Filed by Champion International Corporation
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: Champion International Corporation
Commission File No.: 001-03053
[Presentation posted by Champion International Corporation on its web site
on April 3, 2000]
[Slide 1]
Juha Niemela, CEO
Morgan Stanley Dean Witter
Global Paper & Forest Products Conference
New York, March 15, 2000
[Slide 2]
FOCUS ON CORE BUSINESSES - SALES
[Two pie charts representing the following information:
1996
Sold business and Closed businesses EUR 2.3 billion
Business still a part of the company EUR 6.4 billion
Total: EUR 8.7 billion
1999
Printing Papers 56%
Wood Products 15%
Converting Materials 21%
Others 8%
Total: EUR 8.3 billion
Synergy benefits of EUR 300 million achieved]
[Slide 3]
PAPER PRODUCTION
[Bar graph representing the following information:
Paper production Capacity utilization of paper machines
(1000 tonnes) (%)
I/96 1556 84
II/96 1391 82
III/96 1594 86
IV/96 1593 88
I/97 1766 93
II/97 1701 95
III/97 1841 96
IV/97 1890 98
I/98 1951 97
II/98 1870 96
III/98 1944 94
IV/98 1733 87
I/99 1747 85
II/99 1758 88
III/99 2002 94
IV/99 1987 95
Capacity management - production adjusted to demand
Shut down old capacity (example LWC-capacity)]
[Slide 4]
STRONG CASH FLOW
[Bar graph representing the following information (MEUR):
Operative capex. Strategic capex Depreciation Cash flow*)
88 259 843 240 723
89 418 753 323 607
90 469 1115 398 533
91 407 317 453 161
92 297 262 497 335
93 270 58 533 525
94 416 170 531 851
95 448 379 523 1162
96 494 521 545 931
97 299 1025 541 1244
98 394 297 578 1607
*) Cash flow = Net income + depreciation
Rational investment decisions due to consolidation]
[Slide 5]
USE OF CASH 1996-1999
[Bar graph representing the following information:
EUR million
Cash from operations 4487
Asset sales 2285
Capex -2541
Acquisitions -1080
Dividends -943
Share repurchase -526
Other -264
Debt reduction -1418
Result: Gearing
1995 112
1996 104
1997 93
1998 74
1999 55]
[Slide 6]
[Bar graph representing the following information:
NET INTEREST-BEARING LIABILITIES AND GEARING
Net Interest Bearing Liabilities (MEUR) Gearing (%)
90 4515 150
91 5393 200
92 6023 225
93 5613 196
94 4978 156
95 4358 112
96 4320 104
97 4252 93
98 3739 74
99 2940 55]
[Slide 7]
STRONG FINANCIAL RESOURCES
[Table stating the following:
Asset item Book value Market value Difference
EUR, million
Energy companies 538 1, 077 539
Real estates and housing 124 269 145
Listed companies 216 2,235*) 2,019
Total 878 3581 2703
*) 10.3.2000]
[Slide 8]
RETURN ON EQUITY (EUR)
[Bar graph representing the following information:
Excl. Cap gains Target (10 year bond + 5%) ROE
90 16.8 3.3
91 16.5 0
92 15.7 0
93 14.7 0
94 12.2 12.9
95 20.7 13.6 22
96 8.3 11.1 10.4
97 10.4 11 16.6
98 13.4 9.93 21.8
99 10.9 9.93 19.2]
[Slide 9]
EARNINGS PER SHARE (EUR)
[Bar graph representing the following information:
Excl. Capital gains Capital gains, net
90 0.28 0.13
91 -1.69 0.03
92 -1.03 0.04
93 -0.25 0.2
94 1.28 0.17
95 2.6 0.16
96 1.14 0.31
97 1.64 0.98
98 2.34 1.48
99 2.13 1.63]
[Slide 10]
TOTAL SHAREHOLDER RETURN ON UPM-KYMMENE SHARE
[Bar graph representing the following information:
88 1000
89 833
90 629
91 582
92 610
93 1126
94 1154
95 1112 1000
96 1342 1230
97 1548 1437
98 2016 1907
99 3259 3154
Total Shareholder Return
11 years 11.3%
4 years 33.3%]
[Slide 11]
[LOGO OF UPM-KYMMENE]
[Slide 12]
Why the New CHAMPION
[LOGO OF UPM-KYMMENE] [LOGO OF NEW CHAMPION] [LOGO OF CHAMPION]
o Consistent and supportive with strategy formulated in 1996
o Strong - truly global forest products company
[Slide 13]
The merging companies are an excellent strategic fit
o Same core businesses and product lines
o Complementary geographical presence
o Parallel strategic intent
[Slide 14]
[NEW CHAMPION LOGO]
World Wide
Ranking
Total worldwide sales EUR 13.5 bill. 3
Market capitalization*) EUR 13.4 bill. 2
*) Feb. 2000 at announcement of the merger
[Slide 15]
WORLD'S LARGEST PAPER AND PAPER BOARD PRODUCERS 2000
[Bar graph representing the following information:
Capacity, million tons Paper Paper board
---------------------- ----- -----------
Stora Enso + Consolidated Papers 11.2 3.57
International Paper 7.1 6.6
New Champion 11.7 0.4
------------ ---- ---
Abitibi-Consolidated 7.2
Smurfit-Stone Container 0.1 7.1
Georgia-Pacific 3.2 3.6
Oji Paper 5 1.7
Nippon Group 4.9 1.7
Weyerhaeuser 1.9 3.8]
[Slide 16]
WORLDWIDE PRODUCT LINES - PULP AND PAPER
(In 1000 metric tons)
[Map showing production of Publication papers, Fine papers, Converting
materials and Chemical pulp in Europe, Asia, Africa, North America and
South America as follows:
Publication papers Fine papers Converting materials Chemical pulp
Europe
UPM 5330 1950 850 2900
Champion
North America
UPM 460
Champion 740 1700 480 2790
South America
UPM
Champion 190 380 340]
[Slide 17]
[Table stating the following information:
Worldwide Product Lines
Forests & Wood Products
Europe N.America S.America Total
UPM Champion UPM Champion UPM Champion
Sawn timber, 2000 3851 5851
