The Board of Directors of Fortum Corporation has decided to apply for listing for the warrants offered to the Fortum Group management in 1999 on the Main List of the Helsinki Exchanges (HEX) with effect from 1 October 2002.
In 1999 Fortum Corporation offered 15,000 warrants to the Group management for subscription. One hundred and thirty (130) individuals subscribed for a total of 13,825 warrants. In accordance with the terms and conditions of the option scheme, Fortum Corporation has redeemed some of the warrants due to termination of some contracts of employment.
An application is being made for listing on the Main List of HEX for a maximum of 11,768 warrants. Each warrant authorises subscription for 1,000 Fortum Corporation shares with a nominal value of EUR 3.40. The warrants authorise subscription for a total of 11,768,000 shares which would increase the share capital by a maximum of EUR 40,011,200. The shares subscribed for following the exercise of the warrants would represent a maximum of 1.39 per cent of Fortum Corporation’s share capital.
The warrant subscription period starts on 1 October 2002 and continues until 1 October 2005. Under the terms and conditions of the option scheme, the preconditions for the subscription are that both Fortum’s earnings per share and the share price performance are equal to or better than the average results of the Reference Group consisting of specified European listed companies. At the time of issuing the warrants, the Reference Group consisted of the following European listed companies: Scottish Power (Great Britain), National Power (Great Britain), Electrabel (Belgium), Endesa (Spain), RWE (Germany), Sydkraft (Sweden), ÖMV (Austria), ENI (Italy), Compañía Española de Petroles (CEPSA) (Spain) and Total (France). Due to changes in the corporate and ownership structure, the composition of the Reference Group has subsequently been changed in accordance with the terms and conditions of the option scheme with the result that National Power, Sydkraft and Total have been removed from the Reference Group. The preconditions for subscription specified in the option scheme have been met and the subscription price for the shares is EUR 5.61.
The warrants will be entered in the book entry system before they are listed. The shares can be subscribed for at the asset management branches of Nordea Bank Finland Plc. The shares subscribed for following the exercise of warrants will entitle the holder to a dividend for the financial year in which the subscription was made.
Senior Vice President, Corporate Communications
For further information, please contact:
Group Treasurer Seppo Viitanen, tel. +358 10 452 4477
APPENDIX Terms and conditions for the 1999 option scheme for the management
TERMS AND CONDITIONS FOR THE WARRANTS ISSUED BY FORTUM CORPORATION (UPDATED WITH THE DECISIONS TAKEN BY THE GENERAL MEETING ON 17 APRIL 2000)
THE TERMS AND CONDITIONS HAVE BEEN PREPARED IN FINNISH. A TRANSLATION OF THE TERMS AND CONDITIONS HAS BEEN PREPARED IN ENGLISH. IF THERE ARE ANY DISCREPANCIES BETWEEN THE FINNISH AND THE ENGLISH VERSIONS, THE FINNISH VERSION SHALL PREVAIL.
I TERMS OF SUBSCRIPTION FOR WARRANTS
1. Number of warrants
A maximum of 15,000 warrants made out to a specified person will be issued, the warrants authorize the subscription of a total of 15,000,000 Fortum Corporation shares (2.2 % of the company’s share capital and votes at the time when the General Meeting took the decision to authorize the issue)
2. Subscription right
In deviation of the shareholders pre-emptive subscription right, the warrants will be offered for subscription to the Fortum Corporation management and management of subsidiaries. However, the number of subscribers must not exceed one hundred and fifty (150). The eligible subscribers will be defined by the company Board after consultation with the Supervisory Board. When deciding on the persons entitled to receiving warrants it shall also be taken into consideration that the same persons cannot be eligible for participating in the issue of bond with warrants for the personnel for which the company Board received authorization on 8 September 1998, should this bond with warrant be issued.
Warrants will also be granted to Board members employed by the Fortum Group. However, such Board members will not participate in the Board’s decision-making on warrants. When granting warrants, the prohibition laid down in the Finnish Companies Act, Chapter 4, section 2 a, paragraph 3 should also be observed, i.e. that ‘the decision may not be made in favour of anyone belonging to the insiders’.
Warrants will also be offered to Fortum Oil and Gas Oy for subscription, a company wholly owned by Fortum Corporation; in order to be issued within the incentive scheme at a later stage.
The company will inform the subscribers in writing about the warrants granted.
Deviation is made from the shareholders’ pre-emptive subscription right because the warrants are intended to be part of the management’s incentive system and so there exists a major economic reason for the company.
