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  • 2002-05-30 KONE Corporation – Board of Directors’ Proposal for a Targeted Share Issue to the Finnish State as Part of Acquisition of Partek Shares
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KONE Corporation – Board of Directors’ Proposal for a Targeted Share Issue to the Finnish State as Part of Acquisition of Partek Shares

KONE Corporation – Board of Directors’ Proposal for a Targeted Share Issue to the Finnish State as Part of Acquisition of Partek Shares

Stock Exchange Release Published 30/05/2002

The Board of Directors of KONE Corporation has resolved to propose to the Extraordinary General Meeting on 14 June 2002 that the Extraordinary General Meeting decide on the following increase in the Company’s share capital:
The Company’s share capital shall be increased from 60,463,620 euro to 63,463,620 euro by a new issue of 3,000,000 class B shares under the following terms and conditions:
I. New issue
1. The new issue shall comprise 3,000,000 class B shares having a nominal value of one (1) euro each. The Extraordinary General Meeting of KONE Corporation has on 24 May 2002 resolved that the nominal value of the shares is divided from three euro to one euro whereby the number of the shares is tripled (1:3 split).
2. The new shares shall, deviating from the shareholders’ pre-emptive subscription rights under Chapter 4 Section 2 of the Companies Act, be offered for subscription to the State of Finland.
The reason for the deviation from the shareholders’ pre-emptive subscription rights to new shares in favour of the State of Finland is that payment of the subscription price for the new shares shall be made to the Company by transferring to the Company 6,927,451 Partek Corporation shares as contribution in kind. Targeting the issue to the State of Finland makes it possible to acquire the Partek Corporation shares partly by share capital financing.
The account of the Board of Directors of the grounds for determining the subscription price is attached as Appendix 1. The Company’s auditors’ opinion on the grounds for determining the subscription price and for the deviation from the shareholders’ pre-emptive subscription rights is attached as Appendix 2.
3. The subscription period shall commence on 14 June 2002 and end on 21 June 2002.
4. The subscription of the shares shall take place on a separate subscription list or on the minutes of the Extraordinary General Meeting.
The subscription is effected with the right and obligation of the State of Finland to as contribution in kind transfer 6,927,451 Partek Corporation shares.
5. The subscription price for the new shares shall be 35.33 euro per share after the above-mentioned split (105.99 euro before the split) equalling a total of 105,990,000 euro. The determination of the subscription price is presented in greater detail in Appendix 1 and Appendix 2. The opinion of an independent expert in accordance with the Companies Act on the property transferred as contribution is attached hereto as Appendix 3. To the extent that the subscription price exceeds the nominal value of the new shares, it shall be transferred to the premium fund.
The entire subscription price shall be paid by the State of Finland transferring to KONE Corporation as contribution in kind the 6,927,451 Partek Corporation shares owned by the State. The entire subscription price shall be paid on the transfer day, which shall be no later than the first banking day after the subscription date.
The shares to be transferred to the Company as contribution in kind are in accordance with the statement attached as Appendix 1 entered in the balance sheet at the value of 105,990,000 euro.
The annual account documents of the business activities of Partek Corporation for the two financial periods that have last ended as well as an account of the financial result of the business activities after the end of the last financial period for which annual accounts are prepared are attached as Appendix 4.
