ARE ADVICED TO READ
Proposal by the board of directors for the annual general meeting 19 march 2008 to amend the articles of association
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
Proposal of the Board for distribution of an extra dividend
UBS Disclaimer

PROPOSAL BY THE BOARD OF DIRECTORS FOR THE ANNUAL GENERAL MEETING 19 MARCH 2008 TO AMEND THE ARTICLES OF ASSOCIATION

Proposal by the Board of Directors for the new Articles of Association:

ARTICLES OF ASSOCIATION

ART. 1 NAME AND DOMICILE
The name of the company is Wärtsilä Oyj Abp, in English Wärtsilä Corporation. The company is domiciled in the City of Helsinki.

ART. 2 OBJECT OF THE COMPANY
The company shall engage, either directly or through its subsidiaries and associated companies, in the machine construction and engineering industries, as well as in activities related to energy production and distribution and in other industrial and commercial business activities, including service, financing, design and consulting activities related thereto. The company may deal in securities and engage in other investment activities.

ART. 3 THE SHARES
The company’s shares belong to Series A or Series B. The total amount of shares of Series A may not be higher than 100,000,000 and the total amount of shares Series B may not be higher than 200,000,000.

At the General Meeting, each Series A share shall carry ten (10) votes, and each Series B share one (1) vote. The method of voting shall be determined by the chairperson of the meeting.

The shares of the company are incorporated in the book-entry securities system.

ART. 4 THE BOARD OF DIRECTORS
A Board comprising five to eight (5-8) ordinary directors shall be responsible for the management of the company and the appropriate organization of its operation. The term of the Board member shall continue from their election until the closing of the subsequent first Annual General Meeting.

The Board shall elect from among its members a Chairman and a Deputy Chairman, who shall hold office until the close of the subsequent Annual General Meeting.

ART. 5 PRESIDENT
The company shall have a President and, upon need, a President’s Deputy who are appointed by the Board.

ART. 6 RIGHT TO REPRESENT THE COMPANY
The Chairman of the Board and the President, each separately, and Board members, two jointly, shall represent the company.

In addition the Board can grant procuration to specific individuals in such a way that the holders of procuration may represent the company, two jointly, or one holder of procuration together with a member of the Board.

ART. 7 AUDITOR
The company shall have one CPA-authorized auditor.

The auditor’s duties shall cease at the close of the subsequent Annual General Meeting.

ART. 8 CONVOCATION
Summons to the Shareholders' General Meeting shall be published in not less than two (2) daily newspapers, which are commonly distributed in Finland, as determined by the Board. The summons shall be published not earlier than two (2) months prior to the Meeting and not later than seventeen (17) days prior to the Meeting.

Shareholders who have given prior notice of their attendance in a General Meeting in the way indicated in the convocation shall have the right to participate in the Meeting. The time period for giving such notice shall not end earlier than ten (10) days prior to the Meeting.

ART. 9 GENERAL MEETING OF SHAREHOLDERS
The Annual General Meeting shall be held in the company's place of domicile not later than the end of June on a date determined by the Board.

At the Annual General Meeting, the following shall be

decided

1. Approval of the financial statements and the consolidated financial statements,
2. Use of the profit indicated by the balance sheet,
3. Discharge from liability of the President and members of the Board,
4. Remuneration of Board members,
5. Number of Board members,
6. Remuneration of auditor,
7. Election of Board members and
8. Election of auditor;

discussed

9. Other issues included in the summons

ART. 10 FINANCIAL YEAR
The company's financial year shall be the calendar year.


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

PROPOSAL OF THE BOARD FOR DISTRIBUTION OF AN EXTRA DIVIDEND

The parent company’s distributable funds total 361,451,221.40 euros taken 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

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.
 

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