UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM U-1
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APPLICATION
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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Stora Enso Oyj
Kanavaranta 1, P.O. Box 309
FIN- 00101
Helsinki, Finland
(Name of company filing this statement and address
of principal executive offices)
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None
(Name of top registered holding company
parent of each applicant or declarant)
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Jyrki Kurkinen
Stora Enso Oyj
Senior Vice President, Legal Affairs
Kanavaranta 1, P.O. Box 309
FIN- 00101
Helsinki, Finland
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(Name and address of agent for service)
The Commission is also requested to send copies
of any communications in connection with this
matter to:
Sara D. Schotland
Cleary, Gottlieb, Steen & Hamilton
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006-1801
and
William A. Groll
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, N.Y. 10006-1470
<PAGE>
APPLICATION FOR EXEMPTION FROM THE PROVISIONS OF THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 PURSUANT TO
SECTION 3(a)(5)
INTRODUCTION AND REQUEST FOR COMMISSION ACTION
Stora Enso Oyj, a Finnish corporation ("Stora Enso"), hereby applies for an
order from the United States Securities and Exchange Commission ("SEC" or the
"Commission") to the effect that, upon consummation of the merger transaction
described in Item 1 below, the resulting public utility holding company, and
every subsidiary company thereof as such, will be exempt from the provisions of
the Public Utility Holding Company Act of 1935, as amended ("PUHCA" or the
"Act"), other than Section 9(a)(2), pursuant to Section 3(a)(5) of the Act.
Stora Enso also seeks approval for the instant acquisition under Sections
9(a)(2) and (10) of the Act.
ITEM 1. DESCRIPTION OF THE TRANSACTION
A. The Merger
Pursuant to an Agreement and Plan of Merger, dated February 22, 2000 (the
"Merger Agreement"), by and among Consolidated Papers, Inc., a Wisconsin
corporation ("Consolidated Papers"), Stora Enso and Stora Enso Acquisition,
Inc., a newly-formed direct Wisconsin subsidiary of Stora Enso ("Merger Sub"),
Stora Enso intends to acquire Consolidated Papers, for aggregate consideration
of approximately $4.8 billion, including assumed net debt of approximately $0.9
billion. The Merger Agreement is attached to this application as Exhibit B-1.
Stora Enso's rationale for the transaction includes the opportunity to
expand into the world's largest paper market by acquiring Consolidated Papers,
the premier coated and supercalendered paper producer in the United States, with
leading market positions in Stora Enso's core paper grades. Stora Enso believes
that the combination will create a powerful North American platform for future
growth. The combined enterprise will be the largest producer of paper and board
by capacity worldwide, with total 1999 sales of approximately $13.2 billion1 and
total paper capacity of 15,000,000 metric tons.
Under the terms of the Merger Agreement, Consolidated Papers will merge
with and into Merger Sub (the "Merger") and all of the issued and outstanding
shares of common stock of Consolidated Papers will be converted, at the election
of the holder, into cash or Stora Enso ADRs (American Depositary Receipts
representing an interest in underlying Series R shares of Stora Enso to
facilitate trading in the United States), or a combination of cash and ADRs,
with a value of $44.00 per Consolidated Papers share. Each ADR will represent
one Series R share of Stora Enso. Consolidated Papers shareholders' elections of
cash or ADRs will be pro-rated, to the extent necessary, so as to maintain a 50%
cash and 50% ADR aggregate consideration mix.2 The transaction has been
unanimously approved by the boards of directors of both companies. Assuming 140
million Stora Enso Series R shares are issued, Consolidated Papers shareholders
would receive approximately a 15.5% economic interest and 5.0% of the vote in
Stora Enso.
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1 This figure is based on the EURO/Dollar average noon buying rate for the year
ended December 31, 1999 of 1:1.0653. See Federal Reserve Statistical Release No.
G.5A (405, January 3, 2000).
2 The exchange ratio for Consolidated Papers shares converted into ADRs will be
between 2.678 and 3.621 ADRs per Consolidated Papers share, based on the average
trading value of Stora Enso Series R shares over a period just prior to the
closing, as necessary to provide $44.00 in value per share. However, the
exchange ratio will be fixed at 2.678 ADRs for each Consolidated Papers share if
Stora Enso Series R shares are then trading at an average EUR trading price
higher than a $16.43 equivalent and will be fixed at 3.621 ADRs if the Series R
shares are then trading at an average below a $12.15 equivalent.
Stora Enso management expects that the ADRs will be registered with the SEC
and listed on the New York Stock Exchange, Inc. ("NYSE"). In the event that the
registration statement registering the ADRs has not been declared effective by
the SEC by September 30, 2000 or the ADRs have not been approved for listing on
NYSE (or, failing that, approved for quotation on NASDAQ) by October 31, 2000,
Stora Enso will complete the transaction on a 100% cash basis for $44.00 per
Consolidated Papers share. The Merger is expected to result in the establishment
of a liquid market for the Stora Enso ADRs with an estimated initial float of
approximately $2 billion. The parties currently expect the transaction to close
by August 2000.
Merger Sub will survive the transaction as a direct first-tier Wisconsin
subsidiary of Stora Enso under a new name "Stora Enso Consolidated Papers, Inc."
(the "Surviving Corporation"). Consolidated Papers' existing subsidiaries will
maintain their current status as direct or indirect subsidiaries, as the case
may be, of the Surviving Corporation. The Surviving Corporation will be a
Wisconsin corporation with its principal executive offices in Wisconsin Rapids,
Wisconsin. Stora Enso will remain a Finnish corporation. The Merger Agreement
provides that the current officers of Consolidated Papers will remain the
officers of the Surviving Corporation and that George W. Mead, the current
chairman of Consolidated Papers, will, subject to the approval of Stora Enso's
Shareholders, join the board of directors of Stora Enso upon completion of the
transaction.
Consummation of the transaction is subject to certain regulatory approvals
and to approval by the shareholders of both companies. Specifically, the Merger
is subject to the approval by the holders of at least two-thirds of the
outstanding Consolidated Papers common stock and the issuance of ADRs in the
Merger is subject to approval by the holders of two-thirds by number and voting
power of the Stora Enso Series A shares and the Stora Enso Series R shares
present and voting as a single class at a meeting called for the purpose of
voting on such matter. It is the parties' intention that meetings of the Stora
Enso and Consolidated Papers shareholders will be held in late June or early
July for the purpose of approving the Merger and related matters. The Merger
also is subject to the approval of the Federal Energy Regulatory Commission
("FERC"). An application for FERC approval was filed on March 23, 2000. See
Exhibit D-2. The Merger does not require the approval of the Public Service
Commission of Wisconsin ("PSCW"), as Consolidated Papers is exempt from the
Wisconsin Public Utilities Holding Company Act ("WPUHCA"). A petition for a
declaratory ruling confirming that no such approvals are required and that the
Surviving Corporation will remain exempt from WPUHCA was filed with PSCW on
March 22, 2000. See Exhibit D-1. See below for a fuller discussion in the
section "Regulatory Approvals." The merger is also subject to the notification
provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR
Act") and to the provisions of similar antitrust or competition laws in other
jurisdictions where the companies operate.
Upon consummation of the transaction, Stora Enso will own the Surviving
Corporation, as successor to Consolidated Papers, an intrastate exempt holding
company under Section 3(a)(1) of PUHCA, and its direct and indirect
subsidiaries, including Consolidated Water Power Company ("CWPCo"). CWPCo, a
Wisconsin public utility company, is a Wisconsin corporation and a wholly-owned
subsidiary of Consolidated Papers. CWPCo's principal office and place of
business is in the City of Wisconsin Rapids, Wisconsin. CWPCo is engaged in the
generation, transmission, sale, and distribution of electric energy, primarily
for the internal consumption of Consolidated Papers. CWPCo also provides service
to approximately 1,000 other retail (primarily residential) customers in
Wisconsin. CWPCo owns an approximately one third interest in Wisconsin River
Power Company described below. After giving effect to the transaction, the
Surviving Corporation will claim an exemption from registration under PUHCA
pursuant to Section 3(a)(1) and Rule 2.3 For the reasons set forth herein, Stora
Enso will qualify for an exemption from registration under Section 3(a)(5) of
the Act.
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3 See Consolidated Papers' Form U-3A-2 filing for the fiscal year ended
December 31, 1999 (File No. 69-53-3, filed on 02/25/2000).
B. Description of the Parties to the Transaction
1. Stora Enso
Stora Enso is one of the world's leading forest industry companies. Stora
Enso was formed through the merger of Finland's Enso Oyj and Sweden's Stora
Kopparbergs Bergslags Aktiebolag (publ) at the end of 1998. To date this
combination has been extremely successful, with synergies more than double
targeted levels. Stora Enso is an integrated forest products group that
manufactures magazine paper, newsprint, fine paper and packaging boards,
supported by 2.1 million hectares of productive forestland. Stora Enso holds
strong global positions in all of the aforementioned product areas. Stora Enso
employs approximately 40,000 people and maintains operations in Europe, Asia and
North America. Additionally, Stora Enso has sales and marketing organizations
throughout the world.
Stora Enso currently neither owns nor controls any U.S. public utilities,
nor any exempt wholesale generators or qualified facilities. Exhibit K-1 lists
Stora Enso's subsidiaries and their respective jurisdictions of organization.
Stora Enso's Electricity Operations
Stora Enso currently produces electricity for internal consumption and
sells electricity in the European electric market, primarily in Finland and
Sweden. Stora Enso's 1999 sales of electricity totaled approximately EUR 506
million ($539 million) with operating profit of approximately EUR 103 million
($109 million). Total external electricity sales were 5.3 TWh, of which 3.3 TWh
was sold in Sweden, 1.6 TWh was sold in Finland and 0.4 TWh was sold in other
markets. See Exhibit G-1. Stora Enso's electrical power is produced in Sweden in
hydropower and nuclear power plants, and in Finland primarily in industrial
cogeneration, nuclear power, and thermal power plants.
On January 27, 2000, Stora Enso and Finnish energy group Fortum signed a
letter of intent providing for the sale of the main part of Stora Enso's power
assets outside its mills to Fortum group companies or designees. The purchase
price for the assets covered by the letter of intent is approximately EUR 1.85
billion ($1.85 billion). The letter of intent covers a total of 1,511 MW of
electricity generation capacity in Finland and Sweden, regional electricity
distribution networks in central Sweden and power sales contracts in Sweden.
1,096 MW of the capacity is hydro power, 159 MW of which is in Finland and 937
MW in Sweden. The nuclear power capacity totals 301 MW in Sweden. The
transaction also involves the transfer of regional distribution networks and
power sales contracts in Sweden. Closing is expected to take place in the Spring
of 2000, subject to approval by European competition authorities.
