Fortum sells its electricity distribution business in Finland to Suomi Power Networks for a total consideration of EUR 2.55 billion

FORTUM CORPORATION STOCK EXCHANGE RELEASE, 12 December 2013 at 08.10 EET

Fortum has agreed to sell its electricity distribution business in Finland to
Suomi Power Networks Oy, which is owned by a
consortium of Finnish pension funds Keva (12.5%) and LocalTapiola Pension
(7.5%) together with international infrastructure
investors First State Investments (40%) and Borealis Infrastructure (40%).

The total consideration is EUR 2.55 billion on a debt- and cash-free basis.
Fortum expects to complete the divestment
process during the first quarter of 2014 subject to the necessary regulatory
approvals as well as customary closing
conditions. Fortum expects to book a one-time sales gain of EUR 1.8-1.9 billion
corresponding to approximately EUR 2.0 per
share in its Electricity Distribution and Sales Division's first quarter 2014
results. A total of 320 employees will
transfer with the business at closing with existing terms of employment.

Fortum's decision to divest its electricity distribution business has no effect
as such on its approximately 640,000
distribution customers. Upon closing, the customers will transfer with the
business with existing terms.

The decision to divest Fortum's electricity distribution business in Finland is
linked to the strategic assessment of the
company's electricity distribution business' future alternatives. Fortum has
published a stock exchange release on the
completion of the assessment today, 12 December 2013. Fortum also prepares for
a possible sale of the Swedish and Norwegian
electricity distribution businesses. The decision to complete the process is
dependent on market development and
development of national regulation in both countries, among others.

Fortum's electricity distribution business in Finland includes two jointly
managed grid companies: Fortum Espoo
Distribution Oy, with grids in the city of Espoo and surrounding communities
and the city of Joensuu, as well as Fortum
Sähkönsiirto Oy, with several grid areas located mainly in southern and western
Finland, but also in the north-western part
of the country. The combined network length of the companies is 79,000
kilometres delivering approximately 12.6 terawatt-
hours of electricity to customers. Fortum's market share of the local
electricity distribution in Finland is approximately
20%.

Fortum's Finnish distribution companies' key figures are:

 

Milj. euroa
2012
Viim. 12 kk*
Liikevaihto
321
325
Vertailukelpoinen liikevoitto
154
154
Vertailukelpoinen EBITDA
726
749
Sidottu pääoma (kauden lopussa)
157
142
Bruttoinvestoinnit
321
325

 

 

 

 
*The last 12 months ending at the end of the third quarter 2013.
 

 

"Our electricity distribution business is in very good shape and deserves to be

 

developed further as a core business from
its own standpoint. We are pleased to have found a buyer, who has a deep
understanding of the social importance of
infrastructure assets and is committed to develop reliable networks and
services for the customers. This transaction also
clearly shows that Finland is an attractive country for investors with a
long-term perspective," says Fortum's President
and CEO Tapio Kuula.
 
"We at Fortum can create the best value for our customers, shareholders and the
society as a whole in our competed
businesses. Our ambition is to grow in accordance with our strategy in
low-carbon power generation, energy-efficient
combined heat and power (CHP) production and sales as well as in innovative
customer offerings," Tapio Kuula summarises.
 
The consortium team members have more than 40 years combined experience in the
acquisition and management of electricity
networks. Through their extensive experience, all members share a deep
understanding of the social importance of
infrastructure assets and are committed to good cooperation with the
stakeholders of their investment targets.
 
 
Fortum Corporation
Helena Aatinen
Senior Vice President, Corporate Communications
 
Distribution:
NASDAQ OMX Helsinki
Media
www.fortum.com
 
Further information:
Tapio Kuula, President and CEO, tel. +358 10 45 24112
Corporate Communications: Helena Aatinen, Senior Vice President, +358 10 45
20480,
Fortum Media Desk +358 40 1982 843
Investor Relations: Sophie Jolly, Vice President, tel. +358 10 45 32552
 
A press conference (in Finnish) will be held today, 12 December 2013 at 11.00
EET in the auditorium of Fortum’s head
office, Keilaniementie 1, Espoo, Finland. The press conference will be
webcasted on Fortum’s Finnish website
(www.fortum.com/fi).
 
