Year-end account review at SCA
At its year-end account review, SCA decided that provisions allocated
earlier for restructuring measures within tissue would be retained. A
decision was also taken regarding provisions for tax effects in a Swedish
tax case. In addition, the company decided to propose to the Annual
General Meeting that the Board of Directors should be given the mandate to
acquire own shares to a limited extent and that a decision is taken to
permit an Option Scheme. Finally, the company's Nomination Committee
announced that it intends to propose the new election of Anders Nyrén and
that Clas Reuterskiöld and Christer Gardell have declined re-election.
Restructuring reserve retained
The Board has decided to retain the provision of SEK 625 M allocated
earlier for restructuring measures within tissue. The amount is intended
mainly to cover planned costs for rationalization measures in the combined
production and logistics structure that will service the Nordic market.
This achieves significant cost-savings and competitiveness, which will
strengthen SCA's position on the combined Nordic tissue market. This plan
was developed as a consequence of the EU Commission stopping SCA's
acquisition plans for Metsä Tissue. The allocated amount will also be
available for use to cover costs that could arise in conjunction with a
future termination of the Group's involvement in Metsä Tissue.
In February, through a ruling by the Swedish Supreme Administrative Court
on an advance ruling application, SCA was granted relief for a tax loss on
the liquidation of a subsidiary. The tax effect, exceeding SEK 800 M, has
been allocated to a reserve for tax risks related to restructuring
measures, acquisitions and divestments.
In terms of liquidity, the tax effects will reduce the Group's tax
payments for, mainly, 2001. Accordingly, SCA estimates that the Group's
tax payments during 2001 will be limited to about SEK 1.5 billion.
Buyback of own shares
At this year's Annual General Meeting, the Board will present a proposal
covering a mandate for the Board through to the next Annual General
Meeting to carry out the acquisition and subsequent transfer of the
company's own shares. Currently, SCA does not hold any of its own shares
and the proposal involves the acquisition and subsequent transfer of a
maximum of 11 million shares, corresponding to 5% of the number of shares
in the company. The Board has made the assessment that ongoing
acquisitions and pending expansion plans should exclude repurchases to
change the company's capital structure. However, the need may arise for
SCA to use its own shares as payment in certain company acquisitions and
then mainly to hedge the company's costs in conjunction with the option
scheme. With a mandate that is renewed at each Annual General Meeting,
acquisition and transfer of own shares can be implemented without the need
to convene an Extraordinary General Meeting.
Own shares shall, according to the proposal, be acquired on a stock
exchange at a price per share within the price interval recorded on the
stock exchange at the time of acquisition. It is proposed that transfers
of own shares may be effected on a stock exchange or otherwise. In the
latter case, it is proposed that transfers may take place at a market
value estimated by the Board of Directors, while the lowest price on
transfers effected on a stock exchange must be within the price interval
recorded on the stock exchange at the time of transfer.
Option scheme to management and key persons
In addition, the Board has decided, prior to the company's Annual General
Meeting on April 6, 2001, to present a proposal regarding an option scheme
aimed at senior management and other key persons in the Group. In total,
the scheme involves options for approximately 1.8 million B shares.
Accordingly, the underlying shares correspond to about 0.8% of the total
number of shares outstanding. Half of the options will be allocated in
2001 and half in 2002. The options, which are so-called personnel options,
are non-transferable and the allocation can at the earliest be fully
exercised three years after issue. In addition, the options have a
lifetime of seven years and an exercise price corresponding to the SCA
share price at the time the options are allocated.
The proposed option scheme will replace the current share-price related
incentive program and entitles the President to an annual allocation of
40,000 options during each of the two years. The assessed value of the
annual allocation for other executives and key personnel, about 70
persons, will also correspond to about 20% of each person's base salary.
The proposed scheme is aimed at providing SCA with a senior management
incentive program that is in line with the trend prevailing on the market
and which will serve as an incentive to create long-term value growth for
the benefit of SCA's shareholders. The scheme is designed so that it can
be applied within SCA's operations in North America.
Dilution of earnings per share, calculated applying the principles
determined by the Swedish Financial Analysts Association, is initially
0.1% and at exercise at the end of the lifetime 0.4%, provided the
assumption of an annual share price increase of 10%.
The complete proposal will soon be available at www.sca.se.
In order to implement the scheme, the Board will propose that the Annual
General Meeting resolve
(1) Amendment of the Articles of Association so that a new class of
share, called Class C, may be issued, which are to be convertible into to
Class B shares, at the request of the Board of Directors.
(2) A directed cash issue of 1.8 million Class C shares to a financial
investor, with subscription for shares at nominal value, i.e. SEK 10 per
(3) Authorisation of the Board of Directors to resolve to make a directed
offer to acquire shares to owners of all Class C shares in SCA. The
acquisition shall be effected at a price not below SEK 10 and not above
SEK 11 per share.
(4) Proposed resolution in respect of transfer of own shares so that
Class C shares, after conversion to Class B, can be transferred to the
persons included in the Option Scheme and to subsidiaries within the SCA
Group, when such subsidiaries shall be obliged immediately to sell shares
to the persons included in the Scheme. The price of the shares shall
correspond to the average latest price paid for Class B shares on OM
Stockholmsbörsen (Stockholm Stock Exchange) during a certain period before
the date when allocation is to be effected under the various Schemes.
Nomination Committee's proposal
The Nomination Committee 1) has decided to propose as a new member of
SCA's Board the president-designate for AB Industrivärden, Anders Nyrén.
In addition, the Committee announced that the departing president of AB
Industrivärden, Clas Reuterskiöld and the president of AB Custos, Christer
Gardell, have both declined re-election. As a result, the number of board
members elected by the Annual General Meeting is reduced from eight to
Stockholm, 5 March 2001
SVENSKA CELLULOSA AKTIEBOLAGET SCA (publ)
Communications and Investor Relations
For further information, please contact:
Sverker Martin-Löf, President and CEO, Phone +46-8-788 51 51
Peter Nyquist, Vice President Communications and Investor Relations, Phone
+46-8-788 52 34
Prior to this year's Annual General Meeting, the Committee comprises Bo
Rydin, Chairman of SCA, Bo Damberg, Handelsbankens Stiftelser, Thomas
Halvorsen, Fjärde AP-fonden, Björn Lind, SEB Fonder, and Peter Rudman,
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