2. Consolidated Papers
Consolidated Papers is headquartered in Wisconsin Rapids, Wisconsin, and is
North America's largest producer of coated paper and supercalendered printing
papers, as well as the leading manufacturer of specialty papers. Stora Enso was
particularly attracted to Consolidated Papers because of its excellent
reputation as an industry leader driven by a strong marketing network and
customer relationships. Consolidated Papers employs about 6,800 people and
operates manufacturing facilities in Biron, Kimberly, Niagara, Stevens Point,
Whiting and Wisconsin Rapids, Wisconsin, as well as in Duluth, Minnesota.
Consolidated Papers owns and manages nearly 700,000 acres of forestland in the
States of Wisconsin, Michigan, and Minnesota and in Ontario, Canada.
Consolidated Papers owns electric generating facilities, but these facilities
are used to generate electric energy for its paper manufacturing operations.4
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4 Consolidated Papers makes infrequent sales of excess power from its Niagara,
Wisconsin facility to Wisconsin Electric Power Company ("WEPCo").
Description of Consolidated Papers' Utility Business
The properties of CWPCo are used primarily for the generation and local
distribution of electric energy sold to Consolidated Papers and consumed at
Consolidated Papers' plants but are also used for the generation and local
transmission and distribution of electric energy sold to purchasers of electric
energy as follows:
a. Distributed by it at retail directly to approximately one thousand
residential, commercial, industrial, and rural consumers in the City of
Wisconsin Rapids, Village of Biron, and Town of Grand Rapids, Wood County,
Wisconsin, and the Towns of Plover and Grant, Portage County, Wisconsin.
b. Infrequent sales of excess power to Wisconsin Public Service
Corporation ("WPSC") under a service agreement pursuant to WPSC's W3 FERC
tariff.
CWPCo has powerhouses and dams for the generation of such electric energy
at the Cities of Wisconsin Rapids and Stevens Point, Wisconsin; Villages of
Biron and Whiting, Wisconsin; and Town of Eau Pleine, Portage County, Wisconsin.
It has electric distribution lines connecting its system with the plants of
Consolidated Papers and the electric transmission system of WPSC. CWPCo also
owns an electric transmission line connecting it to the hydroelectric facilities
of Wisconsin River Power Company ("WRPCo") and the electric transmission system
of Wisconsin Power and Light Company ("WPL"). CWPCo owns all necessary land and
flowage rights in connection with said dams and necessary for the operation of
its hydroelectric plants.
None of the properties of CWPCo used for the generation, transmission, or
distribution of electric energy for sale is located outside of the Counties of
Wood, Portage, Marathon, and Adams, Wisconsin. No electric energy is sold or
delivered by it outside of the State of Wisconsin. Occasionally, electric energy
is received by it at the borders of the State of Wisconsin.
CWPCo owns 33.8% of the outstanding stock of WRPCo, a Wisconsin corporation
with its principal place of business in Wisconsin Rapids, Wisconsin. The other
owners of WRPCo are WPL and WPSC, each of whom owns an approximate one-third
share. The properties of WRPCo consist of its Petenwell hydroelectric plant
having a nameplate capacity of 20,000 KW and its Castle Rock hydroelectric plant
having a nameplate capacity of 15,000 KW. Both plants are located on the
Wisconsin River south of Wisconsin Rapids, Wisconsin. CWPCo is the managing
owner of WRPCo. All electric energy produced by WRPCo has been and will be sold
and delivered to CWPCo, WPL and WPSC, its three owners, each of which is a
Wisconsin retail electric utility, and no electric energy is to be delivered to
or received by it outside the borders of said State. The business of WRPCo is
therefore entirely intrastate.
CWPCo filed an application with FERC for authorization to engage in
wholesale power sales at market-based rates. FERC granted such approval on
November 27, 1998. Consolidated Water Power Company, 85 FERC P. 61,289 (1998).5
ITEM 2. FEES, COMMISSIONS AND EXPENSES
The fees, commissions, and expenses to be paid or incurred, directly or
indirectly, by all parties in connection with the transaction are estimated to
total approximately $35 million.6
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5 FERC found that CWPCo did not have market power in generation or transmission
and indeed that its transmission facilities were so limited as to have been
granted a waiver from FERC's generally applicable open access wholesale
transmission requirements.
6 The fees and expenses directly related to the acquisition of securities of
CWPCo are not expected to be material and relate primarily to securing various
governmental approvals.
ITEM 3. APPLICABLE STATUTORY PROVISIONS
SECTION 3(a)(5)
Section 3(a)(5) allows the SEC to exempt a holding company if:
such holding company is not, and derives no material part of its income,
directly or indirectly, from any one or more subsidiary companies which
are, a company or companies the principal business of which within the
United States is that of a public-utility company.
As the Commission has noted, the "Section 3(a) (5) exemption is meant to be
available to a holding company whose U.S. utility operations account for no
material part of the holding company's income" and are "small in size." Gaz
Metropolitain, Rel. No. 26170 (1994) quoting Electric Bond and Share Co., Rel.
No. 11004, 1952 WL 1058. For the reasons set forth below, Stora Enso will
qualify for a Section 3(a)(5) exemption upon completion of the transaction.
1. AES Precedent
The SEC granted AES Corporation a Section 3(a)(5) exemption allowing it to
acquire CILCORP, an Illinois holding company exempt from PUHCA under ss.3(a)(1).
Section 3(a)(1) provides an exemption if the holding company and each of its
material utility subsidiaries are organized in the same state, are predominantly
intrastate in character, and carry on their utility business substantially in
the same state in which they are organized. In granting an exemption to AES
under Section 3(a)(5), the SEC stated:
Upon consummation of the Transaction, AES will own CILCORP, an
intrastate exempt holding company, and its direct and indirect
subsidiaries, including CILCO. AES requests an order exempting it from all
provisions of the Act except section 9(a)(2) following the Transaction. The
application states that, after giving effect to the Transaction, CILCORP
will remain predominantly an intrastate holding company that will not
derive any material part of its income from an out-of-state utility
subsidiary. CILCORP will continue to claim an exemption under section
3(a)(1) of the Act by rule 2.
Rel. 35-27063 (1999).7
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7 Section 9(a)(2) prohibits a person from acquiring, directly or indirectly,
the securities of a public utility company if such person is or will by virtue
of such acquisition become an affiliate of such company and of any other public
utility or holding company through the ownership or control of securities.
In granting AES's request for exemption under Section 3 (a)(5), the SEC
found that the utility operations that AES was acquiring (CILCO) were small both
in a relative sense (not material to AES) and in an absolute sense. The SEC
first examined whether CILCO was small in a relative sense. The SEC found that
in 1998 CILCO had operating revenues of $523 million and net income of $41
million versus AES's operating revenues of $2.4 billion and net income of $311
million. Release Nos. 35-27063, 70-9465 (Aug. 20, 1999). The SEC found that on a
pro forma basis CILCO, the utility subsidiary of CILCORP, would have contributed
10.36% to AES's total operating revenues. Id.
By comparison, CWPCo, the utility subsidiary of Consolidated Papers,
represents on a pro forma basis only 0.30% of Stora Enso's total sales revenues.
CWPCo's sales analysis for the year ended December 31, 1999 reports $39.2
million in revenue. Exhibit G-5. In contrast, for the year ended December 31,
1999, Stora Enso's revenues approximated $11.3 billion (EUR 10.6 billion) and
its net operating revenues were approximately $1.5 billion (EUR 1.4 billion).
See Exhibit G-1. The combined Stora Enso/Consolidated Papers enterprise would
have had 1999 sales of approximately $13.2 billion on a pro forma basis. Exhibit
C-1.
In AES, the SEC assessed the contribution of CILCO (the utility subsidiary
of CILCORP) to the gross revenues, net operating revenues, net income and net
assets of a pro forma combined AES/CILCORP consolidated holding company.
According to table 1 of the SEC's decision, on a pro forma consolidated basis,
CILCO contributed 12.81% of gross revenues; 10.35% of net operating revenues;
12.54% of net income and 7.78% of net assets. On a pro forma consolidated basis
the counterpart figures for CWPCo and the combined Stora Enso/Consolidated
Papers enterprise would have been as follows for the past three years:
CWPCo Pro Forma Contributions To
Stora Enso/Consolidated Papers Consolidated Holding Company
($MM)8
1997 1998 1999
Sales Revenues 0.30% 0.29% 0.30%
Stora Enso 10,650.9 11,174.5 11,330.2
CWPCo 37.1 38.4 39.2
Consolidated Papers
(excluding CWPCo) 1,642.4 1,951.0 1,799.6
Stora Enso/Consolidated Papers 12,330.4 13,163.9 13,169.0
Net Operating Revenues 0.08% 0.19% 0.04%
Stora Enso 875.8 765.5 1,510.7
CWPCo 1.0 1.9 0.7
Consolidated Papers
(excluding CWPCo) 208.5 236.1 163.1
Stora Enso/Consolidated Papers 1,185.3 1,003.5 1,674.5
Net Income Before Taxes 0.17% 0.44% 0.13%
Stora Enso 677.5 361.6 1,226.7
CWPCo 1.5 2.4 1.7
Consolidated Papers (excluding CWPCo) 188.9 175.8 108.4
Stora Enso/Consolidated Papers 867.9 539.8 1,336.4
Net Income 0.18% 0.65% 0.16%
Stora Enso 435.7 203.5 801.6
CWPCo 1.0 2.0 1.4
Consolidated Papers (excluding CWPCo) 117.0 100.4 64.7
Stora Enso/Consolidated Papers 553.7 305.9 867.7
Net Assets 0.15% 0.16% 0.16%
Stora Enso 16,569.7 16,419.6 17,081.0
CWPCo 30.4 32.5 32.8
Consolidated Papers (excluding CWPCo) 3,317.1 3,594.9 3,493.4
Stora Enso/Consolidated Papers 19,917.2 20,047.0 20,607.2
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8 The calculations in this table are based on the assumption that Euro/Dollar
exchange rate of 1:1.0653 (an average noon buying rate for the year ended
December 31, 1999, as reported in Federal Reserve Statistical Release No. G5A
(405, January 3, 2000)) is applicable to all the periods reflected in the table.
In addition, Stora Enso's financial information presented in the table has been
calculated in accordance with International Accounting Standards ("IAS"). When
Stora Enso's financial statements are reconciled to the U.S. GAAP, some of the
numbers in this table might change. Stora Enso will amend this application to
reflect any such changes.