1000 cubic meters
Plywood,
1000 cubic meters 850 1181 2031
Forestlands, 1266 77 2023 612 3978
million hectares
Owned 933 77 1842 546 3398
Managed or 333 181 66 580
controlled]
[Slide 18]
Strategy to increase shareholder value
o Increase shareholder value as principal goal
o Focus on core businesses
o Intensive co-operation with global and local customers
o Emphasis on profitability and financial discipline
o Responsible corporate citizen
o Take advantage of global growth opportunities
[Slide 19]
Strengths
o Global presence - production and sales
o Good long term customer relationships
o Efficient production capacity
o Economies of scale
o High level of vertical integration
o Integration of intellectual capital
[Slide 20]
Synergies
[Table stating the following information:
Cumulative synergies MUSD 2000 2001 2002 2003
A. Cost savings 25 150 175 175
o purchasing
o manufacturing
o logistics
o S, G&A
B. Revenue related synergies 0 75 125 150
o best practice in marketing
o additional volumes
Total 25 225 300 325
[Slide 21]
ACCRETION ANALYSIS
[Table stating the following information:
Market estimates for EPS (I.B.E.S.) in 2001
UPM-Kymmene USD 3.41
Champion USD 7.07
Champion
with synergy benefits of
USD 225 millions USD 3.76
Accretion USD 0.35
% 10.5%]
Merger will be earnings accretive one year from the closing of the deal
Source: Chase Securities, Inc.
[Slide 22]
Financial Objectives
ROE Risk free rate + 5%
ROCE Internally for its businesses, pre-tax return 15%
Gearing ratio below 100%
[Slide 23]
Dividend Policy
On average over 1/3 of the profit for the period.
The aim is to provide shareholders with a steady, growing annual dividend.
Implied dividend of USD 2.50 per existing Champion share compared to USD
1.00 current plan
[Slide 24]
Deal structure:
Exchange ratio:
o Champion shareholders will receive 1.99 UPM-Kymmene shares for 1
Champion share
Ownership structure:
o UPM-Kymmene shareholders 58%
o Champion shareholders 42%
[Slide 25]
Deal structure:
All stock deal
o Shared upside
o Reflects merger features
o Preserves the strong balance sheet
o Establishes a large US shareholder base
o Increases liquidity for shares
[Slide 26]
Pooling of interests
o Avoids goodwill
o Flexibility
o for rationalization and capacity management
o to sell listed shares
o Limitations for asset sales in the near future
o Treasury shares to be re-issued
(estimate: less than 3 million*)
o Share buy-backs not possible
*) press release Feb 22, 2000
[Slide 27]
Time table
Closing in May 2000
preceded by:
o Approval of requisite authorities
o Shareholders' approval
[Slide 28]
[NEW CHAMPION LOGO]
"THE PREMIER GLOBAL FOREST PRODUCTS COMPANY"
[Slide 29]
These materials contain certain statements that are neither reported
financial results nor other historical information. These statements are
forward-looking statements within the meaning of the safe-harbor
provisions of the U.S. federal securities laws. These forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those expressed in the forward-looking
statements. Many of these risks and uncertainties relate to factors that
are beyond the companies' ability to control or estimate precisely, such
as future market conditions, the behavior of other market participants and
the actions of governmental regulators. These and other risk factors are
detailed in the two companies' SEC reports. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only
as of the date of these materials. The companies do not undertake any
obligation to publicly release any revisions to these forward-looking
statements to reflect events or circumstances after the date of these
materials.
Investors and security holders are advised to read the joint proxy
statement/prospectus regarding the business combination transaction
referenced in the foregoing information, when it becomes available, because
it will contain important information. Such joint proxy
statement/prospectus will be filed with the Securities and Exchange
Commission by UPM-Kymmene and Champion International. Investors and
security holders may obtain a free copy of the joint proxy
statement/prospectus (when available) and other related documents filed by
UPM-Kymmene and Champion International at the Commission's website at
www.sec.gov. The joint proxy statement/prospectus and the other documents
may also be obtained from UPM-Kymmene by contacting UPM-Kymmene, Attn: Reko
Aalto-Setala, Etelaesplanadi 2, FIN-00101 Helsinki, Finland, and/or
Champion International by contacting Champion International Corporation,
Attn: Tom Hart, One Champion Plaza, Stamford, Connecticut 06921.
Champion International, its directors, executive officers and certain other
members of Champion International management and employees may be
soliciting proxies from Champion International shareholders in favor of the
merger. Information concerning the participants will be set forth in the
joint proxy statement/prospectus when it is filed with the Securities and
Exchange Commission.
