FORTUM AND STORA ENSO SIGNED A LETTER OF INTENT WORTH ABOUT EURO 1.85 BILLION CONCERNING THE ACQUISITION OF STORA ENSO’S PO

Fortum and Stora Enso have signed a letter of intent concerning the acquisition of Stora Enso’s power assets outside mills. The transaction doesn't include Stora Enso's PVO shares. The value of assets is 15.85 billion Swedish crowns (about euro 1.85 billion or about FIM 11.0 billion). The letter of intent covers a total of 1,511 megawatts of electricity generation capacity in Sweden and Finland, regional electricity distribution networks in central Sweden, and power sales contracts in Sweden. The closing of this transaction is subject to approvals of the boards and the competition authorities. The transaction is intended to be closed this spring.

 

- This acquisition is a unique opportunity to increase our hydro power procurement and fits well to Fortum’s strategic objectives. We welcome the additional annual generation of hydro and nuclear power of 6.7 terawatt-hours, free of carbon dioxide emissions, to our power procurement. Stora Enso’s capacity supplements Fortum's capacity in an excellent way. Stora Enso’s electricity distribution network is closely connected with Birka Energi’s distribution area in central Sweden, says Heikki Marttinen, Fortum’s President and CEO.

 

Stora Enso Energy AB, Stora Enso Oyj’s subsidiary in Sweden, owns the Swedish power generation companies, either wholly or partly. In Finland, the power generation companies are either wholly or partly under Stora Enso Oyj’s control. Fortum intends to implement the main part of this transaction through a financial arrangement off the balance.

 

- The acquisition of Stora Enso's power assets strengthens our position in the Nordic electricity market. As a result, we can further develop our activities in particular in Sweden. We estimate that the arrangements relating to the transaction will be completed within a few months, Heikki Marttinen says.

 

The transaction includes Stora Enso's internal power sales contracts concerning deliveries of annually about 2 TWh to Swedish mills. In addition, Fortum and Stora Enso have signed a memorandum of understanding concerning future electricity portfolio management services and deliveries of power.

 

Power generation capacity related to this transaction comprises 1,096 megawatts (MW) of hydro power, 159 MW of which is in Finland and 937 MW in Sweden. The nuclear power capacity totals 301 MW in Sweden. The rest of the capacity totals 114 MW. The annual hydro power generation amounts to about 4.6 terawatt-hours (TWh), and nuclear power generation to about 2.1 TWh.

 

The hydro power capacity at Fortum's and Birka's disposal is today about 3,700 MW, so this transaction will increase the capacity by almost 30%. In 1999, Fortum’s procurement of electricity, including own generation, was about 45 TWh, so the increase will be about 15%.

 

Stora Enso’s hydro power plants in Sweden are mostly located on the rivers Ljusnan and Dalälven. The total number of hydro power plants is 42. In Finland, the hydro power plants are located on the rivers Kemijoki and Kymijoki and on the Vuoksi water system. The nuclear power shares are in the Forsmark (2.3%) and Oskarshamn (10%) power plants. The total length of the regional distribution network is 1,710 km. The number of employees involved in the transaction is about 200, and all located in Sweden.

 

Fortum Corporation

 

 

Antti Ruuskanen

Corporate Executive Vice President, Communications

 

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ADDITIONAL INFORMATION

Heikki Marttinen, President and CEO, tel. +358 10 45 24100

Tapio Kuula, Corporate Executive Vice President,

tel. +358 10 45 24112

Eero Aittola, Corporate Executive Vice President, CFO,

tel. +358 10 45 24234