In AES, the SEC assessed whether CILCO was small in an absolute sense by
considering what proportion CILCO represented of Illinois's electricity revenues
and of that state's electricity customers. CILCO represented only 2.8% of the
state's electric utility revenues and 3.4% of state customers. Like CILCO, CWPCo
is a minute factor in the state of Wisconsin: CWPCo represents only 1.1% of
Wisconsin's electricity revenues and less than 1% of its customers.9 Unlike
CILCO which was a relatively significant gas utility, CWPCo does not engage in
the gas utility business. Thus, both from the perspective of relative
size/materiality and from the perspective of absolute size, this transaction
satisfies the Section 3(a)(5) requirement that revenues derived from U.S.
utility subsidiary interests are not material in relative or absolute terms.
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9 CWPCo's 1998 electric revenue was $38,215,340, compared to Wisconsin's
statewide retail electric revenues of $3,375,961,000. In 1998, CWPCo served
1,035 of Wisconsin's 2,536,715 retail electric consumers. Wisconsin figures are
taken from ftp://ftp.eia.doe.gov/pub/pdf/electricity/054098.pdf, at page 217.
2. Gaz Metropolitain
In Gaz Metropolitain, Rel. 26170 (1994), a Canadian company received
approval under Sec. 3(a)(5) and under Section 9(a) (2) to acquire an exempt
intrastate holding company which owned a Vermont gas utility. The Vermont gas
utility's revenues of $38 million, net income of $2.8 million and customer base
(24,600 customers) were relatively small - 4.2% of the acquirer's consolidated
revenues and 3.1% of consolidated net income. The SEC stated that "nothing in
the Act prevents a foreign company that does not own or control public utility
or holding company securities from acquiring the securities of a domestic public
utility company." Id.
Viewed in light of the AES and Gaz Metropolitain precedents, the Merger
represents an a fortiori case. First, CWPCo is a smaller utility both in an
absolute sense (amount of sales and number of customers) and in a relative sense
(vis a vis Stora Enso) than the utility interests at issue in AES and Gaz
Metropolitain. Second, due to the location of Stora Enso in Finland, there is no
realistic opportunity of abusive affiliate transactions or cross-subsidization.
In contrast, AES had extensive U.S. energy operations.
3. Public Interest
Under the "unless and except" clause of Section 3(a), the Commission has
the authority to deny a request for exemption if it were to determine that
granting the exemption would be "detrimental to the public interest or to the
interest of investors or consumers." No such concerns, however, are presented
with respect to this transaction and request for exemption. From the standpoint
of PUHCA, it is true of Stora Enso, as it was true of AES, that Stora Enso "does
not appear to be the type of company at which the Act is directed." At present,
Stora Enso has no U.S. utility operations; following the acquisition, the only
assets that it will have are indirect operations which qualify for exemption
under Section 3(a)(1) due to their intrastate character. The modest retail sales
conducted by CWPCo will remain subject to the rate jurisdiction of PSCW. Stora
Enso will undertake to PSCW that it will have full access to the corporate books
and records of Stora Enso as necessary to assure discharge of its
responsibilities under the Act. With respect to wholesale transactions, Stora
Enso and Consolidated Papers have filed for FERC approval of those aspects of
the transaction which are FERC-jurisdictional.
Stora Enso's acquisition of Consolidated Papers (i) will not diminish
CWPCo's ability to provide adequate, reliable, efficient, and safe utility
service; (ii) will not impair the ability of CWPCo to raise necessary capital on
reasonable terms or to maintain a reasonable capital structure; (iii) will not
undermine the ability of PSCW to regulate CWPCo's retail operations; (iv) is not
likely to have any adverse impact on retail electricity customers of CWPCo; (v)
does not present significant opportunity for abusive affiliate transactions or
cross-subsidization; and (vi) is not likely to have a significant adverse effect
on competition.
SECTION 9(a)(2)
Section 9(a)(2) provides that SEC approval must be obtained with respect to
the acquisition of any security of any public utility company by "any person"
who is, or will by virtue of an acquisition, become an affiliate of two or more
public-utility companies.
Stora Enso would also require SEC approval under Section 9(a)(2) because as
a technical matter, in connection with the instant merger transaction it will be
acquiring two public utility subsidiaries, CWPCo and WRPCo. While WRPCo
qualifies as a second utility acquisition in that it meets the definition of a
public utility under PUHCA in that it is engaged in generation of hydroelectric
power which it sells to its three owners, as discussed above, WRPCo is not a
public utility under Wisconsin law. WRPCo makes no retail sales of power. WRPCo
neither owns nor controls transmission. Its output is sold to its three owners
for resale by them. Wisconsin River Power Co., 32 P.S.C.W. Reports 451 (1947);
see also In the Matter of Wisconsin River Power Co., 27 SEC 539 (1948), noting:
"The Wisconsin Commission has also ruled that River Company is not a utility
under the applicable statutes...."
The SEC has recently explained that "the main purpose of Section 9 is to
prevent `the growth and extension of holding companies [that bear] no relation
to economy of management and operation or the integration and coordination of
related operating properties' (an abuse that led to the enactment of the Holding
Company Act). . . . Section 10(b) provides that we shall approve an acquisition
unless we affirmatively find that the acquisition will have certain adverse
consequences." See Rel. No. 35-27110, Registered Public Utility Holding
Companies and Internationalization, 1999 SEC LEXIS 2641 (Dec. 1999). The SEC
explained that adverse consequences would include interlocking relationships,
detriment to the interest of consumers, impairment of capital structure, etc.
None of these factors apply to the instant transaction.
The Merger complies with the provisions of Section 10 and 11 of the Act.
The Merger does not involve or tend toward the creation of any additional
relationship among public utility companies. CWPCo will continue to be subject
to the jurisdiction of the FERC and PSCW and WRPCo to the FERC. CWPCo and WRPCo
will continue their operations in essentially the same manner as before the
merger. The relationship of CWPCo and WRPCo to other subsidiaries of
Consolidated Papers or to their current owners will not be changed by the
Merger. The Merger will not result in any interlocking relationships or any
concentration of control of public utility companies, and will not affect
competition among public utility companies. The structure of the holding company
resulting from the Merger will not be any different or more complicated than the
current structure; the significant change being that Stora Enso Consolidated
Papers is the Surviving Corporation and becomes the Section 3(a)(1) exempt
holding company.
The Merger will not result in any change in the utility operations of CWPCo
or WRPCo or any change in the relationship between CWPCo and WRPCo. Consequently
the Merger does not raise any issues under Section 8 or Section 11 of the Act or
regarding the economical and efficient development of an integrated public
utility system.
In Gaz Metropolitain, a Canadian company was granted approval under
Sections 3(a)(5) and 9(a)(2) FERC found that the integration provisions of PUHCA
did not bar the Canadian company from owning a gas utility. The Stora
Enso/Consolidated Papers transaction represents an a fortiori case for approval
because VGS was the only gas utility in Vermont with 24,600 customers. CWPCo has
only 1000 retail customers and WRPCo has none.
ITEM 4. REGULATORY APPROVALS
Consummation of the Merger is subject to approval by the holders of at
least two-thirds of the outstanding Consolidated Papers common stock. Issuance
of Stora Enso ADRs in the Merger is subject to approval by the holders of
two-thirds by number and voting power of the Stora Enso Series A shares and the
Stora Enso Series R shares present and voting as a single class at a meeting
called for the purpose of voting on such matter. It is the parties' intention
that meetings of the Stora Enso and Consolidated Papers shareholders will be
held in late June or early July for the purpose of approving the Merger and
related matters. Stora Enso's registration statement relating to the ADRs will
need to be declared effective by the SEC and the ADRs will also need to be
approved for listing on NYSE (or, failing that, on NASDAQ).
The Merger is also subject to approval by FERC. An application for such
approval was filed on March 23, 2000. Exhibit D-2.
The Merger is also subject to the notification provisions of the HSR Act
and to the provisions of similar antitrust or competition laws in other
jurisdictions where the companies operate.
Stora Enso and Consolidated Papers have applied to PSCW for a declaratory
order confirming that the Surviving Corporation will continue to be exempt from
the provisions of WPUHCA, which includes the requirement that the sum of the
assets of all non-utility affiliates in a holding company system of any holding
company formed on or after November 28, 1985 may not exceed 25% of the assets of
all public utility affiliates. See also Wis. Stat. ss. 196.795(5)(p). See
petition dated March 22, 2000, Exhibit D-1. The basis for the petition is the
"grandfathering" clause of ss. 196.795(8)(a), which provides that WPUHCA "does
not apply to any holding company which was organized or created before November
28, 1985, and which was not organized or created at the direction of a public
utility." See also ss. 196.795(11)(b) ("This section shall be deemed to legalize
and confirm the formation, prior to November 28, 1985, of any holding company,
which is not itself a public utility..."). The petition for exemption
demonstrates that Consolidated Papers has been exempt from the state holding
company statute under this "grandfather" clause and that none of the purposes
underlying WPUHCA would be served by discontinuing Consolidated Papers'
exemption following the merger of Consolidated Papers into the Surviving
Corporation.
ITEM 5. PROCEDURE
Stora Enso respectfully requests that the Commission issue its order
granting and permitting the requested exemption as soon as practicable, but in
no event later than July 1, 2000.
It is submitted that a recommended decision by a hearing officer is not
needed for approval of the proposed transaction. The Division of Investment
Management may assist in the preparation of the Commission's decision. There
should be no waiting period between issuance of the Commission's Order and the
date on which it is to become effective.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS
A. Exhibits
A-1 Articles of Association of Stora Enso
A-2 Restated Articles of Incorporation of Consolidated Papers, Inc. (previously
filed with the Commission as Exhibit (3)(i)to Consolidated Papers'
quarterly report on form 10-Q for the quarter ended March 31, 1996, File
No. 001-11359, and incorporated herein by reference)
A-3 By-Laws of Consolidated Papers, (Previously filed with the commission as
Exhibit 3.B. to the Consolidated Papers' Annual report on form 10-K for the
year ended December 31, 1999, filed on March 26, 1998, file No. 001-11359,
and incorporated herein by reference)
B-1 Agreement and Plan of Merger (previously filed with the Commission as
Exhibit 2.1 to the Consolidated Papers' current report on form 8-K, filed
on March 2, 2000, File No. 001-11359, and incorporated herein by reference)
C-1 Definitive Proxy Statement/Prospectus relating to the special meeting of
shareholders of Consolidated Papers, Inc. to approve the merger with Stora
Enso (to be filed by amendment)
D-1 Petition to the Public Service Commission of Wisconsin, filed on March 22,
2000.
