The Extraordinary General Meeting decided on the reverse split in June 2014. The technical implementation of the reverse split did not have a direct immediate effect on the value of shareholders’ investment, and it did not require any action on part of the shareholders.
Extraordinary General Meeting: June 16, 2014
Reverse split: June 19, 2014
Reduced number of shares in the Trade Register: June 20, 2014
Trading with the merged shares commences: June 23, 2014
Proceeds from the sale of fractional shares paid to shareholders: July 2, 2014
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As a Outokumpu shareholder, do I need to take action because of the reverse split?
No. Outokumpu will carry out the reverse split, and no action is needed from shareholders. Shareholders can participate and vote in the Extraordinary General Meeting on June 16, 2014 where the reverse split is decided.
What is the combination ratio of the reverse split / How does the number of shares change?
25 shares will be combined into one share. The total number of shares in Outokumpu will decrease from over 10.3 billion to approximately 415 million.
Why have you decided conduct a reverse split of Outokumpu stock?
Combining Outokumpu shares will increase the value of a single share, which Outokumpu believes is in the shareholders’ best interest, as it is expected to make the company more attractive to investors. The combination is expected to enhance trading conditions for the shares and contribute to the shares’ efficient price formation on the stock market.
How does a 25:1 reverse split actually work?
The reverse split has practically the same result as combining 25 old shares into one new share, which will have 25 times the value. Technically, in the 25:1 reverse split, Outokumpu redeems from each shareholder the number of shares based on the number of shares on the shareholder’s account multiplied by 24/25. For example, if an investor owns 2,500 shares of Outokumpu, 2,400 of those shares are redeemed and the investor has 100 shares going forward. In order to avoid a fractional number of shares, the number of redeemed shares is rounded up to the next full share. The extra fractional shares that are redeemed are sold on behalf of the investor on the Helsinki Stock Exchange, and the proceeds with interest are paid to the shareholders. For example, if an investor has 2,520 shares, 2,420 shares are redeemed and the investor will have 100 shares going forward. The extra 20 shares will be combined and sold on behalf of the investor, who will then receive the proceeds from the sale with interest.
What happens if I own less than 25 shares?
If you own less than 25 shares, all your shares will be redeemed and the proceeds with interest paid to you, after which you will no longer be a shareholder in the company.
Will the reverse split affect the total value of my investment?
No. A reverse split simply means that there will be a reduction in the number of Outokumpu shares outstanding. The total market value of Outokumpu shares outstanding will not be affected as a result of the reverse split, except with respect to the redemption of fractional shares. The stock price of Outokumpu and consequently the value of an investment in Outokumpu is determined in daily trading on the Helsinki Stock Exchange, and even though the reverse split does not have a direct immediate impact on the value of the Outokumpu share, the purpose of the combination is to have better trading conditions for the share, which Outokumpu believes will be valuable for shareholders.
The following example illustrates a hypothetical result of a 25:1 reverse split. Let’s assume that an investor owns 2,500 shares and that the market price of a stock is EUR 0.27 per share, so that the investment is worth EUR 675. Let’s also assume that the stock price does not move up or down for any other reason. After the 25:1 reverse split, the investor would own 100 shares worth EUR 6.75, so that the investment is still worth EUR 675.
Will the reverse split affect how much of Outokumpu I own?
No, except in the case of fractional new shares sold to the market, in which case the investor’s share of ownership in Outokumpu would decrease by the amount corresponding to the fraction of the share.
How will I receive the combined shares?
If you hold shares in a brokerage account, the combined shares will appear on your account automatically after the reverse split on June 19, 2014. Contact your broker if you have any questions regarding timing.
How will the reverse split affect the number of shares outstanding and future calculation of earnings per share
At the time of the reverse split, the number of shares outstanding will be divided by 25 and earnings per share will be multiplied by 25.
Why has the ratio 25:1 been chosen?
Reverse split with a combination ratio of 25:1 has been chosen to arrive at a reasonable share price level, and at the same time to minimize the number of shareholders for whom the entire investment is redeemed, and to minimize the number of shareholders for whom the split ratio leads to a fractional number of shares.
Are there any personal income tax consequences as a result of the reverse split?
There will be no tax consequences to Finnish residents under the Finnish tax code as a result of the reverse split, except in the case of cash proceeds from the redemption of fractional shares, which could cause a shareholder to realize a gain or loss. Foreign residents should consult their local tax advisors.
Does the reverse split affect the share-based incentive programs of Outokumpu management?
The number of shares awarded and share price targets for Outokumpu ‘s share-based incentive programs are adjusted according to the combination ratio.
What happens to treasury shares (shares owned by Outokumpu) in the reverse split?
The reverse split will not affect treasury shares, i.e. treasury shares are not redeemed.
There is a small technical exception tough: part of the Outokumpu treasury shares will be sold prior to the reverse split in order to adjust the number of shares owned by other parties than Outokumpu to be divisible by the reverse split ratio. Based on Outokumpu’s ownership as on the date of the notice to the Extraordinary General Meeting, the number of treasury shares to be sold would be five.