HELSINKI, May 31, 2013 (Press Release) -
- The Board has completed a strategy study, resulting in the signing of a demerger plan
- The new parent company for Metso's Pulp, Paper and Power businesses will be named Valmet Corporation
- Financing arrangements for Valmet are in place; Metso has received consents and waivers from most of its lenders and will immediately start a bondholder consent process
- Extraordinary General Meeting is planned to be held on or about October 1, 2013
The Board of Directors of Metso Corporation has completed a strategy study and concluded that going forward a demerger would offer the best potential for its Pulp, Paper and Power businesses as well as its Mining and Construction and Automation businesses to utilize their respective strengths in their customer industries faster and more efficiently. Metso has developed its businesses actively during the past decade through investing in the development of their global service capabilities, broadening their technology offering through substantial R&D and building their market positions through acquisitions. Both new entities would be globally leading companies in their respective markets and the next steps in their strategic development would be taken most efficiently as two separate companies, enabling more focused and crystallized strategies and operations. The increased management and board focus should also help the two independent companies in achieving stronger growth and improved profitability. This would also be expected to result in increased value for shareholders inasmuch as both companies would have their own distinct characteristics and would offer different investment profiles.
Metso's Board has today approved a demerger plan to transfer all the assets, debts and liabilities of Metso's Pulp, Paper and Power businesses to a newly-formed company that will be named Valmet Corporation. An application will be made to list the shares of Valmet on the NASDAQ OMX Helsinki stock exchange. Following the demerger, Metso's current Mining and Construction and Automation businesses would remain in the current company, which would continue to operate under the Metso name. Valmet would initially have the same ownership structure as Metso and would be totally independent without any cross-ownership between Metso and Valmet.
The demerger will require the approval of an Extraordinary General Meeting of Metso and the registration of the completion of the demerger with the Finnish Trade Register following the creditor hearing process pursuant to the Finnish Companies Act. If approved, the planned registration date of the completion of the demerger is December 31, 2013 and public trading in new Valmet shares on NASDAQ OMX Helsinki is expected to commence as soon as possible thereafter.
Jukka Viinanen, Metso's Chairman of the Board, says that the Board of Directors recommends that shareholders approve the demerger. "After carefully reviewing various alternatives that would accelerate the implementation of Metso's strategy and its growth, the Board has concluded that spinning off Metso's Pulp, Paper and Power businesses through a demerger offers the best potential to increase the focus and ambition of Valmet and Metso and the implementation of their respective distinct growth strategies. The Board believes that this, together with the creation of two attractive investment alternatives, would also create strong potential to increase value for Metso's shareholders."
Matti Kähkönen, Metso's President and CEO, says: "As a long-standing Metso employee, I am proud that our Pulp, Paper and Power businesses have developed into a strong globally leading company over the past decade and are now ready to take their next steps as an independent company. The Valmet name reflects the long heritage of these businesses and symbolizes their exceptional engineering achievements. Based on preliminary feedback, I am convinced that both our customers and our personnel - both in the Pulp, Paper and Power businesses and in the Mining and Construction and Automation businesses - would benefit from the independent governance and strategy that two separate companies would offer. Both Valmet and Metso would be sizeable, globally leading businesses with strong balance sheets. Strengthening their respective cultures, goals and agility to execute their strategy through a demerger would enable them to realize their full potential in the future."
In approving the demerger plan, the Board of Directors has sought to ensure the strong financial position for both Valmet and Metso. Certain key financial figures for each company based upon the attached illustrative consolidated pro-forma balance sheets and income statements as of and for the year ended December 31, 2012 (with such assumptions and adjustments as are described therein) are as follows:
- Metso Corporation: Total assets of EUR 4,005 million, total equity of EUR 1,362 million, gross debt of EUR 1,095 million, net debt of EUR 388 million, net sales of EUR 4,499 million, and EBITA before non-recurring items of EUR 496 million
- Valmet Corporation: Total assets of EUR 2,637 million, total equity of EUR 865 million, gross debt of EUR 195 million, net debt of EUR -72 million, net sales of EUR 3,005 million, and EBITA before non-recurring items of EUR 192 million
Alongside its strategy study, Metso has taken steps to arrange financing for both Metso and Valmet in preparation for the demerger. This process has included obtaining consents and waivers from the lenders under Metso's EUR 500 million revolving credit facility and also from a majority of the lenders under its bilateral loan arrangements, which consents and waivers, in the aggregate, cover financial facilities totaling approximately EUR 2,700 million. In order to facilitate the demerger process, Metso will today also launch a consent solicitation process in respect of Metso's bonds issued under the company's EMTN programme. The aggregate nominal amount of these bonds is approximately EUR 900 million and they would, in accordance with the demerger plan, remain obligations of Metso. Metso has also agreed on a new committed back-up facility of EUR 500 million to support the consent solicitation process with the bondholders.
Metso has also arranged new funding for Valmet, including a EUR 200 million term loan, with a maturity of three years, and a EUR 200 million syndicated revolving credit facility, with a maturity of five years from the demerger date.
Metso has received a favorable pre-ruling from the Finnish tax authorities confirming the tax-neutral treatment of the demerger in Finland.
Metso plans to hold an Extraordinary General Meeting on or about October 1, 2013 to decide on the demerger and other Board proposals based on the demerger plan. A separate notice related to the Extraordinary General Meeting will be issued by the Metso Board at a later time. Certain major Metso shareholders, including Solidium, Cevian Capital, Varma Mutual Pension Insurance Company and Ilmarinen Mutual Pension Insurance Company, have signed an undertaking to vote in favor of the demerger at the Extraordinary General Meeting. The demerger and listing prospectus, which is expected to be published in September 2013, will contain more detailed information on the demerger as well as on Valmet and Metso and their financial position.
The Metso Board will propose to the Extraordinary General Meeting that Valmet's Board of Directors would partly consist of certain current members of the Metso Board, whose directorship in Metso would end upon the registration of the completion of the demerger, and partly of one or more new members to be elected by the Extraordinary General Meeting. Similarly, the Metso Board will propose to the Extraordinary General Meeting that the Metso Board would, after the completion of the demerger, partly consist of those of its current members who will not become members of the Valmet Board, and partly of one or more new members to be elected by the Extraordinary General Meeting.
According to the attached demerger plan, the transaction would be executed as a partial demerger, as defined in the Finnish Companies Act. Upon registration of the completion of the demerger, Metso shareholders would receive, as demerger consideration, one (1) share in Valmet for each Metso share that they hold. No action would be required from shareholders to receive this demerger consideration.
SEB Corporate Finance is acting as the financial advisor for Metso and as the Lead Manager and Arranger for the demerger, while White & Case LLP is acting as Metso's legal counsel.