D-2 Application to FERC, filed on March 23, 2000
E-1 Stora Enso organization chart (to be filed by amendment)
E-2 Consolidated Papers organization chart (to be filed by amendment)
E-3 Combined company organization chart after the consummation of the Merger
(to be filed by amendment)
F-1 Opinion of Counsel (to be filed by amendment)
F-2 Past Tense Opinion of Counsel (to be filed by amendment with Rule 24
certificate)
G-1 Stora Enso's Annual Report to the Finnish National Board of Patents and
Registration for the fiscal year ended December 31, 1999 (to be filed by
amendment)
G-2 Consolidated Papers' Annual Report on Form 10-K for the fiscal year ended
December 31, 1999 (File No. 001-11359, filed on March 24, 2000 and
incorporated herein by reference)
G-3 Stora Enso's Annual Report to the Finnish National Board of Patents and
Registration for the fiscal year ended December 31, 1998 (to be filed by
amendment)
G-4 Consolidated Papers' Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 (File No. 001-11359, filed on March 26, 1999, and
incorporated herein by reference)
G-5 Consolidated Papers Statement by Holding Company on Form U-3A-2 for the
fiscal year ended December 31, 1999 (File No. 69-53-3, filed on February
25, 2000 and incorporated herein by reference)
H-1 Proposed Form of Notice
K-1 Stora Enso's Subsidiaries (to be filed by amendment)
K-2 CWPCo Contributions to Stora Enso Consolidated Holding Company (GAAP
Basis) (to be filed by amendment)
K-3 Order Issued by the Public Service Commission of Wisconsin pursuant to
petition filed by CWPCo on March 22, 2000 (to be filed by amendment)
B. Financial Statements
FS-1 Stora Enso's Consolidated Balance Sheet as of December 31, 1999, 1998 and
1997
FS-2 Stora Enso's Consolidated Statement of Income for the 12 months ended
December 31, 1999, 1998 and 1997
FS-3 Consolidated Papers' Consolidated Balance Sheet as of December 31, 1999
(previously filed with the Commission in Consolidated Papers' Annual
Report on Form 10-K for the year ended December 31, 1999 (Exhibit G-2
hereto), filed on March 24, 2000, File No. 001-11359, and incorporated
herein by reference)
FS-4 Consolidated Papers' Consolidated Statement of Income for the 12 months
ended December 31, 1999 (previously filed with the Commission in
Consolidated Papers' Annual Report on Form 10-K for the year ended
December 31, 1999 (Exhibit G-2 hereto), filed on March 24, 2000, File No.
001-11359, and incorporated herein by reference)
FS-5 Consolidated Papers' Consolidated Balance Sheet as of December 31, 1998
(previously filed with the Commission in Consolidated Papers' Annual
Report on Form 10-K for the year ended December 31, 1998 (Exhibit G-4
hereto), filed March 26, 1999, File No. 001-11359, and incorporated herein
by reference)
FS-6 Consolidated Papers Consolidated Statement of Income for the 12 months
ended December 31, 1998 (previously filed with the Commission in
Consolidated Papers' Annual Report on Form 10-K for the year ended
December 31, 1998 (Exhibit G-4 hereto), filed March 26, 1999, File No.
001-11359, and incorporated herein by reference)
SIGNATURE
Pursuant to the requirements of the Public Utility Holding Company Act of
1935, the undersigned company has duly caused this Application to be signed on
its behalf by the undersigned thereunto duly authorized.
STORA ENSO OYJ
By: /s/ Johan Feldreich
--------------------------------
Name: Johan Feldreich
Title: Deputy General Counsel
By: /s/ Erkki Autio
--------------------------------
Name: Erkki Autio
Title: Legal Counsel
Date: March 20, 2000
Translation from Finnish
NATIONAL BOARD OF PATENTS AND REGISTRATION
Trade Register System Register number: 676.550
Issued 07.02.2000
E X T R A C T F R O M T H E T R A D E R E G I S T E R
- -------------------------------------------------------------
Company name: Stora Enso Oyj
Trade Register no: 676.550
Entered in the Register: 01.05.1996
Handled by office: NBPR/ Register office 2
Address: Arkadiankatu 6 A, 00100 Helsinki
Tel.: 09-6939 5979
Domicile: Helsinki
Contents of Extract: Information valid at 07.02.2000
- --------------------------------------------------------------------------------
Information relating to registered report:
Diary No. Ordinal number Entered in the Register Announcement made in
2000/009027 20 07.02.2000 Register Journal 6/00
- --------------------------------------------------------------------------------
Register entries:
POSTAL ADDRESS (Registered 01.05.1996): Kanavaranta 1, 00160 Helsinki
COMPANY NAME (Registered 23.12.1998): Stora Enso Oyj
SPHERE OF OPERATIONS (Registered 23.12.1998)
The Company operates directly or through subsidiaries and associated
companies in the forest, engineering and chemical industries and other
manufacturing industries; engages in agriculture, forestry and merchant
shipping, as well as in mining industry, supply of hydro-power,
building of hydro-electric facilities and financing. The Company may
also engage in the sale of know-how and services in its own field of
operations and carry out construction, operational, marketing and other
corresponding assignments both in Finland and abroad.
DOMICILE (Registered 01.05.1996): Helsinki
ACCOUNTING PERIOD (Registered 14.11.1997)
The accounting period of the company shall annually commence on 1
January and end on 31 December.
FOUNDATION (Registered 01.05.1996)
The Articles of Association were approved by general meetings of
shareholders held on 7 September 1995. The Court has issued a permit
for the execution of the merger agreement.
The following companies have merged to form Enso Oy:
Enso-Gutzeit Oy
Veitsiluoto Oy
<PAGE>
Register number: 676.550
CHANGE OF ARTICLES OF ASSOCIATION (Registered 23.12.1998)
The Articles of Association have been changed on 23 July 1998.
BOOK ENTRY SECURITIES SYSTEM (Registered 01.05.1996):
The shares of the company are maintained in the book entry securities
system.
SHARE CAPITAL (Registered 26.01.2000):
By January 4, 2000 the share capital has been increased on the basis of
the bonds issued on April 7, 1997, in addition to the increase of
300.000,00 Finnish marks earlier registered, by 2.460.000,00 Finnish
marks Share capital: 7,598.556.890,00 Finnish marks, fully paid up.
Shares: 759,855.689 at 10 Finnish marks each.
The share capital converted officially: Euro 1,277,985.527,43.
DIFFERENT CATEGORIES OF SHARES (Registered 26.01.2000)
The company shares are divided in series A and series R shares, which
differ from each other as stipulated in the Articles of Association.
Series A: 208,951,188 shares
Series R: 550,904.501 shares
MINIMUM AND MAXIMUM SHARE CAPITAL (Registered 23.12.1998):
Minimum share capital: 5,000,000,000 Finnish marks.
Maximum share capital: 20,000,000,000 Finnish marks.
BONDS (Registered 26.01.2000)
On 7 April 1997 the Company decided on the issue of bonds with warrants
to a total value of 1,000,000.00 Finnish marks. On the basis of the
bonds, the Company's share capital can be increased by a maximum of
30,000,000.00 Finnish marks through a rights issue. Subscription for
the new shares can take place during the period from 1 December 1998 to
31 March 2004. By January 26 2000 the share capital has been increased
on the basis of the bond by 2,760,000.00 Finnish marks.
BOARD OF DIRECTORS (Registered 23.12.1998)
Chairman: 06.06.1947 Dahlback, Claes Ake Gustav
Ordinary members: 07.02.1948 Ackermann, Josef Meinrad
290840-4599 Ahlstrom, Krister Harry
21.03.1934 Einsmann, Harald
07.06.1945 Hagglund, Bjorn Arne
151046-471T Harmala Jukka Sakari
310159-057V Luoma Raimo Johannes
080742-125N Pitkanen Paavo Juhani
18.11.1948 Sjoqvist, Jan Gustav
02.09.1956 Wallenberg, Marcus
<PAGE>
Register number: 676.550
OTHER DIRECTORS (Registered 23.12.1998):
Chief Executive Officer: 151046-471T Harmala Jukka Sakari
Deputy Chief Executive Officer: 07.06.1945 Hagglund, Bjorn Arne
AUDITORS (Registered 16.11.1999)
Auditors:
KPMG Wideri Oy Ab, Registration number 770.463, Trade Register
Auditor in charge:
310152-0915 Niileksela Anssi Hannu Kalevi
SVH Pricewaterhouse Coopers Oy, Registration number 222.847,
Trade Register
Auditor in charge:
301244-469 Nikula Pekka Antero
LEGAL REPRESENTATION (Registered 14.11.1997)
The company's name shall be signed by the Board of Directors in
accordance with the Companies Act.
COMPANY SIGNATORIES (Registered 23.12.1998)
In accordance with the Articles of Association authorised to sign for the
Company are the members of the Board of Directors, two jointly.
AUTHORISATIONS TO SIGN FOR THE COMPANY (Registered 07.02.2000)
29.09.1945 Bengtsson Lars Goran Olof
15.04.1955 Dingertz Per Johan Wilhelm
17.03.1952 Feldreich Karl Johan
071041-069C Kalela Kimmo Risto Erkki
281251-051J Korhonen Kai Antero
200648-1576 Kurkinen Jyrki Uolevi
120456-0279 Laaksonen Pekka Jaakko Tapani
22.06.1960 Lichtenthaler Lothar
03.07.1938 Lindell Erik Gunnar
231146-5732 Makelainen Esko Olavi
270142-137F Paavolainen Timo Juhani
20.02.1941 Petersson Anders Henning Ingvar
05.10.1956 Rettig Bernd Franz Georg
13.11.1947 Stade Yngve Arneson
150241-2232 Taukojarvi Jouko Paivio
The above persons are entitled to sign for the company, two together or each
separately together with a member of the board of directors.
- --------------------------------------------------------------------------------
<PAGE>
Register number: 676.550
HISTORY OF COMPANY NAME: From 23.12.1998 - Stora Enso Oyj
14.11.1997 - 22.12.1998 Enso Oyj
01.05.1996 - 13.11.1997 Enso Oy
- --------------------------------------------------------------------------------
The above information is a print-out from the Trade Register system. Printed on
the official form of the Board of Patents and Registration this document is an
original without a signature.
<PAGE>
NATIONAL BOARD OF PATENTS AND REGISTRATION
Trade Register System
23.12.1998
Register No. 676.550
ARTICLES OF ASSOCIATION
Register No. 676.550
Company: Stora Enso Oyj
Handled by Office: NBPR / Register Office No. 2
Address: Arkadiankatu 6 A
00100 Helsinki
Tel. 09-6939 5979
Contents: Copy of existing Articles of Association
dated 23 December 1998
Valid: From 23 December 1998 -
This information is a print-out from the Trade Register system. Printed on the
official form of the Board of Patents and Registration this document is valid
without a signature.
