Filed by UPM-Kymmene Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Champion International Corporation
Commission File No.: 001-03053
UPM-KYMMENE GROUP / CHAMPION INTERNATIONAL
TELECONFERENCE SCRIPT
THURSDAY 17, 2000 - 3:30PM TO 4:30PM FT (8:30AM TO 9:30AM NYT)
OLAVI KAUPPILA, VP, INVESTOR RELATIONS, UPM-KYMMENE
Thank you, Operator.. Before we begin this call we would like to remind everyone
that the teleconference contains certain statements that are neither reported
financial results nor other historical information. These statements are
forward-looking statements within the meaning of the safe-harbor provisions of
the U.S. federal securities laws. These forward-looking statements are subject
to risks and uncertainties that could cause actual results to differ materially
from those expressed in the forward-looking statements. For further details,
please see the companies' 10K, 10Q and other filings with the SEC. With that out
of the way, let me introduce to you Mr. Juha Niemela, president and chief
executive officer of UPM-Kymmene. Juha...
JUHA NIEMELA:
Thank you, Olavi. Welcome to our conference call. We appreciate your being with
us today. With me in Helsinki is Richard Olson, chairman and chief executive
officer of Champion International, Jan-Henrik Kulp, Senior Vice President and
Chief Financial Officer and Mike Corey, Senior Vice President and Kari Toikka,
Senior VP, Investor Relations.
Today we announced that our two companies have entered into a definitive merger
agreement that would create a premier global paper and forest products company.
Since we have on the telephone members from both the European and the American
financial communities, some of whom may know one company but not the other, let
me tell you something about why this is such a powerful combination.
First of all, UPM-Kymmene is one of Europe's largest forest product and paper
companies. We manufacture printing papers, including magazine paper, newsprint,
and fine paper, as well as converting materials and wood products. UPM-Kymmene
has a strong market position in the North America in magazine papers and is
fully integrated in pulp and almost self sufficient in energy. Champion
International has leadership positions in North America and Brazil. Its major
businesses include coated and uncoated papers; paper distribution; northern
softwood and hardwood pulps; timberlands; and wood products.
The combined company will be called Champion International and its logo will be
UPM-Kymmene's Griffin. The headquarters will be in Helsinki.
Together, we will have total revenues of euros between 13 and 14 billion and
will have around 49,000 employees. Total papermaking capacity is approximately
12.1 million metric tons per year. UPM-Kymmene and Champion, together, will have
a global well-balanced complimentary business portfolio and mass to compete in
global business. Production plants in 17 countries and extensive sales and
distribution facilities on five continents serve better both local and global
customers. We expect this geographic diversification to fortify our strong
position in the magazine and fine papers businesses and to moderate the
traditional cyclicality in our earnings base. In addition, the combined company
will have the responsibility for the sustainable management of over 6.4 million
hectares (15.8 million acres) of forestlands worldwide. All these factors
together make the new company poised for continued growth.
We are committed to providing a superior return. It will come from accretion and
UPM-Kymmene's higher dividends to our shareholders. Our two world-class
organizations will create an outstanding platform to do just that. Our
complementary product lines will provide enhanced profit opportunities through,
among other things, access to both short and long fiber, improved pulp balance
and low cost pulp supply.
In addition, we expect to realize substantial operational and marketing
benefits. Our combined company will be committed to continuous improvement in
all its operations in order to maximize efficiency and long-term profitability.
Under the terms of our merger agreement, UPM-Kymmene will exchange 1.99 ordinary
shares for each share of Champion common stock. The transaction values
Champion's total equity at approximately EUR 6.6 billion, or $6.5 billion, based
on UPM-Kymmene's February 16 closing price of EUR 33.80 ($33.33). The exchange
ratio of 1.99 represents a premium to Champion shareholders of approximately 30%
over the average ratio of the two stocks during the past month. The transaction
will be accounted for as a pooling of interests and is expected to be accretive
to both companies' earnings per share in the first full year after closing.
