Elisa Corporation and Lounet Oy have signed a merger plan according
to which Lounet will merge with Elisa through the absorption process
referred to in the Finnish Companies Act, chapter 16, section 2,
paragraph 1, sub-paragraph 1. Before the merger Elisa Group owned
80.51 per cent of Lounet. The business activities of the companies
participating in the merger complement each other as a whole, and
combining these activities will generate a stronger and more
competitive entity. The merger will also simplify Elisa's current
group structure.
According to the merger plan, Lounet shareholders will receive a
merger consideration consisting of new Elisa shares. 0,07 Elisa new
shares will be given in exchange for each Lounet share (corresponding
70 Elisa new shares in exchange for each Lounet share certificate).
Furthermore, the Board of Directors of Lounet Oy has proposed that
Lounet Oy distributes a dividend, the amount of which is EUR 150 for
each Lounet Oy share certificate. Elisa has agreed to vote in favour
of the Board's proposal for the distribution of the dividend. The
amount of the merger consideration is based on the mutual
relationship between the values of Elisa and Lounet.
A decision regarding the merger shall be made at Lounet's
extraordinary shareholders' meeting to be held in Turku on 5 July
2007. Approval of the merger requires that at least two thirds (2/3)
of the shares represented at the shareholders' meeting and of the
votes given are in favour of the merger.
The merger shall take effect once the execution of the merger is
registered in the trade register. The estimated registration date of
the merger is 30 September 2007.The merger consideration shall be
paid after the merger has been registered. No merger consideration
shall be paid for the 16,148,000 Lounet shares owned by Elisa. There
are a total of 3,909,000 shares owned by shareholders other than
Elisa (corresponds to 3,909 Lounet share certificates). Consequently,
a maximum of 273.630 new Elisa shares will be given as merger
consideration, which represents approximately 0,17 per cent of the
current number of Elisa shares.
The merger plan is attached to this release. Elisa is scheduled to
publish a merger prospectus on the Lounet merger in week 25.
ELISA
Vesa Sahivirta
Vice President, IR and Financial Communications
For more information, please contact:
Jari Kinnunen
CFO, tel. +358 10 26 9510
Pekka Ekstam
Vice President, M&A, tel. +358 50 5205252
Distribution:
Helsinki Stock Exchange
Principal media
APPENDIX: Merger plan
MERGER PLAN
1 Companies participating in the merger
1.1 Elisa Corporation, business ID 0116510-6, Helsinki
(Hereinafter "Elisa")
1.2 Lounet Oy, business ID 0136135-0, Turku
(Hereinafter "Lounet" or "merging company")
(Elisa and Lounet are hereinafter referred to as "the Parties" or"Companies participating
in the merger")
2 Merger
The Boards of Directors of the companies participating in the merger
have signed this plan regarding the merging of Lounet into Elisa
through absorption, referred to in Chapter 16, section 2, paragraph
1, sub-paragraph 1 of the Finnish Companies Act, under the terms and
conditions of this merger plan in such a way that all of Lounet's
assets and liabilities will be transferred to Elisa without
liquidation proceedings.
3 Information required by the Companies Act
3.1 Companies participating in the merger
Companies participating in the merger have been specified above in
section 1.
3.2 Reasons for the merger
It is the opinion of the Boards of Directors of the companies
participating in the merger that the business activities of the
companies participating in the merger on the whole complement each
other, and that combining these activities will generate a stronger
and more competitive entity.
It is the opinion of the Boards of Directors of the companies
participating in the merger that it is in the interest of both
Parties and their shareholders to simplify the existing ownership
structure by combining the activities of Elisa and Lounet through a
merger, which will be executed in accordance with this merger plan.
3.3 Amendments to Elisa's Articles of Association
The merger will not require any amendments to Elisa's Articles of
Association.
3.4 Shares to be given as merger consideration
As merger consideration, Lounet's shareholders will receive new Elisa
shares, with each Lounet share being exchanged for 0.07 ("Conversion
rate") new Elisa shares. In cases where one Lounet so-called old
telephone share consists of 1,000 Lounet shares, the merger
consideration shall be 70 Elisa shares for each old telephone share.