<PAGE>
ARTICLES OF ASSOCIATION OF STORA ENSO OYJ
I. NAME AND DOMICILE OF THE COMPANY AND ITS FIELD OF OPERATIONS
ss.1. The name of the Company is Stora Enso Oyj, and its domicile the
City of Helsinki.
ss.2. The Company operates directly or through subsidiaries and associated
companies in the forest, engineering and chemical industries and
other manufacturing industries; engages in agriculture, forestry and
merchant shipping, as well as in mining industry, supply of
hydro-power, building of hydro-electric facilities and financing. The
Company may also engage in the sale of know-how and services in its
own field of operations and carry out construction, operational,
marketing and other corresponding assignments both in Finland and
abroad.
II. SHARE CAPITAL AND SHARES
ss.3. The minimum share capital of the Company is five thousand million
(5,000,000,000) Finnish marks and the maximum twenty thousand million
(20,000,000,000) Finnish marks, within the limits of which the share
capital may be increased or reduced without amending the Articles of
Association.
The nominal value of each share is ten (10) Finnish marks.
The minimum number of shares may not be less than five hundred million
(500,000,000) and the maximum not more than two thousand million
(2,000,000,000) shares.
The shares shall be divided into class A shares and class R shares.
The number of class A shares may not be more than five hundred million
(500,000,000) and class R shares not more than one thousand six
hundred million (1,600,000,000) shares, provided, however, that the
total number of shares may not be more than two thousand million
(2,000,000,000) shares.
The shares of the Company shall be incorporated in the book-entry
system.
The right to receive funds distributed by the Company and to subscribe
for shares when increasing the share capital shall be restricted to
persons:
1. who have been registered as shareholders in the Shareholders'
Register on the record date;
<PAGE>
2. whose right to payment has been registered on the record date on
the book-entry account of a registered shareholder and entered
into the Shareholders' Register; or
3. in case a share is nominee registered, on whose book-entry
account the share has been registered on the record date and
whose nominee has been registered in the Shareholders' Register
of the Company on the record date as the nominee of the shares.
III. MANAGEMENT OF THE COMPANY
ss.4. The Board of Directors and the Chief Executive Officer shall
be responsible for the management of the Company. The duties of
the various bodies of the Company shall be determined by the
laws of Finland and by a separate Corporate Governance Policy
determined by the Board of Directors.
ss.5. The Board of Directors shall consist of not less than six (6)
and not more than ten (10) ordinary members.
The Board of Directors shall elect one of its members chairman
and one of its members vice chairman.
The term of office of a member of the Board of Directors shall
expire at the end of the following Annual General Meeting of
Shareholders.
The Board of Directors shall appoint the Chief Executive Officer
and the Executive Vice President, who shall also act as Deputy
Chief Executive Officer of the Company, as well as other senior
managers.
ss.6. Authorised to sign for the Company are the ordinary members of
the Board of Directors, two jointly, or each of the persons
heretofore authorised by the Board of Directors, two jointly
with each other or with a member of the Board of Directors.
The Board of Directors shall decide on authorising persons to
sign for the Company per procuram.
IV. CLOSING OF ACCOUNTS AND ANNUAL AUDIT
ss.7. The financial year of the Company shall be the calendar year.
The annual accounts shall be prepared in good time and handed
over to the Auditors for annual audit at least one month before
the Annual General Meeting of Shareholders.
ss.8. The Company shall have one (1) or two (2) Auditors, who shall be
entities of Certified Public Accountants or individuals approved
by the Finnish Central Chamber of Commerce.
<PAGE>
The Auditors shall be appointed by a General Meeting of
Shareholders for a term of office expiring at the close of the
following Annual General Meeting of Shareholders.
The Auditors shall submit a report of their audit to the Board
Directors two (2) weeks before the Annual General Meeting of
of Shareholders, at the latest.
V. ANNUAL GENERAL MEETING
ss.9. Shareholders present at a General Meeting of Shareholders or
their legally qualified representatives or their legally
qualified proxies shall have the right to exercise their power
to decide on matters pertaining to the Company.
A shareholder wishing to attend a General Meeting of
Shareholders shall notify the Company by the date mentioned in
the notice to the meeting, which may not be more than five days
before the meeting.
Since the shares of the Company are incorporated in the
book-entry system, the provisions of the Finnish Companies Act
regarding the right to participate in a General Meeting of
Shareholders must also be taken into account.
ss.10. At votings and elections, each class A share and each ten class
R shares entitle the holder to one vote. Each shareholder shall,
however, have at least one vote.
ss.11. The Board of Directors shall convene a General Meeting of
Shareholders by publishing a notice to the meeting in
newspapers, as determined by the Board of Directors, but at
least in two Finnish and two Swedish newspapers, not more than
two (2) months and not less than fourteen (14) days before
the last day for advance notice of attendance mentioned in the
notice to the meeting.
Other notices to the shareholders shall be delivered in the same
way.
ss.12. The General Meeting of Shareholders shall be held in
Helsinki.
ss.13. The Annual General Meeting of Shareholders shall be held within
six (6) months from the end of the financial year.
An Extraordinary General Meeting of Shareholders shall be
convened when considered necessary by the Board of Directors or
when requested in writing by an Auditor or shareholders holding
together a minimum of one tenth of all the shares to discuss a
specified matter which they have indicated.
<PAGE>
ss.14. At the Annual General Meeting of Shareholders shall be:
presented
1. the annual accounts, which shall comprise the income
statement, the balance sheet and the report of
operations;
2. the Auditors' report;
decided
3. the adoption of the income statement and the balance
sheet;
4. the measures to which the profit or loss of the adopted
balance sheet may give cause, and upon the date and
manner for a possible distribution of dividend;,
5. the granting of discharge from responsibility to the
members of the Board of Directors, and the Chief
Executive Officer;
6. the number of the members of the Board of Directors;
7. the number of Auditors;
8. the remuneration of the members of the Board of
Directors and the Auditors;
elected
9. the members of the Board of Directors; and
10. the Auditors; and
dealt with
11. any other matters notified separately in the notice to
the meeting.
VI. CONVERSION OF SHARES
ss.15. The Company's A shares can be converted into R shares subject
to the stipulations of this Section.
The conversion shall always take place within the maximum limits
for each share class as stipulated in the Articles of
Association. No monetary consideration shall be payable for the
conversion.
An A share may be converted into an R share at the request of a
shareholder, or, in case the shares are registered in the name
a nominee, at the request of the nominee indicated in the
of book-entry register. The Board of Directors of the Company
shall each year determine
<PAGE>
a period not exceeding one (1) month, during which the
conversion request may be presented to the Company. The
Board of Directors shall inform the shareholders of the
conversion possibility eight (8) days before the beginning
of the conversion period, at the latest, by a notice given
in the manner prescribed at the time for notices to General
Meetings of Shareholders.
A shareholder's request for conversion of shares shall
be presented to the Company in writing. The request
shall mention the number of shares to be converted as
well as the book-entry account on which the
book-entries corresponding to the shares are recorded.
The Company may request that an entry be made on the
shareholder's book-entry account restricting the
shareholder's right of transfer during the conversion
procedure. The Company shall without delay notify the
Trade Register of the changes in the numbers of shares
following the conversion.
A request for conversion of shares may be cancelled
before the change has been notified to the Trade
Register. Upon cancellation, the Company shall request
that any entry restricting the shareholder's right of
transfer shall be removed from the shareholder's
book-entry account.
The conversion of A shares into R shares shall become
effective upon registration in the Trade Register. The
party who requested the conversion and the book-entry
registrar shall be notified of the registration.
In the event a General Meeting of Shareholders is
convened during a period of conversion determined by
the Board of Directors, any conversion requests made
during such conversion period shall be deemed to be
received after the General Meeting of Shareholders. In
such a case, the Board of Directors may decide upon
extension of the conversion period to end after the
General Meeting of Shareholders, when necessary.
The Board of Directors shall, when necessary, decide on
more detailed procedures for the conversion of shares
based on a request of a shareholder or, in case of
shares registered in the name of a nominee, on the
request of the nominee indicated in the book-entry
register.
----------------------------------
This is to certify that the foregoing is a true translation
of the original Finnish document produced to me.
Helsinki, 23 December 1998.
BEFORE THE
PUBLIC SERVICE COMMISSION OF WISCONSIN
- ------------------------------------------------------------------------------
PETITION OF CONSOLIDATED PAPERS, INC.,
CONSOLIDATED WATER POWER CO.,
AND STORA ENSO OYJ
FOR
DECLARATORY RULING
- ------------------------------------------------------------------------------
Consolidated Papers, Inc., a Wisconsin corporation headquartered in
Wisconsin Rapids, Wisconsin ("CPI") and Consolidated Water Power Company, a
wholly-owned, Wisconsin incorporated subsidiary of CPI ("CWP"), by their
attorneys, Foley & Lardner, and Stora Enso Oyj, a Finnish corporation ("Stora
Enso"), by its attorneys, Cleary, Gottlieb, Steen & Hamilton, hereby petition
this Commission pursuant to Wis. Stat. ss. 227.41 for a ruling declaring and
confirming that the merger of CPI into Stora Enso Acquisition, Inc., a Wisconsin
subsidiary of Stora Enso, by which the merged successor to CPI (Stora Enso
Consolidated Papers, Inc., hereafter referred to as "Stora Enso Consolidated
Papers") will become a wholly-owned Wisconsin incorporated subsidiary of Stora
Enso (the "Merger"), will not affect the exemption of Stora Enso Consolidated
Papers and its affiliates under Wis. Stat. ss. 196.795(8)(a) from the provisions
and restrictions of the Wisconsin Public Utility Holding Company Act ("WPUHCA"),
Wis. Stat. ss. 196.795. CPI also seeks a ruling confirming that the Merger does
not require any approvals under Chapter 196 from this Commission. In support of
this Petition, the Petitioners state as follows:
<PAGE>
STORA ENSO CONSOLIDATED PAPERS SHOULD REMAIN EXEMPT
---------------------------------------------------
UNDER WIS. STAT. ss. 196.795(8)(a)
----------------------------------
1. CWP is a wholly-owned, Wisconsin incorporated subsidiary of CPI and has
been so wholly-owned since its organization as Oneida Paper Company in 1918.(1)
CWP buys and sells electricity for resale under the jurisdiction of the Federal
Energy Regulatory Commission ("FERC"). CWP owns minimal electric transmission
facilities, and is exempt from FERC's open access transmission requirements.(2)
CWP also owns electric distribution facilities and provides retail electric
service to approximately 1,000 customers in and around the Village of Biron,
Towns of Grand Rapids, Plover and Grant and in part of the City of Wisconsin
Rapids. Due to this retail service, CWP is a regulated electric public utility
under Chapter 196 of the Wisconsin Statutes. CWP rates and terms of service, and
certain aspects of its operation as a public utility, are subject to regulation
by this Commission. CWP has been operated as a retail public utility since
1919.(3)
2. CPI is one of the world's leading manufacturers of enamel coated paper.
In 1999, its total revenues, primarily from paper manufacturing, were $1.839
billion. CWP's 1999 revenues as a public utility were just $39.2 million.