We anticipate that we will achieve approximately EUR 330, or $325 million, in
annual synergies by 2002 from a combination of process optimization resulting in
lower operating costs; reductions in logistical and purchasing costs;
implementation of world-class marketing practices; and internal pulp
utilization; and sales and administrative cost reductions.
The combined company will have a total market value of approximately EUR 20.5
billion ($20.2 billion) [EUR 15.5 billion ($15.3 billion) in equity; EUR 5.0
billion ($4.9 billion) in debt] giving us all the necessary financial strength
to pursue a whole range of growth opportunities in our industry. The Board of
Directors and Executive Management will be committed to the highest
international standards of excellence in business practises, environmental
issues and treatment of people.
I will serve as chief executive officer of our company and Richard Olson, will
be senior executive vice president. The other member of our management team are
outlined in our press release. Six directors from Champion will be invited to
join UPM-Kymmene's Board, including Mr. Olson and Mr. Nichols, Champion's vice
chairman and executive officer, and four independent directors.
Now, I'd like to turn the call over to Richard Olson so that he can share his
thoughts on today's announcement.
RICHARD OLSON:
Thank you, Juha.
We at Champion share Juha's excitement about this combination. This merger is
simply the perfect fit for our Company. We immediately achieve a scale and the
market presence to succeed in a global economy. Our shareholders will receive a
premium for their shares and the opportunity to own stock in a premier global
company with substantial growth potential. Together, we intend to be the
supplier of choice for our customers by providing the quality of products and
services they value. We expect to set the standard for excellence in this
industry.
Our employees will benefit from being part of an organization with leadership
positions around the globe. The combined talents of UPM-Kymmene and Champion
employees will make us not just bigger, but better. Both companies share a
history of commitment to employees, the communities in which we operate, to
sustainable forest management and to the environment.
The merger is conditioned upon, among other things, the approvals of the
shareholders of both companies, and regulatory approvals in various
jurisdictions. The companies anticipate that the merger can be completed during
the first half of this year.
In summary, this merger puts us in the top tier of global paper and forest
products companies and positions us for profitable growth in a [consolidating?]
industry.
JUHA NIEMELA:
Thanks,Dick. Now, Operator, we would be pleased to take some questions.
These materials contain certain statements that are neither reported financial
results nor other historical information. These statements are forward-looking
statements within the meaning of the safe-harbor provisions of the U.S. federal
securities laws. These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
expressed in the forward-looking statements. Many of these risks and
uncertainties relate to factors that are beyond the companies' ability to
control or estimate precisely, such as future market conditions, the behavior of
other market participants and the actions of governmental regulators. These and
other risk factors are detailed in the two companies' SEC reports. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of the presentation of these materials. The companies
do not undertake any obligation to publicly release any revisions to these
forward-looking statements to reflect events or circumstances after the date of
the presentation of these materials.
Investors and security holders are advised to read the joint proxy
statement/prospectus regarding the business combination transaction referenced
in the foregoing information, when it becomes available, because it will contain
important information. Such joint proxy statement/prospectus will be filed with
the Securities and Exchange Commission by UMP-Kymmene and Champion
International. Investors and security holders may obtain a free copy of the
joint proxy statement/prospectus (when available) and other related documents
filed by UPM-Kymmene and Champion International at the Commission's website at
www.sec.gov. The joint proxy statement/prospectus and the other documents may
also be obtained from UPM-Kymmene by contacting UPM-Kymmene, Attn: Reko
Aalto-Setala, Etelaesplanadi 2, FIN-0010 Helsinki, Finland, and/or Champion
International by contacting Chamption International, Attn: Tom Hart, One
Champion Plaza, Stamford, Connecticut 06921.
Champion International, its directors, executive officers and certain other
members of Champion International management and employees may be soliciting
proxies from Champion International shareholders in favor of the merger.
Information concerning the participants will be set forth in the joint proxy
statement/prospectus when it is filed with the Securities and Exchange
Commission.
[Q&A SESSION]