An international teleconference conducted in English for analysts and investors
will be held today, 12 December 2013 at
14.30 EET. The dial-in numbers:
European callers: +44 (0)20 3427 0503
US callers: + 1 212 444 0481
Finnish callers: +358 (0)9 2310 1621
Confirmation code: 3501655
 
There will be a replay facility available for one week after the teleconference:
European callers: +44 (0)20 3427 0589
US callers: + 1 347 366 9565
Finnish callers: +358 (0)9 2310 1650
Confirmation code: 3501655
 
A live audio webcast of the call will be available together with the slide
presentation on Fortum’s website at
www.fortum.com/investors.
 
Further information on Suomi Power Networks’ owners:
Keva is responsible for funding the earnings-related pension cover of municipal
sector employees in Finland serving 1.3
million insured persons and pension recipients. Keva´s contribution income in
2012 amounted to approximately €4.8bn and
Keva paid out approximately €3.8bn in municipal sector pensions in 2012. Keva
is a long-term investor where investments are
targeted to support a stable level of pension contributions. On 31 December
2012, Keva's investments' market value was
€34.4bn. www.keva.fi
 
LocalTapiola Pension is the third largest provider of earnings-related pension
insurance in Finland with the number of
insured approximately 260,000. LocalTapiola Pension’s investment assets
amounted to €9.9bn as of 31 December 2012.
LocalTapiola Pension and Pension Fennia have decided to merge and the merger
will come into effect on 1 January 2014. The
new business name of the merged companies is Elo Mutual Pension Insurance
Company, and it will have close to €20bn of
investment assets. www.lahitapiola.fi/elake
 
First State Investments is the consolidated asset management division of
Commonwealth Bank of Australia, the largest
financial institution in Australia and currently manages approximately €124
billion of investments globally. First State is
a leading manager of, and investor in, infrastructure assets. With nineteen
years’ experience in infrastructure investment,
it is one of the longest established managers of infrastructure assets on
behalf of institutional investors and currently
manages in excess of €2.4 billion of equity invested across assets in the
utility, transport and social infrastructure
sectors in Australasia and Europe. www.firststateinvestments.com
 
Borealis Infrastructure Management Inc. Borealis has 15 years of experience
originating, structuring and actively managing
infrastructure investments on behalf of the Ontario Municipal Employees
Retirement System (“OMERS”). OMERS, which was
established in 1962, is a large defined benefit Canadian pension plan with
429,000 members, net assets of more than CAD
$60bn and an AAA credit rating from Standard & Poor’s. OMERS was one of the
first large Canadian pension plans to invest in
private markets, including infrastructure and has earmarked more than 20% of
its portfolio to be allocated to
infrastructure investments. Borealis has sourced and currently manages over 20
infrastructure investments in Canada, the
United States and Europe, representing over C$10 billion of OMERS’ invested
equity. www.borealis.ca
 
Further information on Fortum:
 
Fortum’s purpose is to create energy that improves life for present and future
generations. We provide sustainable
solutions that fulfill the needs for low emissions, resource efficiency and
energy security, and deliver excellent value to
our shareholders.
 
Fortum is the leading electricity distribution company in the Nordic countries
with over 1.6 million network customers:
~903,000 in Sweden; 640,000 in Finland and ~102,000 in Norway. Electricity
distribution is a nationally regulated
business. At Fortum, the Distribution business area is part of the company’s
Electricity Solutions and Distribution
Division that is also responsible for retail sales of electricity.
 
Fortum is the second largest electricity retail company in the Nordic countries
with approximately 1.2 million customers in
Finland, Sweden and Norway. Electricity sales is a competed business and there
are altogether 350 electricity retailers in
the Nordic countries.
 
Fortum’s largest division, Power, consists of Fortum’s power generation, power
trading and power capacity development as
well as expert services for power producers. Fortum’s Heat Division consists of
combined heat and power (CHP) generation,
district heating activities and business-to-business heating solutions in the
Nordic countries and other parts of the
Baltic Rim. The Russia Division consists of power and heat generation and sales
in Russia.
 
In 2012, Fortum’s sales totaled EUR 6.2 billion and comparable operating profit
was EUR 1.7 billion. We employ
approximately 10,400 people. Fortum’s shares are quoted on NASDAQ OMX Helsinki.
Further information: www.fortum.com