- --------
1 The name of Oneida Paper Company was changed to Oneida Power Company (and
the corporation's purpose was changed from being a private utility to being a
public utility) in 1919. The company's name was changed to Consolidated Water
Power Company in 1926.
2 Black Creek Hydro, Inc., et al., 77 FERCP. 61,232 (1996); Northern States
Power Co. (Minn.) et al., 76
FERCP. 61,250 (1996).
3 CWP is also a one-third owner of Wisconsin River Power Company ("WRPCo"),
which owns and operates the Castle Rock and Petenwell hydroelectric projects for
the benefit of its three owners, CWP, Wisconsin Power and Light Company and
Wisconsin Public Service Corporation. Because its power output is sold
exclusively to its owners, WRPCo is not a public utility under Wisconsin law.
Wisconsin River Power Co., 32 P.S.C.W. Reports 451 (1947). WRPCo's sales of
power for resale to its owners are, however, regulated by FERC. Wisconsin River
Power Co., 11 FERC P. 61,271 (1980).
<PAGE>
3. The Merger will not result in any change in the outstanding securities
of CWP.(4) Its common stock is not being sold, transferred, taken, acquired,
exchanged or converted. Rather, the owner of the CWP stock (CPI) is simply being
merged into Stora Enso Consolidated Papers, which will continue to own all of
CWP's stock. This transaction, of course, is not occurring at the direction of,
or otherwise by, CWP.
4. CPI has, for diverse business reasons, concluded that its
Wisconsin-based business enterprise would benefit from a strategic alliance with
an international paper manufacturer. A strategic combination with Stora Enso was
determined to offer significant advantages to CPI, its owners, workers and other
stakeholders. Stora Enso, in its capacity as the shareholder of the common stock
of the successor to CPI, has no intent to alter the operations of CPI subsidiary
CWP in its capacity as a public utility. There was a comparable relationship in
comparative scale regarding revenues and employees between CPI and CWP prior to
1985 as is projected into the future.
5. WPUHCA was adopted in 1985 to deal with state policy issues implicated
by the formation, at the instance of publicly-traded Wisconsin public utilities,
of non-utility corporations as holding companies to own the voting securities
of, or otherwise control, that public utility. Section 196.795(8)(a) of WPUHCA
provides a complete exemption from WPUHCA for utility holding companies already
in existence on November 28, 1985 which were not "... organized or created by or
at the direction of a public utility." Of course, CPI (the paper manufacturer),
the company holding the stock of CWP on November 28, 1985, was not organized by
or at the direction of CWP. CPI was formed in 1894, before CWP even
- ----------
4 A more complete description of the Merger transaction, and data pertinent
to the Merger, will be found in the application for necessary approvals being
made by the Merger parties to FERC. A copy of the FERC application will be
provided shortly after its filing, which is imminent.
<PAGE>
existed.(5) As such, CPI and its successors have a grandfathered status and are
exempt from all of the provisions of ss. 196.795, including the non-utility
investment restrictions of ss. 196.795(5)(p) and the holding company takeover
provisions of ss. 196.795(3). As the successor corporation, Stora Enso
Consolidated Papers succeeds to the grandfathered status of CPI because upon
merger it possesses "all the rights, privileges, immunities, and franchises, as
well of a public as of a private nature, of each of the merging or consolidating
corporations . . . and all and every other interest, of or belonging to or due
to each of the corporations so merged." Wis. Stat. ss. 180.67 (1985-86).(6)
6. The policy considerations leading to the non-utility investment
restrictions, and numerous of the other limitations created by ss. 196.795, are
generally understood to have been prompted by concerns over the potential
diversion of utility management attention and corporate focus which would be
caused by a shift to a holding company structure at the instance of the utility.
There has been no shift in the structure of CWP and its relationship to CPI (the
holding company) since CWP began operating as a public utility in 1919. The
relationship between CWP and Stora Enso Consolidated Papers, the successor
corporation to CPI, will be the same as the historic relationship between CWP
and CPI. Stora Enso Consolidated Papers will continue to own all of the stock of
CWP. CWP can continue to look to Stora Enso Consolidated Papers for capital if
or when it is needed. The electric needs of the CWP utility serving Biron will
continue to be dwarfed by the electric needs of Stora Enso Consolidated Papers.
Stora Enso Consolidated Papers will continue to have an absolute business
imperative to meet its electric requirements. The retail customers of Biron, and
this Commission, can and have historically been able to take great comfort
regarding the cost and reliability of electric service to the retail customers
by relying upon the CPI need to meet its electricity needs reliably and
economically. The assets of CWP devoted to retail electric service were, in
1985, a very small fraction of the total holding company assets of CPI. That
situation was true before 1985, and will be true after the Merger. The Merger
will not trigger any circumstance which did not exist in 1985 when CPI's status
was grandfathered.
7. There is no potential whatever for a material impact upon state policy
from the precedent created by this case.
a. In 1985 several of the major utilities were themselves holding
companies (Wisconsin Electric Power Company, Wisconsin Public Service
Corporation, Wisconsin Power & Light Company, Madison Gas & Electric
Company). None of these were owned by holding companies in 1985, and
therefore their status is not grandfathered. All but Madison Gas & Electric
have subsequently formed holding companies, and of course the status of
such new holding companies is not grandfathered and is not exempt from ss.
196.795.
- ------------
5 CPI was originally organized as Consolidated Water Power Company in 1894.
The name of this corporation was changed to Consolidated Water Power and Paper
Company in 1902, and to Consolidated Papers, Inc. in 1962.
6 In examining the legislative intent behind the Wis. Stat.ss.196.795(8)
exemption, we "must assume that the lawmakers knew the law in effect at the time
they acted." See State v. Rosenburg, 560 N.W.2d 266, 267, 269 (Wis. 1997). When
Wis. Statss.196.795(8) was drafted, Wis. Stat.ss.180.67 (1985-86), cited in the
above text, governed the effect of a merger upon the corporations involved. The
current Wis. Stat.ss.180.1106 replaced Wis. Stat.ss.180.67 (1985-86) following
Wisconsin's adoption of the third edition of the Model Business Corporation Act.
While Wis. Stat.ss.180.1106(1) does not contain the "rights, privileges,
immunities, and franchises" language of its predecessor, which language
originated from the second edition of the Model Act, the notes to the third
edition provide that the "all property" language utilized for Wis.
Stat.ss.180.1106(1)(b) "should be construed broadly" to include the "property"
referenced in previous editions of the Model Act including "all the rights,
privileges, immunities, and franchises, of a public as well as of a private
nature" and "all and every other interest of or belonging to or due to the
corporations party to the merger." See 3 Model Business Corporation Act Annot.
(3d Ed.), p. 11-66. The Connecticut Supreme Court concluded from this provision
of the Model Act that the "general rule" under merger statutes is that "the
rights, powers, privileges and immunities of the terminating corporations pass
to the surviving corporations, unless there is some provision to the contrary by
constitutional or statutory provision." See All Brand Importers, Inc. v. Dept.
of Liquor Control, 567 A.2d 1156, 1165 (Conn. 1989).
<PAGE>
b. Northern States Power Company Wisconsin ("NSPW") was in 1985
wholly-owned by Northern States Power Company, Minnesota ("NSPM"), and its
status was and is grandfathered - but NSPM is treated specifically under
provisions in ss. 196.795 dealing with holding companies which are
themselves utilities. Also, under NSPM's recent merger it will be
substantially regulated as a federal, registered holding company under
PUHCA.
c. Minnesota Power & Light Company has the same relationship with Lake
Superior District Power Company as does NSPM with NSPW - and has comparably
separate statutory treatment.
d. WICOR, the holding company for Wisconsin Gas Company, was a utility
holding company organized and existing prior to November 28, 1985 which has
been treated as a grandfathered public utility holding company subject to
ss. 196.795(11)(b), and therefore is not wholly exempt from ss. 196.795
under ss. 196.795(8). WICOR will, after its acquisition by Wisconsin Energy
Corporation, be owned by that non-exempt Wisconsin utility holding company.
e. This requested ruling cannot affect WICOR, Wisconsin Energy,
Alliant, Wisconsin Public Service Corporation, NSP, MP&L or MG&E. There is
no other, substantial electric or gas utility holding company with a
grandfathered status under ss. 196.795 which could be affected by the
precedent of a Commission ruling confirming the continued, grandfathered
and exempt status of the holding company owning CWP after the Merger. 8.
Therefore, in order to avoid any uncertainty regarding the status of CPI
and its affiliates after the Merger, and because such uncertainty would be
unacceptable to the ongoing operations of the business enterprise, the
applicants respectfully request a declaration that the Merger transaction
will not affect the grandfathered status of CWP's holding company, and that
CWP, CPI and its successor corporation resulting from the merger, and each
of CWP's affiliates (including all upstream and downstream affiliates)
shall after the Merger remain exempt pursuant to Wis. Stat. ss.
196.795(8)(a) from all of the provisions of the Wisconsin Public Utility
Holding Company Act.
THE MERGER REQUIRES NO PSCW APPROVALS
-------------------------------------
9. CPI seeks a declaration by this Commission that the Merger requires no
approvals by this Commission.
10. Because CPI is currently exempt from WPUHCA by virtue of Wis. Stat.ss.
196.795(8)(a), Commission approval is not required under Wis. Stat.ss.
196.795(3) for Stora Enso's acquisition of CPI's stock.
11. Because the Merger will not involve any changes to the corporate
structure of CWP and will not effect the sale, acquisition, lease or rental of
any of CWP's property or assets, no Commission approval is required under Wis.
Stat.ss. 196.80.
REQUEST FOR RELIEF
------------------
For the reasons stated in this Petition, Applicants respectfully request
the Commission to issue a declaratory order in form and substance similar to the
proposed order attached to this Petition as Attachment 1, which declaratory
order shall be binding upon: CPI, whose principal business address is 510 High
Street, P.O. Box 8050, Wisconsin Rapids, Wisconsin, 54495-8050; CWP, whose
principal business address is 231 First Avenue, North, P.O. Box 8050, Wisconsin
Rapids, Wisconsin, 54495-8050; Stora Enso, whose principal business address is
Kanavaranta 1, P.O. Box 309, FIN-00160 Helsinki, Finland; and upon Stora Enso
Consolidated Papers, whose principal business address will be 510 High Street,
P.O. Box 8050, Wisconsin Rapids, Wisconsin, 54495-8050.