The report of the Board of Directors on the contribution in kind is attached as Appendix 5.
6. KONE Corporation’s shares were entered in the book-entry system on 4 September 1992.
After the subscription, the subscriber’s right to the new shares shall be registered into the waiting list kept by the Finnish Central Securities Depository Ltd. Thereafter, once the increase in the share capital has been paid in full and the increased share capital has been registered with the Trade Register, the subscriber shall be registered in the Company’s shareholder register and the shares shall be entered in the subscriber’s book-entry account.
7. The new shares entitle to dividends for the first time for the financial period that started on 1 January 2002. The subscriber has the right to exercise the other rights of a shareholder in the Company once the increase in the share capital has been registered with the Trade Register and the subscriber has been entered in the Company’s shareholder register.
8. Copies of the annual accounts for 2001 and the decision of the General Meeting relating to the profit and the copy of the first interim report for the year 2002 are attached as Appendix 6. The account of the Board of Directors of events that have occurred after the annual accounts 2001 and having a material effect on the position of the Company is attached as Appendix 7. The opinions of the auditors on the interim report and on the account of the Board of Directors is attached as Appendix 2.
II. Terms and conditions for the contribution in kind
1. Title to and possession of the shares in Partek Corporation to be transferred as contribution in kind shall pass to KONE Corporation on the first banking day after the subscription date (the transfer date).
2. The State of Finland will brief its account operator to transfer the Partek Corporation shares to the book-entry account of KONE Corporation as contribution in kind and to transfer the powers of attorneys and the transferring documents needed to execute the transfer to a stockbroker named by KONE Corporation.
III. General
1. This proposal for the increase in the share capital and the attached documents are available to the shareholders at the head office of the Company one week prior to the Extraordinary General Meeting. The documents will be sent to a shareholder requesting it and they will be available at the Extraordinary General Meeting.
2. Prior to the proposed new issue the State of Finland does not hold any shares in KONE Corporation. Following the new issue the State’s holding of shares in KONE Corporation corresponds to 4.7% of the shares and 1.9% of the votes in KONE Corporation.
3. The Board of Directors shall decide on other matters relating to the increase in the share capital.
Helsinki 28 May 2002
The Board of Directors
Appendices
Appendix 1
The account of the Board of Directors of the grounds on the basis of which the subscription price shall be determined
Appendix 2
The opinion of the auditors concerning the grounds for determining the subscription price and the deviation from the shareholders’ pre-emptive subscription rights, and the opinion of the auditors on the account of the Board of Directors
Appendix 3
The opinion of an independent expert on the property to be transferred as contribution in kind
Appendix 4
The annual accounts of Partek Corporation for 2000 and 2001 as well as an account of the Board of Directors on the financial result of the business activities and the financial position after the annual accounts for 2001
Appendix 5
The report of the Board of Directors on the property to be transferred as contribution in kind
Appendix 6
Copies of the annual accounts for 2001 and the decision of the General Meeting relating to the profit. (Documents are available for review at the headquarters of the Company one week before the date of the Extra General Meeting)
Appendix 7
The account of the Board of Directors of events that have occurred after the annual accounts for 2001 and having a material effect on the position of the Company
Appendix 1
KONE Corporation
The Board proposal