Elisa owns a total of 15,905,000 (fifteen million nine hundred and
five thousand) Lounet shares. In addition, Elisa exercises the voting
rights included in those 243,000 shares that are subject to a common
annulment procedure in the District Court of Turku (case number H
07/1158). The ownership of the said shares will be assigned to Elisa
after the shares have been annulled and the sale prices have been
paid to the shareholders involved in the annulment procedure.
Including the shares to be annulled, Elisa owns 16,148,000 (sixteen
million one hundred and forty-eight thousand) Lounet shares.
Lounet holds 3,909,000 (three million nine hundred and nine thousand)
shares owned by parties other than Elisa.
No merger consideration shall be given for shares owned by Elisa at
the time the execution of the merger is registered.
A maximum of 290.640 (two hundred ninety thousand and six hundred
forty) new Elisa shares shall be given as merger consideration inconnection with the merger.
3.5 Other merger consideration
If the number of all Elisa shares, determined on the basis of the
Conversion Rate, to be given as merger consideration is not an
integer number, the number of Elisa shares to be given as merger
consideration shall be the number derived by multiplying the number
of all Lounet shares entitling to merger consideration by the
Conversion Rate and rounding up the resulting number of Elisa shares
to the nearest lower integer number.
If the number of Elisa shares, determined on the basis of the
Conversion Rate, to be given as merger consideration to any
shareholder is not an integer number, the number of Elisa shares to
be given as merger consideration shall be the number derived by
multiplying the number of Lounet shares owned by the relevant
shareholder by the Conversion Rate and rounding up the resulting
number of Elisa shares to the nearest lower integer number. The
remaining fraction shall be paid in cash through a procedure whereby
Elisa shares compiled of the fractions will be sold in the Helsinki
Stock Exchange on behalf of the Lounet shareholders entitled to the
fractional merger consideration immediately after the execution of
the merger has been registered, and the value of the fraction shall
be calculated on the basis of the average selling price of the shares
sold. This value will be paid to those entitled to it within three
(3) weeks of the date on which the execution of the merger was
registered under the conditions specified in section 3.6.
No other consideration shall be paid in addition to those specified
in sections 3.4 and 3.5.
3.6 Division of the merger consideration, time of merger
consideration payment, and other terms related to the merger
consideration payment, and the grounds thereof
The merger consideration specified in sections 3.4 and 3.5 shall be
distributed to Lounet shareholders against their shareholding
provided that
(a) the recipient of the consideration has informed Elisa or a third
party named by Elisa of their book-entry account number and, if the
consideration to be given to the Lounet shareholder also includes
cash, a bank account number,
(b) the recipient of the consideration has provided Elisa or a third
party named by Elisa with share certificates, if share certificates
have been issued for the shares owned by the recipient of the
consideration,
(c) if no share certificates have been issued for the shares owned by
the recipient of the consideration, the recipient was, on the date on
which the execution of the merger was registered, registered in
Lounet' share register, or can provide Elisa or a third party named
by Elisa, with a sufficient, reliable and acceptable account of their
title and ownership, and
(d) the recipient of the consideration will in other respects comply
with the requirements set forth by Elisa in its merger prospectus.
The merger consideration shall be recorded in book-entry accounts
immediately after the execution of the merger has been registered,
and any fractional cash consideration referred to in section 3.5
shall be paid within three (3) weeks of the registration of the
execution of the merger.
If a Lounet shareholder entitled to merger consideration has not
handed over any share certificates issued for Lounet shares to Elisa
or a third party named by Elisa, or informed its book-entry account
number or bank account number for the payment of merger consideration
before the registration of the execution of the merger, the merger
consideration shall not be paid until the recipient of the
consideration has handed over the share certificates and/or provided
the information regarding the book-entry account and bank account.
If a Lounet shareholder entitled to merger consideration has not
handed over any share certificates issued for the shares they own
and/or informed their book-entry account or bank account number to
Elisa or a third party named by Elisa for the payment of the merger
consideration within ten (10) years of the registration of the
execution of the merger, shareholders at Elisa's shareholders'
meeting may decide to forfeit the right to merger consideration and
any rights based on it.
The merger consideration shall be determined on the basis of the
mutual relationship between the values of Elisa and Lounet. The
parties and their shares have been valued on the basis of generally
used valuation principles. For Lounet, the valuation has primarily
relied on a financial analysis based on the company's projected cash
flows and on a peer company analysis, and for Elisa, based on the
volume weighted average price (adjusted by dividend) on Helsinki
Stock Exchange between February 8, 2007 and May 16, 2007.
