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Shareholders’ Meeting of KONE Corporation

Shareholders’ Meeting of KONE Corporation

Stock Exchange Release Published 01/11/2004

The invitation to the shareholders' meeting will published in newspapers and mailed to all shareholders in accordance with the Articles of Association immediately after the demerger plan has been announced.
The shareholders of KONE Corporation are invited to an Extraordinary Shareholders’ Meeting that will be held on Friday 17 December, 2004 at 1 p.m. at the Finlandia Hall, address Mannerheimintie 13 e, Helsinki. The registration of the attendants of the meeting will begin at noon.
The matters on the agenda of the meeting are as follows.

1. The Proposal of the Board of Directors Concerning the Demerger of the Corporation

The Board of Directors of KONE Corporation proposes that the Shareholders’ Meeting approves the demerger plan that the Board of Directors has signed on 1 November, 2004.

The Main Contents of the Demerger Plan

KONE Corporation (”KONE”) will be demerged so that all its assets and liabilities will be transferred without a liquidation procedure to two public limited corporations to be established and that KONE dissolves. The two new corporations to be established are proposed to be named KONE Corporation (“New KONE) and Cargotec Corporation (“Cargotec”).
The proposed Articles of Association of New KONE and Cargotec are included in the demerger plan.
The demerger will become effective when the execution of the demerger is registered in the Trade Register. The planned date of the registration is 31 May, 2005.
The recipient corporations will apply for the listing of their class B shares and option rights on the main list of the Helsinki Stock Exchange approximately as of June 1, 2005.
Demerger Consideration
As demerger consideration the shareholders of the demerging corporation will receive shares in the recipient corporations so that for each class A share of KONE will be given one class A share in New KONE and one class A share in Cargotec and for each class B share of KONE will be given one class B share in New Kone and one class B share in Cargotec. The accounting par value of both recipient corporations is one euro.
The demerger consideration will be distributed to the shareholders of KONE in proportion to their existing shareholding. The ownership structure and the division of voting rights of New KONE and Cargotec after the demerger will reflect the ownership structure and the division of voting rights of the demerging corporation at the time of the demerger. The A class and B class shares differ from each other on the basis of the voting rights and the right to dividend connected to the shares.
The demerger consideration will be given in the book-entry system on the effective date of the demerger.
Option Rights
According to the terms of the KONE 2004 option program, one option right entitles to subscribe for three (3) class B shares of KONE (KONBS) for the price of 24.67 euro per share. According to the terms of the option program, KONE or its Board of Directors may offer, in case of demerger, an exchange of option rights. If the exchange of option rights into new corresponding option rights is offered, the holder of the option rights cannot demand redemption of option rights.
The Board of Directors of KONE has decided to offer an exchange of option rights so that for each class A option right will be given one class A option right of New KONE and one class A option right of Cargotec, and for each class B option right will be given one class B option right of New KONE and one class B option right of Cargotec. The exchange will be made in the book-entry system.
After the exchange a holder of a present option right is entitled to subscribe for three (3) class B shares in New KONE and three (3) class B shares in Cargotec. According to prevailing option program, the subscription price of one share of 24.67 euro will be divided between the option rights in proportion to the recipient corporations’ market values at the time of the listing.
The terms of the option programs are enclosed to the demerger plan.
Proposal for the Division of Assets and Liabilities
It is proposed that the assets and liabilities of KONE will be divided between the recipient corporations so that the shares, assets and other liabilities related to the elevator and escalator business are transferred to New KONE, and that the shares, assets and other liabilities related to container and cargo handling business (Kalmar and Hiab) are transferred to Cargotec.
Division of assets and liabilities is detailed in the demerger plan and its appendix.
The Board of Directors and Auditors of the Recipient Corporations
The Board of Directors and auditors of the recipient corporations will be elected as a part of the approval of the demerger plan.
The Board of Directors proposes to the Shareholders’ Meeting that seven (7) board members will be elected to the Boards of Directors of the recipient corporations. It is proposed to the Shareholders’ Meeting that Matti Alahuhta, Jean-Pierre Chauvarie, Antti Herlin, Sirkka Hämäläinen-Lindfors, Masayuki Shimono, Iiro Viinanen and Gerhard Wendt will be elected as board members of both recipient corporations.
It is proposed that the Board of Directors of New KONE will promote the election of Antti Herlin as Chairman of the Board and Sirkka Hämäläinen-Lindfors as Vice Chairman of the Board and to appoint Manfred Eiden as Managing Director.
It is proposed that the Board of Directors of Cargotec will promote the election of Antti Herlin as Chairman of the Board and Sirkka Hämäläinen-Lindfors as Vice Chairman of the Board and to appoint Carl-Gustaf Bergström as Managing Director.
It is proposed that two auditors will be elected for the both recipient companies. The proposed auditors are the authorized public accountants Jukka Ala-Mello and PricewaterhouseCoopers Ltd.
Proposal Concerning the Share Capital of the Recipient Corporation
The share capital of both receiving companies will be a minimum of 60,911,794 euro and the maximum of 64,409,010 euro. The final share capital and number of shares depend on the number of shares in KONE that have been subscribed for on the basis of the option rights connected to the option program and on whether the demerging corporation holds any of its own shares that will become null and void when the demerger becomes effective.
Other terms
The demerger plan also includes a report on the reasons for the demerger and ground for the evaluation of the assets. Furthermore, it includes a report of the own shares held by the corporation.