Dated this ____ day of__________, 2000. FOLEY & LARDNER
----------------------------------
Allen W. Williams, Jr., SBN 1014272
Bradley D. Jackson, SBN 1005468
David A. Meisinger, SBN 1029921
Attorneys for Consolidated Papers, Inc.
and Consolidated Water Power
Company
777 East Wisconsin Avenue
Milwaukee, WI 53202-5367
(414) 271-2400
CLEARY, GOTTLIEB, STEEN & HAMILTON
----------------------------------
Sara D. Schotland
William A. Groll
Attorneys for Stora Enso Oyj
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006-1801
and
One Liberty Plaza
New York, NY 1006-1470
<PAGE>
VERIFICATION
STATE OF ________________ )
) ss.
COUNTY OF ______________ )
I, Carl H. Wartman, being first duly sworn on oath, do hereby state the
following:
1. I am the Secretary and General Counsel of Consolidated Papers, Inc., and
I have reviewed the attached Petition for Declaratory Ruling, which deals with
the exemption of the successor corporation to Consolidated Papers, Inc., Stora
Enso Consolidated Papers, from regulation under the Wisconsin Public Utility
Holding Company Act.
2. I verify that the attached Petition for Declaratory Ruling has been
approved by Consolidated Papers, Inc.
________________________________________
Carl H. Wartman
Secretary and General Counsel
Consolidated Papers, Inc.
510 High Street, P.O. Box 8050
Wisconsin Rapids, Wisconsin 54495-8050
Subscribed and worn to before me this ____ day of March 2000.
__________________________________
NOTARY PUBLIC, State of ________
My Commission is/expires: ________
<PAGE>
Attachment 1
-------------
BEFORE THE
PUBLIC SERVICE COMMISSION OF WISCONSIN
- ------------------------------------------------------------------------------
PETITION OF CONSOLIDATED PAPERS, INC.,
CONSOLIDATED WATER POWER CO., AND
STORA ENSO OYJ FOR DECLARATORY RULING
REGARDING THE EXEMPTION OF STORA ENSO Docket No. ____________
CONSOLIDATED PAPERS FROM REGULATION
AS A PUBLIC UTILITY HOLDING COMPANY
PURSUANT TO WIS. STAT.ss.196.795(8)
- ------------------------------------------------------------------------------
ORDER
- ------------------------------------------------------------------------------
Introduction
On March 22, 2000 a petition was filed with this Commission pursuant to
Wis. Stat. ss.227.41(1) and Wis. Admin. Codess.PSC 2.65 for a declaratory ruling
with respect to the applicability of Wis. Stat.ss.196.795, et seq. to the
successor corporation resulting from a merger of Consolidated Papers, Inc.
["CPI"] into the Wisconsin incorporated Stora Enso Acquisition, Inc., with the
successor to be Stora Enso Consolidated Papers, Inc., a Wisconsin corporation
["Stora Enso Consolidated Papers"].
For the reasons set forth below, we find that Store Enso Consolidated
Papers shall be exempt from regulation as a public utility holding company, and
that no approval from this Commission is required for the transaction which
includes this merger.
Findings of Fact
1. CPI, located in Wisconsin Rapids, is one of the world's leading
manufacturers of enameled coated paper.
2. Consolidated Water Power Company ("CWP"), a wholly-owned Wisconsin
incorporated subsidiary of CPI, buys and sells electricity for resale under the
jurisdiction of the Federal Energy Regulatory Commission. Due to its limited
retail electricity sales within the State of Wisconsin, CWP is also a public
utility under this Commission's jurisdiction pursuant to Chapter 196, Wis.
Stats.
3. CWP has been a wholly-owned, Wisconsin-incorporated subsidiary of CPI
since prior to November 28, 1985 and, as such, CPI is a "holding company" within
the meaning of Wis. Stat.ss.196.795(1)(h).
4. CPI is not a public utility.
5. CPI was not organized or created as a public utility holding company by
or at the direction of CWP or any other public utility.
6. CPI has not acquired any interest in any public utility since November
28, 1985.
7. Stora Enso Acquisition, Inc. is a direct Wisconsin subsidiary of Stora
Enso Oyj, a Finnish corporation.
8. After the transaction in which CPI shall be merged into Stora Enso
Acquisition, Inc., with the successor Wisconsin corporation to be named Stora
Enso Consolidated Papers, Stora Enso Consolidated Papers shall be a wholly-owned
subsidiary of Stora Enso Oyj [the "Merger"].
9. The Merger is not occurring at the instance of CWP or any other public
utility.
10. The Merger will not result in the sale, transfer, acquisition, exchange
or conversion of any of CWP's common stock.
11. The Merger will not effect any change in the outstanding securities of
CWP, as the owner of such securities shall be a successor Wisconsin corporation,
Stora Enso Consolidated Papers, which will be the sole owner of CWP just as CPI
is prior to the Merger.
12. The Merger will not change CWP's corporate structure.
13. The Merger will not effect the sale, acquisition, lease or rental of
any of CWP's property or assets.
Conclusions of Law
1. The Commission has authority under Wis. Stat.ss.ss.197.795, 196.80 and
227.41 and Wis. Admin. Codess.PSC 2.65 to issue this declaratory ruling.
2. CPI is currently exempt from regulation as a public utility holding
company pursuant to Wis. Stat.ss.196.795(8).
3. The Merger will not result in the formation of a holding company under
Wis. Stat. ss.196.795(2).
4. Upon the Merger, Stora Enso Consolidated Papers will succeed to the
status under Chapter 196, Wis. Stats. held or enjoyed by CPI prior to the
Merger.
Opinion
The merger of CPI and Stora Enso Oyj will not change the relationship
between CWP and its parent company that has existed since CWP's corporate
predecessor was organized in 1918.
In addition, it is reasonable to conclude that the electric needs of CWP's
retail customers will continue to be very small compared to the electric needs
of Stora Enso Consolidated Papers, and that the retail customers can continue to
be assured of adequate service at reasonable costs due to Stora Enso
Consolidated Papers' imperative to obtain adequate service at low cost.
Finally, CPI is the only Wisconsin public utility holding company exempt
from Wis. Stat. ss.196.795, et seq., pursuant to Wis. Stat.ss.1960795(8)(a),
which is not itself a public utility. Thus, while the continued exemption of
Stora Enso Consolidated Papers from regulation under Wis. Stat.ss.196.795, et
seq. is consistent with the plain language of the statute and with the
state policy considerations upon which the Public Utility Holding Company Act
was based, this decision will also have no direct or indirect impact on the
Commission's regulation of any other public utility holding company.
Under these circumstances, the Merger will not result in the formation of a
holding company, and Stora Enso Consolidated Papers and its affiliates will
succeed to the rights, privileges, immunities and franchises of CPI, including
CPI's exemption under Wis. Stat. ss.196.795(8). The public interest does not
require otherwise.
Order
1. This Order shall become effective ten (10) days after its issuance
unless objections to the contrary which this Commission determines are
compelling are filed prior to that effective date, in which case this Commission
will re-open the proceeding for further consideration.
2. No prior or subsequent approval from this Commission under Chapter 196,
Wis. Stats. is required for or as a result of the transactions by which CPI is
merged into its successor, Stora Enso Consolidated Papers.
3. Upon the merger of CPI into Stora Enso Consolidated Papers, Stora Enso
Consolidated Papers shall succeed to CPI's exemption from regulation under
Chapter 196, Stats. as established by Wis. Stat.ss.196.795(8), and Stora Enso
Consolidated Papers, and all of its affiliates, including Stora Enso Oyj, shall
be exempt from all of the provisions of Wis. Stat.ss.196.795.
4. This Order shall be binding upon Stora Enso Oyj, Stora Enso Acquisition,
Inc., CPI, Stora Enso Consolidated Papers, CWP and all of its affiliates, and
all parties to whom actual and/or constructive notice of the above-referenced
Petition was provided.
Dated at Madison, Wisconsin this ___ day of _______________, 2000.
By the Commission:
___________________________
Exhibit H-1
[Proposed Form of Notice]
UNITED STATES OF AMERICA
before the
SECURITIES AND EXCHANGE COMMISSION
under the
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
(Release No. ___________)
_____________, 2000
- ---------------------------
In the matter of: )
)
Stora Enso Oyj )
Kanavaranta 1 )
P.O. Box 309 Fin-00101 )
Helsinki, Finland )
- ---------------------------
NOTICE IS HEREBY GIVEN that Stora Enso Oyj ("Stora Enso"), a Finnish
corporation has filed with this Commission an Application on Form U-1 for an
exemption from the provisions of the Public Utility Holding Company Act of 1935
(the "Act"). Stora Enso seeks an order from the Commission to the effect that,
upon the consummation of the merger transaction described therein (the
"Transaction"), the resulting public utility holding company, and every
subsidiary company thereof as such, will be exempt from the provisions of the
Act, other than Section 9(a)(2), pursuant to Section 3(a)(5) of the Act. Stora
Enso also seeks approval for the merger under Sections 9(a)(2) and 10 of the
Act.
Stora Enso intends to acquire Consolidated Papers, Inc., a Wisconsin
corporation ("Consolidated Papers"), by merging Consolidated Papers with and
into Stora Enso's direct, newly-formed Wisconsin subsidiary, Stora Enso
Acquisition, Inc. ("Merger Sub"), with Merger Sub as the surviving corporation
under the name, Stora Enso Consolidated Papers, Inc. (the "Surviving
Corporation"). The Surviving Corporation will be a first-tier, direct subsidiary
of Stora Enso, and Consolidated Papers' subsidiaries will become direct or
indirect subsidiaries, as the case may be, of the Surviving Corporation. The
Surviving Corporation will be a Wisconsin corporation with its principal
executive offices in Wisconsin Rapids, Wisconsin and Stora Enso will remain a
Finnish corporation with its principal executive offices in Helsinki, Finland.
Stora Enso is an integrated forest products group that manufactures
magazine paper, newsprint, fine paper and packaging boards, supported by 2.1
million hectares of productive forestland. Stora Enso holds strong global
positions in all of the aforementioned product areas. Stora Enso employs
approximately 40,000 people and maintains operations in Europe, Asia and North
America. Additionally, Stora Enso has sales and marketing organizations
throughout the world. Stora Enso currently produces electricity for internal
consumption and sells electricity in the Nordic electric market and in central
Europe. Total external electricity sales were 5.3 TWh, of which 3.3 TWh was sold
in Sweden, 1.6 TWh was sold in Finland and 0.4 TWh was sold in Central Europe.
Stora Enso is not currently a holding company as defined by the Act, and it
neither owns nor controls any U.S. public utilities, nor any exempt wholesale
generators or qualified facilities.