3. Subscription and payment of warrants
Warrants may be subscribed during the notified subscription time at the Head Office of Fortum Corporation and possibly at other place to be stated later. Warrants are assigned to subscribers free of charge.
4. Approval of subscriptions
The company Board decides on the approval of subscriptions and, in the case of oversubscription, how the warrants shall be allocated. The subscribers shall be notified of approved subscriptions in writing by 31 May 1999.
In case of undersubscription, the warrants not subscribed for shall be given to Fortum Oil and Gas Oy for subscription.
The company is entitled to keep the warrants in its custody as a guarantee for the observance of the prohibition of transfer referred to below. The subscribers are entitled to take possession of the warrants regarding which the said prohibition has expired.
II TERMS OF SUBSCRIPTION FOR SHARES
1. Right to subscribe for new shares
For each warrant, holders are entitled to subscribe to 1,000 Fortum Corporation shares of a nominal value of EUR 3.40. As a result of the subscriptions, the share capital of Fortum Corporation may be increased by a minimum of 1000 shares, i.e. by EUR 3,400 and a maximum of 15,000,000 shares, i.e. by EUR 51,000,000 (2.2 % of the company’s share capital and votes at the time when the General Meeting took the decision to authorize the new issue)
2. Subscription and payment of shares
Subscription period for shares in exchange for warrants begins on 1 October 2002 and ends on 1 October 2005. Subscription will take place at the Head Office of Fortum Corporation and possibly at other place to be announced later. When subscribing for shares, the subscriber shall submit the warrant pertaining to subscription of shares. The shares are payable at subscription.
3. Subscription price of the shares
The subscription price is the average share price of Fortum Corporation weighted with trading volumes on the Helsinki Stock Exchange during the period from January 1, 2002 through June 30, 2002 less two times the percentage by which the increase in the price of Fortum Corporation’s shares exceeds the increase in value of a share price index of reference group companies as referred to under II 4 b) during the period from April 1, 1999 through August 31, 1999 as compared to the period from April 1, 2002 through August 31, 2002. The subscription price shall be rounded off to the nearest even cent.
However, the subscription price shall be at least the average price of the share weighted with trading volumes on the Helsinki Stock Exchange during the period from December 15, 1998 through January 15, 1999.
At the Board’s discretion, essential changes that occur within the reference group companies may be considered when calculating the weighted average share price level of the reference group companies.
4. Conditions for subscription for shares
The right to subscribe for shares will arise only provided the following two (2) conditions are fulfilled:
a) The increase in Fortum Corporation’s average earnings per share shall be equal to or better than that in the Reference Group (defined below) on an average. When considering the aforementioned earnings per share development, the average earnings per share of the Reference Group in 1998 and Fortum Corporation’s average earnings per share in 1998 shall be compared with the average for the period 1999- 2001, calculated in the same manner, in which case the increase of Fortum Corporation’s average earnings per share shall be equal to or greater than that of the Reference Group.
b) The development of Fortum Corporation’s average share price shall be equal to or better than that of the Reference Group (defined below) on an average. When considering the aforementioned share price development weighted with trading volumes, the comparison index illustrating the average share price development during the period April 1, 1999 – August 31, 1999 shall be compared with the comparison index illustrating the average share price development during the period April 1, 2002 – August 31, 2002, calculated in the same manner, in which case the comparison index illustrating the average price increase of Fortum Corporation’s share shall be equal to or greater than that of the Reference Group on average.
5. Reference Group
The Reference Group mentioned under II.3 and II.4 is composed of at least a total of five (5) international companies operating in the oil and gas or electric power industry. Having heard the Supervisory Board’s opinion, the company Board decides on the companies to be included in the Reference Group and on the weighting coefficients to be used in the comparison in accordance with II.3 and II.4. The composition of the Reference Group can later be altered only in the case of the merger or demerger of one of the companies or for some other significant reason.
6. Entry of shares
Subscribed shares, paid in full, shall be entered in the subscriber’s book-entry account.
7. Restrictions on the right of disposal
Warrants may not be pledged or assigned to a third party without the Board’s written consent until the share subscription in exchange for warrants has begun.
8. Shareholder rights conferred by the shares
The subscribed shares will confer the right to a dividend to be distributed for the financial year in which the subscription was made. The shares will confer the other rights in the company when the increase in the share capital has been entered in the Trade Register.