On the basis of negotiations and various reports, the Boards of
Directors of the merging companies have come to the conclusion that
the proposed payment of consideration is correct and justified.
3.7 Lounet's options and other special rights entitling to shares
Lounet has not issued any options referred to in Chapter 16, section
3, paragraph 2, sub-paragraph 7 of the Companies Act, and does not
possess any other rights entitling to its' shares.
3.8 Elisa's share issue and increase in share capital
To pay the merger consideration, a share issue shall be carried out
at the time the execution of the merger is registered on the basis of
the share issue authorisation granted at the shareholders' meeting on
19 March 2007 and in accordance with this merger plan. A maximum of
290.640 new Elisa shares will be issued. The shares will be offered
as merger consideration to Lounet's shareholders other than Elisa in
accordance with this merger plan. There is an important financial
reason for waiving the pre-emption rights of existing shareholders as
it enables the execution of the merger and, in addition, the merger
is expected to benefit Elisa's shareholders. The share subscription
price will be determined on the basis of the accounting process
related to the merger, which is explained in section 3.9 of the
merger plan.
In connection with the share issue related to the merger, the
consideration of the share issue will be recorded in the invested
free equity fund. However, in the event that a need to pay the cash
consideration referred to in section 3.5 above arises, Elisa shall
increase its share capital in connection with the share issue by a
sum that is eleven (11) times higher than the total amount incurred
from the shares sold in a manner explained in section 3.5. In this
case, this portion of the share subscription price determined in the
merger will be recorded as an increase in the company's share capital
while the remainder will be recorded in the invested free equity
fund. This increase in share capital in connection with the merger
may be waived provided the Boards of Directors of the companies
participating in the merger agree to do so.
The shares offered as merger consideration shall entitle to equal
rights with other Elisa shares following the registration of the
execution of the merger.
3.9 Lounet's assets, liabilities, shareholders' equity and factors
affecting their measurement, the effect of the merger on Elisa's
balance sheet, and the accounting methods applied to the merger
Lounet's assets primarily consist of the assets used in the
telecommunications operations, cash and bank receivables, trade
receivables, and investments and real estate company shares. Cash and
bank receivables and trade receivables have been measured at nominal
value, investments and real estate companies at acquisition cost, and
the assets used in telecommunications business at acquisition cost
less planned depreciation.
Lounet's liabilities primarily comprise trade payables and other
business-related liabilities. There are no long-term financial
liabilities. In accounting, liabilities have been recorded at nominal
value.
Lounet's assets and liabilities will be recorded in Elisa's balance
sheet in compliance with the accounting continuity principle.
Approximately EUR 4,000,000 will be entered under Elisa's
shareholders' equity, of which the amount specified above in section
3.8 will be recorded in share capital and the amount not recorded in
share capital will be recorded in the invested free equity funds. In
Elisa's accounting, the merger generates goodwill, which will be
written off in five (5) years. In Elisa's consolidated financial
statements, Lounet's assets and liabilities will be measured and
allocated to acquired assets in accordance with international
accounting standards.
The values for the transferring assets and liabilities to be recorded
in Elisa's balance sheet will be finally determined on the basis of a
final account to be prepared on the date on which the execution of
the merger is registered.
3.10 The right of the companies participating in the merger to decide
on arrangements other than standard business practices that affect
their shareholders' equity or number of shares
During the merger procedure, Lounet agrees not to engage in, or
decide to engage in any unusual or far-reaching or otherwise
non-standard business activities. However, under a decision taken at
the Annual General Meeting, Lounet may, before the execution of the
merger is registered, pay a dividend of not more than EUR 0,15 per
share.
Lounet specifically agrees that before the merger takes effect, it
shall not
(i) change or decide to change its share capital
(ii) repurchase or decide to repurchase its own shares
(iii) grant or decide to grant options or other special rights
(iv) pay or decide to pay any dividend other than that which has been
specified in the previous paragraph
(v) initiate or decide to initiate a demerger, a merger other than
that referred to in this merger plan, or any other corporate
arrangement.