2. Proposal of the Board of Directors to the Shareholders’ Meeting concerning the Amendment of Sections 12 and 13 of the Articles of Association

In connection with the demerger the Board of Directors proposes to the Shareholders’ Meeting that the financial period of the corporation will be prolonged until 31 March, 2005. For this reason the Board of Directors proposes that the first paragraph of Section 12 and the whole Section 13 of the Articles of Association will be amended to read as follows.
”12 § Shareholders’ Meeting
The ordinary Shareholders’ Meeting shall be held annually within three months from the end of the financial period on a day decided by the Board of Directors.”
The rest of the Section will remain as it is.
”13 § Financial Period
The financial period of the corporation is 1 April–31 March. The exceptional financial period is 1 January, 2004-31 March, 2005.”

3. Proposal of the Board of Directors to the Shareholders’ Meeting concerning the Granting of Authorization to Assign Own Shares

The Board of Directors proposes that the Shareholders’ Meeting authorizes the Board of Directors to assign the maximum of 476,304 class A shares and the maximum of 2,696,876 class B shares that the corporation has acquired on the basis of the decision of the Shareholders’ Meeting made on 27 February, 2004. The Board of Directors is authorized to decide to whom and in which order the own shares are assigned. The Board of Directors may decide on the assignment of own shares otherwise than in proportion to the shareholder’s priority right to acquire the corporation’s own shares.
The shares can be assigned as consideration in possible acquisitions or other arrangements or in restructuring the company’s capital in the manner and extent decided by the Board of Directors, for example, in public trading arranged by the Helsinki Stock Exchange.
The shares will be assigned at the minimum of their current price at the time of the assignment. The current price will be determined in the public trading arranged by the Helsinki Stock Exchange.
This authorization supersedes the authorization granted by the ordinary Shareholders’ Meeting on 27 February, 2004 and will be in force until the execution of the demerger, however, not more than a year from the granting of the authorization.
Display and availability of the Documents
The proposal of the Board of Directors concerning the amendment of the Articles of Association and assignment of own shares as well as the demerger plan and its appendices are available to the shareholders for one month before the meeting at the head office of the corporation in Helsinki, address Kartanotie 1 and on the internet pages of the corporation www.konecorp.com/agm.
Right to Attend
A shareholder who has been registered as a shareholder on 7 December, 2004 in the register of shareholders maintained by Suomen Arvopaperikeskus Oy or who is entitled to attend the Shareholders’ Meeting on the basis of Paragraph 3 a Section 4 Subsection 2 of the Companies Act has the right to attend the Shareholders’ Meeting.
Registration
A shareholder who wishes to attend the Shareholders’ Meeting shall notify the corporation of his/her attendance at the latest on 13 December, 2004 before 4 p.m.

  • by letter to address Kartanontie 1, 00330 HELSINKI,
  • by telefax to number +358 204 75 4309,
  • by telephone to number +358 204 75 4332 / Ulla Silvonen
  • by an electric registration form on the internet pages of the corporation www.konecorp.com/agm


Powers of attorney, if any, shall be delivered in connection with the advance registration so that they have arrived before the period of advance registration ends on 13 December, 2004.
Demerger Prospectus
The demerger prospectus will be available as of 9 December, 2004 at the head office of the corporation, on the internet pages of the corporation www.konecorp.com and at the OMX way, address Fabianinkatu 14, Helsinki.
Helsinki 1 November, 2004
BOARD OF DIRECTORS
Sender:
KONE Corporation
Tapio Hakakari
Director, secretary to the Board of Directors
Minna Mars
Senior Vice President, Corporate Communications & IR
www.konecorp.com


1) As a result of the decision of the Board of Directors of Kone Corporation on November 22, 2004 to invite Matti Alahuhta as the President of Kone Corporation, after the signing of the Demerger Plan, it is proposed to instruct the Board of Directors of New KONE to appoint Matti Alahuhta as the President of New KONE as of the Demerger Date.