9. Share issues, convertible loans and warrant bonds and option rights prior to subscription
If, prior to subscription, the company increases its share capital by a new issue of shares or by issuing new convertible bonds or bonds with warrants or warrants, the holders of warrants shall have the same or equal right as the shareholders. Equality will be achieved in the manner decided by the Board, by altering the number of shares to be subscribed or the subscription prices, or both.
Should the company raise its share capital by a bonus issue before the beginning of the period for determining the subscription price as defined under II.3, the terms of subscription shall be amended so that the shares to be subscribed by warrant will still form the same relative part of the share capital. If the company raises its share capital by a bonus issue after the beginning of the above-mentioned period for determining the subscription price, the terms of subscription and the subscription price shall be amended so that the position of the holder of the warrant remains unchanged. Should the holder when exercising the right of subscription obtain a fraction of shares, that fraction will be taken into consideration by lowering the subscription price.
10. Special circumstances
Should the company lower the share capital prior to subscription, the subscription right of the holder of the warrant shall be altered correspondingly, in a manner specified by the decision taken on the lowering of the share capital.
If the company decides on merging with another company as a merging company or via a combination merger or on division, the holder of the warrant shall be given the right to subscribe the shares prior to the merger or division, within a period prescribed by the Board. After the expiry of this time limit, the subscription rights are no longer valid.
If the company goes into liquidation prior to subscription, the holder of the warrant shall be given the opportunity to exercise his subscription rights before the liquidation commences, within a period determined by the Board.
If the company takes a decision on acquiring its own shares by a purchase offer to all shareholders, an equal offer shall be made to the holder of the warrant. In other respects, the acquiring of own shares does not require any measures vis-á-vis the holder of the warrant.
If a shareholder has the right to redemption of shares in accordance with Chapter 14, Section 19 of the Finnish Companies Act, or a redemption obligation as referred to in the company statutes or under Chapter 6, Section 6 of the Securities Market Act, the holder of the warrant shall be given the same opportunity to sell his warrant and the shares subscribed by warrant to the redeemer.
If the nominal value of the shares is altered so that the share capital remains unchanged, the terms of subscription shall be amended so that the total nominal value of the shares to be subscribed as well as the total subscription price remain unchanged.
The change of a public limited company into a private limited company will not call for any changes in the terms pertaining to warrants.
If one shareholder’s portion of the shares of Fortum Corporation, or of the votes they represent, reaches the limit that according to the articles of association calls for obligatory redemption, the holder of the warrant is entitled to sell all or part of his warrants to Fortum Corporation or designee. Notification of the use of the right to sell shall be given within a month from the date on which the exceeding of the aforesaid limit was published. The warrants offered shall be bought by Fortum Corporation or designee at a price determined according to one of the following alternatives, whichever should give the higher price:
a) average share price weighted with trading volumes during the five stock exchange days preceeding the date on which the above limit was exceeded and reduced by the subscription price of the share according to the terms pertaining to the warrant or, if the subscription price is not determined, by the minimum subscription price as defined in Chapter II, Section 3; or
b) average share price weighted with trading volumes during the calendar month preceeding the date on which the above limit was exceeded and reduced by the subscription price of the share according to the terms pertaining to the warrant or, if the subscription price is not determined, by the minimum subscription price as defined in Chapter II, Section 3.
11. Termination of employment
If the employment of the holder of the warrant with the Fortum Group is terminated prior to 1 October 2002 due to notice given by the employee or by the employer, or because of transfer of ownership or changes in the structure of the Group, or if the nature of his assignment changes prior to the said date so that it no longer is in accordance with the Board’s definition of assignments covered by this incentive scheme, the holder should immediately, at the Board’s request, offer his warrant to Fortum Corporation or designee without compensation. If the holder is given another assignment to which the option right does not apply, or if he becomes disabled or retires prior to 1 October 2002, he will be entitled to that portion of the total number of warrants which corresponds to the period of time he was at work after the subscription of the warrants.
Should the employment be terminated because of the death of the holder, the company is not entitled to demand that the warrants be returned.
12. Approval of subscription and providing more detailed information
The Board of Fortum Corporation decides on the approval of subscriptions and on any other matters related to subscription and the issue of warrants insofar as they have not been defined above.
The Board also decides on the exact content of the calculation method and indices defined under II.3 and II.4 illustrating the earnings and share price development.
The Board may also take a decision that the warrants be entered in the book-entry system at a later date, and decide on the technical amendments to be made to the terms due to this. The documents pertaining to warrants are available at the Head Office.
Any disputes concerning the issue of warrants shall be settled through arbitration in accordance with the regulations of the Arbitration Board of the Chamber of Commerce.