During the merger procedure, Elisa shall be entitled to take or
decide to take all measures representing standard business practices
regardless of whether or not the said measures affect Elisa's
shareholders' equity or the number of shares.
It is specifically pointed out the Elisa shall be entitled to
repurchase its own shares under the authorisation granted at Elisa's
Annual General Meeting of 19 March 2007. The share purchase price
shall then be based on the market price at the Helsinki Stock
Exchange, and in the Parties' opinion it will not alter the financial
grounds on which the merger consideration was determined.
Elisa will continue to have the right to cancel its own shares in its
possession. Even though the cancellation will reduce the number of
Elisa shares, the Parties' opinion is that it will not alter the
financial grounds on which the merger consideration was determined.
Elisa shall continue to have the right to make decisions regarding
share issues under a decision of Elisa's Annual General Meeting, or
of the Board of Directors, if the share price to be paid in the share
issue is the same as the market price of Elisa shares at the Helsinki
Stock Exchange. In the Parties' opinion it will not alter the
financial grounds on which the merger consideration was determined.
Elisa shall continue to have the right to change its equity structure
if such change has no effect on the total amount of shareholders'
equity.
Making decisions referred to in Chapter 16, section 3, paragraph 2,
sub-paragraph 10 of the Companies Act for both Parties requires prior
consent from the Boards of Directors of both Parties.
3.11 Capital loans
The companies participating in the merger have no capital loans
referred to in Chapter 16, section 3, paragraph 2, sub-paragraph 11
of the Companies Act.
3.12 Ownership structure
Lounet owns 49,976 Elisa shares.
As explained above in section 3.4, Elisa owns 16,148,000 (sixteen
million one hundred and forty-eight thousand) Lounet shares. This
represents an 80.51% holding of Lounet.
Lounet does not own its shares.
3.13 Business mortgages
Elisa has registered business mortgages consisting of seven (7)
mortgaged collateral notes amounting to a total of EUR 185,000 (FIM
1,100,000). The business mortgages do not represent collateral for
Elisa's obligations. Elisa has signed a merger plan with First Orange
Contact Oy, which states that the expected merger date is 31 August
2007. First Orange Contact Oy has registered business mortgages
consisting of three (3) mortgaged collateral notes amounting to a
total of EUR 25,228 (FIM 150,000). The business mortgages do not
represent collateral for the company's obligations.
There are no registered business mortgages on Lounet's assets, nor
are there any mortgage applications pending.
3.14 The benefits and rights granted in connection with the merger
Members of Lounet's Supervisory Board, Board members of the companies
participating in the merger, managing directors, or auditors shall
not be offered any special benefits or rights in connection with the
merger, nor will any such benefits be offered to the authorised
public accountants issuing a statement of the merger, apart from a
reasonable invoiced fee.
3.15 Proposal for a planned registration of the execution of merger
The merger will take effect once the notification of the execution of
merger has been registered. The planned registration date is 30
September 2007.
3.16 Other merger terms and conditions
Lounet's Board of Directors has decided to call a shareholders'
meeting on 5 July 2007 and has decided to propose to the meeting that
the company pay a dividend of EUR 0.15 per share (corresponding of
EUR 150 per so called old telephone share) . Elisa undertakes to vote
in favour of the Board's proposal at the said shareholders' meeting.
A precondition for the merger is that no permanent unfavourable
changes occur in the current financial operating conditions of the
merging companies other than changes attributable to business cycles
before the shareholders' meeting or Board meeting in which the
approval of the merger plan shall be decided. The companies
participating in the merger undertake to act in line with the
objectives and purpose of this merger plan and to take it duly into
consideration in all their decision-making, unless otherwise agreed
in this merger plan.
The Boards of Directors of the merging companies are hereby
authorised to make joint decisions regarding any technical
modifications in the merger plan or its appendices possibly required
by the authorities or otherwise deemed appropriate.
4 Date and signatures
This merger plan has been written in two (2) identical copies, one
(1) for Elisa and one (1) for Lounet.
Helsinki, 24 May 2007
ELISA CORPORATION
Pekka Ketonen
Mika Ihamuotila
Lasse Kurkilahti
Matti Manner
Risto Siilasmaa
Ossi Virolainen
LOUNET OY
Tapio Laakso
Matias Castren
Pasi Mäenpää
Jouko Virta