Consolidated Papers is North America's largest producer of coated paper
and supercalendered printing papers, as well as the leading manufacturer of
specialty papers. Consolidated Papers owns and manages nearly 700,000 acres of
forestland in the States of Wisconsin, Michigan, and Minnesota and in Ontario,
Canada. Consolidated Papers is an intrastate holding company exempt from the
Act, except for Section 9(a)(2), under Section 3(a)(1) and Rule 2. Consolidated
Papers is the parent of, among other entities, Consolidated Water Power Company
("CWPCo"), a Wisconsin public utility company. CWPCo is engaged in the
generation, transmission, sale, and distribution of electric energy, primarily
for the internal consumption of Consolidated Papers. CWPCo provides service to
approximately 1,000 retail (primarily residential) customers in Wisconsin.
The merger of Consolidated Papers with and into Merger Sub will be
governed by the terms of an Agreement and Plan of Merger, dated February 22,
2000 (the "Merger Agreement"), by and among Stora Enso, Consolidated Papers and
Merger Sub. Pursuant to the Merger Agreement, each issued and outstanding share
of common stock of Consolidated Papers will be cancelled upon consummation of
the Transaction and converted, at the election of the holder, into cash or Stora
Enso ADRs (American Depositary Receipts representing an interest in underlying
Series R shares of Stora Enso to facilitate trading in the United States), or a
combination of cash and ADRs, with a value of $44.00 per Consolidated Papers
share. Each ADR will represent one Series R share of Stora Enso. Consolidated
Papers shareholders' elections of cash or ADRs will be pro-rated, to the extent
necessary, so as to maintain a 50% cash and 50% ADR aggregate consideration mix.
Following the Transaction, the Surviving Corporation will remain
predominantly an intrastate holding company that will not derive any material
part of its income from an out-of-state utility subsidiary. Accordingly, the
Surviving Corporation will claim an exemption from registration under the Act
pursuant to Section 3(a)(1) and Rule 2.
Stora Enso seeks an order from the Commission that Stora Enso will be
exempt from registration pursuant to Section 3(a)(5) of the Act. Stora Enso
states that following the Transaction it will meet the statutory requirements of
the Section 3(a)(5) exemption because it will not be and will not derive a
material part of its income, directly or indirectly, from any one or more
subsidiary companies, which are a company or companies the principal business of
which within the U.S. is that of a public utility company. Stora Enso also
states that following the Transaction, Stora Enso will be a holding company
system with significant foreign operations whose U.S. utility operations do not
account for a material part of the holding company's income and are small in
size. Accordingly, exemption under Section 3(a)(5) is appropriate and in the
public interest.
The Application and any amendments thereto are available for public
inspection through the Commission's Office of Public Reference. Interested
persons wishing to comment or request a hearing should submit their views in
writing by __________, 2000, to the Secretary, Securities and Exchange
Commission, Washington, D.C. 20549, and serve a copy on Stora Enso at the
address specified above. Proof of service (by affidavit or, in case of an
attorney at law, by certificate) should be filed with the request. Any request
for hearing shall identify specifically the issues of fact or law that are
disputed. A person who so requests will be notified of any hearing, if ordered,
and will receive a copy of any notice or order issued in the manner. After said
date, the Application, as filed or as amended, may be granted and/or permitted
to become effective.
For the Commission, by the Division of Investment Management, pursuant
to delegated authority.
Jonathan G. Katz
Secretary
Exhibit FS-1
Stora Enso's Consolidated Balance Sheet
<TABLE>
Consolidated balance sheet December 31,
------------------------------------- Euro/$=1,0046
Assets EUR mill. 1997 1998 1999 1999 USD
Fixed assets and other long-term investments -------- -------- -------- -------------
<S> <C> <C> <C> <C>
Intangible assets....................... O 42.2 42.0 60.3 60.5
Goodwill on consolidation............... O 509.4 540.5 466.4 468.5
Property, plant and equipment........... O 10,731.5 10,424.6 10,717.6 10,766.9
Shares, associated companies............ O 317.9 334.1 165.5 166.2
Shares, other companies................. O 57.0 128.8 280.4 281.7
Capital investment shares............... I 37.9 48.0 49.3 49.6
Non-current loan receivables............ I 77.8 90.1 66.8 67.1
Deferred tax assets..................... T 11.6 7.8 5.9 5.9
Other non-current assets................ O 78.6 79.2 88.6 89.1
--------- --------- --------- ---------
11,863.9 11,695.1 11,900.8 11,955.5
Current assets 0.0
Inventories............................. O 1,289.1 1,332.3 1,265.6 1,271.4
Tax assets.............................. T 0.3 3.4 71.9 72.2
Short-term receivables.................. O 2,040.6 1,783.4 2,090.4 2,100.1
Short-term investments and receivables.. I 110.0 250.4 265.9 267.1
Cash and cash equivalents............... I 249.7 348.5 439.4 441.4
--------- --------- --------- ---------
3,689.6 3,718.0 4,133.2 4,152.2
Total assets............................ 15,553.5 15,413.1 16,034.0 16,107.7
======== ======== ======== ========
Shareholders' equity....................
Share capital........................... 1,277.5 1,277.5 1,277.6 1,283.5
Restricted equity....................... 736.1 704.6 698.2 701.4
Retained earnings....................... 3,090.5 3,093.2 3,224.9 3,239.8
Profit for the period................... 409.0 191.0 752.5 755.9
--------- --------- --------- ---------
5,513.1 5,266.3 5,953.2 5,980.6
0.0
Minority interests...................... 271.7 278.8 202.0 202.9
Long-term liabilities...................
Pension provisions...................... I 564.0 569.6 575.5 578.1
Deferred tax liability.................. T 1,373.8 1,326.6 1,488.9 1,495.7
Other provisions........................ O 121.4 256.0 186.5 187.3
Long-term debt.......................... I 4,209.1 4,294.1 3,846.2 3,863.9
Other long-term liabilities............. O 84.5 90.8 87.0 87.4
--------- --------- --------- ---------
6,352.8 6,537.0 6,184.1 6,212.5
Current liabilities
Current portion of long-term debt....... I 1,202.1 1,218.4 446.7 448.8
Short-term borrowings................... I 590.1 475.4 1,476.6 1,483.4
Other current liabilities............... O 1,485.5 1,451.7 1,507.8 1,514.7
Tax liability........................... T 138.1 185.5 263.6 264.8
--------- --------- --------- ---------
3,415.9 3,331.0 3,694.7 3,711.7
--------- --------- --------- ---------
Total shareholders' equity and
liabilities............................. 15,553.5 15,413.1 16,034.0 16,107.7
========= ========= ========= =========
</TABLE>
Items designated with "O" are included in the operating capital. Items
designated with "I" are included in interest-bearing net liabilities. Items
designated with "T" are included in net tax liability.
<PAGE>
<TABLE>
Consolidated balance sheet
(IAS) Equity reconciliation December 31,
------------------------------------------------------ Euro/$=1,0046
1997 1998 1999 USD 1999
--------------- --------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Share capital........................................ 1,277.5 1,277.5 1,277.5 1,283.4
Increase............................................. 1,277.5 1,277.5 0.1 1,277.6 0.1 1,283.5
------- ------- -------- -------- -------- --------
Share issue.......................................... 1.9 1.9
Other restricted equity.............................. 670.8 736.2 704.6 707.8
Transfer from non-restricted equity.................. 30.0 23.4
Increase............................................. 28.6
Translation difference............................... 35.4 736.2 (83.6) 704.6 (8.3) 696.3 (8.3) 699.5
-------- -------- -------- -------- -------- -------- -------- --------
Reserve for own shares............................... - -
Non-restricted equity ............................... 3,336.6 3,499.5 3,311.4 3,326.6
Effect of adopting IAS 19 revised.................... (27.2) (27.2) (27.3)
-------- -------- --------
Non-restricted equity restated....................... 3,472.3 3,284.2 3,299.3
Dividends paid....................................... (233.50) (242.6 (268.3) (269.5)
To be placed at the disposal of the Board of
Directors............................................ (0.4)
Share exchange with minority......................... 17.2 17.3
Transfer to other restricted equity.................. (30.0) (23.4)
Translation difference............................... 17.8 (113.1) 191.7 145.9
Profit for the period................................ 409.0 3,499.5 191.0 3,284.2 752.5 3,977.4 802.7 3,995.7
-------- ------- -------- ------- -------- -------- -------- --------
Total equity......................................... 5,513.3 5,266.3 5,951.2 5,978.6
Distributable funds................................
Non-restricted equity.............................. 3,499.5 3,284.2 3,977.4 3,995.7
Untaxed reserves included in non-restricted equity .. (796.6) (935.2) (1,393.5) (1,399.9)
-------- ------- -------- --------
Distributable funds on 31 December................... 2,702.9 2,349.1 2,583.9 2,595.8
</TABLE>
Exhibit FS-2
Stora Enso's Consolidated Income Statement
Average USD rate for the period EUR 1,0668
Closing USD rate for the period EUR 1,0046
<TABLE>
Consolidated income statement Euro/$=1,0668
EUR mill. 1997 1998 1999 1999 USD
-------- -------- -------- -------------
<S> <C> <C> <C> <C>
Sales.................................................. 9,998.1 10,489.6 10,635.7 11,346.2
Finished and semifinished goods, decrease (-).......... 7.9 41.8 (119.4) (127.3)
Share of profits of associated companies............... 16.5 9.9 9.7 10.3
Other operating incom.................................. 60.6 44.9 126.1 134.5
Materials and services................................. (5,353.7) (5,033.5) (4,843.3) (5,166.9)
Freights and sales commissions......................... (1,100.4) (1,016.0) (993.5) (1,059.8)
Personnel expenses..................................... (1,737.3) (1,805.2) (1,754.3 (1,871.5)
Depreciation and value adjustments..................... (829.7) (1,151.4) (885.4) (944.5)
Other operating expenses............................... (145.6) (861.6) (757.6) (808.2)
-------- -------- -------- --------
Operating profit....................................... 916.4 718.6 1,418.1 15,12.8
Financing.............................................. (280.1) (379.3) (266.6) (284.4)
-------- -------- -------- --------
Profit before tax and minority items................... 636.3 339.4 1,151.5 1,228.4
Tax (205.6) (148.2) (394.5) (420.9)
-------- -------- -------- --------
Profit after taxes..................................... 430.6 191.2 757.0 807.5
Minority interests..................................... (21.6) (0.2) (4.5) (4.8)
Profit for the period.................................. 409.0 191.0 752.5 802.7
======== ======== ======== ========
Key Ratios
Earnings per share basic, EUR.......................... 0.54 0.25 0.99 1.06
Earnings per share diluted, EUR........................ 0.54 0.25 0.99 1.05
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