KONE CORPORATION – ACCOUNT OF THE GROUNDS ON THE BASIS OF WHICH THE SUBSCRIPTION PRICE SHALL BE DETERMINED
The Board proposes that the Extraordinary General Meeting decide on the increase of the Company’s share capital from 60,463,620 euro to 63,463,620 euro by a new issue of shares of 105,990,000 euro by offering for subscription 3,000,000 class B shares having a nominal value of one (1) euro each. The Extraordinary General Meeting has on 24 May 2002 decided on dividing the amount of the shares and the nominal value of the shares by three (the split 1:3). According to the Board’s proposal deviating from the shareholders’ pre-emptive subscription rights under the Companies Act Chapter 4 Section 2, the new shares shall be offered for subscription to the State of Finland.
According to the Board’s proposal the subscription price per share is 35.33 euro (105.99 before the split) equalling a total of 105,990,000 euro. The subscription price shall be paid in its entirety by the transfer by the State of 6,927,451 Partek Corporation shares as contribution in kind.
The subscription price is based on the values of the Company and Partek Corporation and the structure of KONE Corporation Group after completion of the new issue.
Helsinki 28 May 2002
The Board of Directors
Appendix 2

AUDITORS’ STATEMENT
To the shareholders of Kone Oyj
The Board of Directors of Kone Oyj has proposed to the Extraordinary General Meeting assembling on 14 June 2002 that the company’s share capital is raised by new issue against apports en nature by 3,000,000 euro so that 102,990,000 euro is paid in surplus. According to the Board’s proposal new shares may be subscribed by the State of Finland, deviating from the pre-emptive subscription right pursuant to the Companies Act Chapter 4, on basis of the preliminary agreement signed on 21 May 2002. By the agreement the State of Finland sells the Partek Oyj shares it owns corresponding 30.2% ownership of Partek Oyj’s share capital to Kone Oyj, against which Kone Oyj receives as part payment 6.927.451 pieces of Partek Oyj’s shares as apports en nature (14.2 % of Partek Oyj’s share capital).
In accordance with good auditing practice we have estimated the value of apports en nature due to Kone Oyj pursuant to the regulations of the Companies Act. The determination of the market value of Partek Oyj’s shares is based primarily on the negotiations between Kone Oyj and the State of Finland. In addition, the market value of Partek Oyj’s shares has been estimated by comparing Partek Oyj to other listed companies acting on similar lines of business. The estimation of Partek Oyj’s share value exceeds the rate on the date when the sale was made public by approx. 25 per cent and the weighed mean rate on basis of sales in the last 12 months by approx. 45 per cent. The basis for the value exceeding the Stock Exchange rate is the valuation of major shareholdings of other Finnish listed companies in the last few years in comparison to the Stock Exchange rates of these companies.On basis of these factors the value of apports en nature totals 105,990,000 euro.
Against apports en nature the Board proposes to relinguish 6,927,451 shares of Kone Oyj so that in addition to the 3.00 euro counter value per share, 32.33 euro per share is paid in surplus. The amount to be paid for the shares totals 105,990,000 euro.
As authorised auditors acting as independent experts we state that the value of apports en nature corresponds at least the amount to be paid for the shares to be relinguished against it.
Helsinki, 28 May 2002
Tilintarkastus Logos Oy
Authorised Public Accountants
PricewaterhouseCoopers Oy
Authorised Public Accountants
Seppo Tervo
APA
Jukka Ala-Mello
APA
Appendix 3

AUDITORS’ STATEMENT
To the shareholders of Kone Oyj
The Board of Directors of Kone Oyj has proposed to the Extraordinary General Meeting assembling on 14 June 2002 that the company’s share capital is raised by new issue against apports en nature by 3,000,000 euro so that 102,990,000 euro is paid in surplus. According to the Board’s proposal new shares may be subscribed by the State of Finland, deviating from the pre-emptive subscription right pursuant to the Companies Act Chapter 4, on basis of the preliminary agreement signed on 21 May 2002. By the agreement the State of Finland sells the Partek Oyj shares it owns corresponding 30.2% ownership of Partek Oyj’s share capital to Kone Oyj, against which Kone Oyj receives as part payment 6.927.451 pieces of Partek Oyj’s shares as apports en nature (14.2 % of Partek Oyj’s share capital).
In accordance with good auditing practice we have estimated the value of apports en nature due to Kone Oyj pursuant to the regulations of the Companies Act. The determination of the market value of Partek Oyj’s shares is based primarily on the negotiations between Kone Oyj and the State of Finland. In addition, the market value of Partek Oyj’s shares has been estimated by comparing Partek Oyj to other listed companies acting on similar lines of business. The estimation of Partek Oyj’s share value exceeds the rate on the date when the sale was made public by approx. 25 per cent and the weighed mean rate on basis of sales in the last 12 months by approx. 45 per cent. The basis for the value exceeding the Stock Exchange rate is the valuation of major shareholdings of other Finnish listed companies in the last few years in comparison to the Stock Exchange rates of these companies.On basis of these factors the value of apports en nature totals 105,990,000 euro.
Against apports en nature the Board proposes to relinguish 6,927,451 shares of Kone Oyj so that in addition to the 1.00 euro counter value per share, 34.33 euro per share is paid in surplus. The amount to be paid for the shares totals 105,990,000 euro.
As authorised auditors acting as independent experts we state that the value of apports en nature corresponds at least the amount to be paid for the shares to be relinguished against it.
Helsinki, 28 May 2002
Tilintarkastus Logos Oy
Authorised Public Accountants
PricewaterhouseCoopers Oy
Authorised Public Accountants
Seppo Tervo
APA
Jukka Ala-Mello
APA
Appendix 4
KONE Corporation
The Board proposal

ACCOUNT OF THE BOARD OF DIRECTORS OF THE FINANCIAL RESULT OF THE BUSINESS ACTIVITIES AND THE FINANCIAL POSITION OF PARTEK CORPORATION AFTER THE ANNUAL ACCOUNTS FOR 2001
Since Partek Corporation’s annual accounts per 31 December 2001, the company has published an interim report for the period January–March 2002 containing an account of events having an effect on the position and prospects of Partek Corporation. The Board of Directors of KONE Corporation is not aware of any material changes in the financial position of Partek Corporation having occurred since the publication of the interim report.
Helsinki 28 May 2002
The Board of Directors
Appendix 5
KONE Corporation
The Board proposal

THE BOARD’S ACCOUNT OF THE PROPERTY TO BE TRANSFERRED AS CONTRIBUTION IN KIND
KONE Corporation’s Board of Directors has proposed that the Extraordinary General Meeting decide on an increase in the Company’s share capital by 3,000,000 euro by a new issue of 3,000,000 class B shares having a nominal value of one (1) euro each. The Extraordinary General Meeting has on 24 May 2002 decided on dividing the amount and the nominal value of the shares by three (split 1:3). The shares to be issued correspond to 1,000,000 class B shares prior to the split, having the nominal value of three (3) euro.
The increase in the share capital relates to the acquisition of Partek Corporation shares owned by the State of Finland. The new shares shall be offered for subscription to the State of Finland with the right and obligation to transfer all the Partek Corporation shares owned by the State (6,927,451 shares) as contribution in kind. The subscription price is based on the values of the Company and Partek Corporation and the structure of KONE Corporation Group after the completion of the new issue.
As an account of the events that may have significance in assessing the value of the property to be transferred to the Company, the Board of Directors refers to the annual report 2001 of Partek Corporation and to the interim report of Partek Corporation published on 30 April 2002 which contains an account of events that have occurred in the period January–March 2002 having material effect on the position of the company (attached hereto).
The shares to be transferred in the issue to the Company as contribution in kind are entered in the balance sheet at the value of 105,990,000 euro.
Helsinki 28 May 2002
The Board of Directors
Appendix 7
KONE Corporation
The Board proposal

ACCOUNT OF THE BOARD OF DIRECTORS OF EVENTS THAT HAVE OCCURRED AFTER THE ANNUAL ACCOUNTS FOR 2001 AND HAVING A MATERIAL EFFECT ON THE POSITION OF THE COMPANY
The Company has on 23 April 2002 published an interim report for the period after the Company’s annual accounts 31 December 2001. The interim report contains an account of events that occurred in the period January–March 2002 having effect on the position of the Company. For that period the Board of Directors refers as its account to the above-mentioned interim report (attached hereto).
After the interim report the activity of the Company has been normal and no significant changes have occurred in the activity.
In May 2002, the Company has been negotiating with the State of Finland for buying the Partek Corporation shares owned by the State of Finland. The Company has 21 May 2002 signed a letter of intent according to which the State of Finland will sell the 30.2 per cent portion that it owns of Partek Corporation’s share capital to the Company. The Board of Directors of the Company has accepted the provisions of the share purchase agreement according to which the State of Finland is willing to transfer part of its Partek Corporation shares as contribution in kind for shares of the Company.
The purpose is to create a significant sized Finnish-based industrial and service enterprise with a strong global market position and first-class potential to profitable expansion. The aim of the Company is to persistently develop the businesses of Partek Corporation in compliance with the operative strategy of Partek Corporation. This will be carried out by taking advantage world-wide of the strong financial position and the industrial know-how of the emerging whole. The aggregate turnover of the combined group was about 5.6 billion euro in 2001 and the cash flow of the business was over 400 million euro. The combined group will be the largest in its line of business in the Nordic countries.
The Board of Directors considers the acquiring of the Partek Corporation shares owned by the State of Finland as a significant step in the development of the Company.
Helsinki 28 May 2002
The Board of Directors
For additional information, contact:
Tapio Hakakari
Director, Secretary to the Board of Directors
Phone: +358 204 75 4226 or +358 400 408 316
www.kone.com