TYPE: 425
SEQUENCE: 1
DESCRIPTION: SLIDE PRESENTATION
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
[Slide Presentation given by Champion International and UPM-Kymmene
Corporation on February 22, 2000]
[Slide 1]
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 UPM-Kymmene's and Champion International's 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, 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.
[Slide 2]
[Logo of UPM-Kymmene Corporation]
[Logo of post-merger Champion International Corporation]
[Logo of Champion International Corporation]
[Slide 3]
[Logo of Champion International Corporation]
[Logo of UPM-Kymmene Corporation]
Champion International Corporation UPM-Kymmene Corporation
Turnover 1999 USD 5268 mill. EUR 8261 mill.
Personnel 18,000 31,000
Earnings USD 322 mill. EUR 1398 mill.
Paper production
capacity 3.5 mill. tonnes 8.6 mill. t
Pulp 3.1 mill. tonnes 2.9 mill. t
Plywood 1.2 mill. m3 0.8 mill. m3
Sawn Timber 3.9 mill. m3 2.0 mill. m3
Forests under
management 4 mill. hectares 1.3 mill. hectares
Production in USA, Canada, Brazil Europe, USA, China
[Slide 4]
CHAMPION SALES BY BUSINESS 1999
[Pie chart showing Champion's percentage sales and amount in Euros by
business
in 1999:
Business Percentage of Sales
Forest 7%
Chemical pulp 8%
Wood Products 17%
Converting 6%
Fine 31%
Magazine paper 16%
Other 15%]
[Slide 5]
[Logo of post-merger Champion International Corporation]
"THE PREMIER GLOBAL FOREST PRODUCTS COMPANY"
[Slide 6]
[Logo of post-merger Champion International Corporation]
Worldwide ranking
Total worldwide sales EUR 13.5 bill. 2
Market capitalization EUR 13.4 bill. 2
[Slide 7]
The merging companies have an excellent strategic fit for each other
o parallel strategic intent
o complementary product lines
o complementary geographical presence
[Slide 8]
PRODUCTION PLANTS IN EUROPE
[Map showing plant locations in Europe]
[Slide 9]
PRODUCTION PLANTS OUTSIDE EUROPE
[Map showing plant locations outside of Europe]
[Slide 10]
DEAL STRUCTURE:
All stock deal - pooling of interests
o preserves the strong balance sheet and liquidity
o enhances growth prospects
o increases the share of US investors
o increases liquidity for shares
[Slide 11]
POOLING OF INTERESTS
o no goodwill
o strong balance sheet preserved
o limitations for asset sales in the near future (excluding listed
shares)
o treasury shares to be re-issued (3,2 mill. shares)
o share buy-backs not possible in the near future
[Slide 12]
DEAL STRUCTURE:
Exchange ratio:
Champion shareholders will receive 1.99
UPM-Kymmene shares for 1 Champion share
Ownership structure:
UPM-Kymmene shareholders 58%
Champion shareholders 42%
[Slide 13]
Premium over Champion's Share Price
1 day 19%
1 week 24%
1 month 29%
3 months 26%
6 months 23%
[Slide 14]
SHARE PRICE RATIO CHAMPION/UPM
[Graph presenting the share price ratio of Champion International
Corporation and UPM-Kymmene Corporation as follows:
May 1996 2,62
1997 2,18
1998 2,21
1999 1,45
2000 1,62]
[Slide 15]
ACCRETION ANALYSIS
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 150 millions USD 3.75
Accretion USD 0.24
% 7.1%
The merger will be earnings accretive one year from the closing of the deal
[Slide 16]
SYNERGIES
Years from merger
Cumulative Synergies mill. USD 1 2 3
A. Cost savings 100 175 175
o purchasing
o manufacturing
o logistics
o S, G&A
B. Revenue related synergies 50 100 150
o best practice in
marketing
o additional volumes
TOTAL 150 275 325
----- ----- -----
[Slide 17]
Shares listed in Helsinki and New York (NYSE)
Champion shareholders will have the option of
getting ADS's listed on the New York Stock
Exchange or shares listed on the Helsinki
Stock Exchange
[Slide 18]
BOARD OF DIRECTORS
It is proposed to the shareholders' meeting to have six
additional members on the Board:
From the present Champion Board
o Chairman and CEO Richard E. Olson
o Vice chairman Kenwood D. Nichols
o and four others
[Slide 19]
THE MANAGEMENT TEAM
Chief Executive Officer Juha Niemela
Senior Executive Vice President Martin Granholm
Senior Executive Vice President Richard E. Olson
Executive Vice President Kenwood C. Nichols
Senior Vice President Michael P. Corey
Senior Vice President Jan-Henrik Kulp
Senior Vice President Heikki Sara
Senior Vice President Kari Toikka
Group Senior Vice President Pentti Arvela
Group Senior Vice President Ismo Lepola
Group Senior Vice President Matti J. Lindahl
Group Senior Vice President Pentti Kallio
Group Senior Vice President Kari Makkonen
[Slide 20]
II Company presentation
[Slide 21]
STRATEGY
o take advantage of global growth opportunities
o focus on core businesses
o intensive co-operation with global and local customers
o emphasis on profitability
o financial discipline
o responsible corporate citizen
o increase shareholder value as principal goal
[Slide 22]
STRENGTHS
o Global presence
o Good long term customer relationships
o Efficient production capacity
o Economies of scale
o High level of vertical integration
o Integration of know-how and cultures
[Slide 23]
FINANCIAL OBJECTIVES
ROE Riskfree Rate + 5%
ROCE Internally for its businesses, pre-tax return 15%
Gearing ratio below 100%
[Slide 24]
DIVIDEND POLICY
Annual dividend anticipated to average 1/3 of the annual profit
[Slide 25]
ENTERPRISE VALUE OF SELECTED PAPER COMPANIES
[Bar graph representing the following information :
Market Value Net Debt
(USD millions)
International Paper 17676 11837
CHAMPION approx. 15000 approx. 5000
Weyerhauser 12099,4 4211
Stora Enso 10595,2 5585
Georgia-Pacific 9504,9 5546
Smurfit-Stone Contai 3686,7 5965
SCA 5846,8 2823,1
Williamette 4155,6 1706,1
Jefferson Smurfit 2851,2 2139,3
Mead 3419,3 1498,6]
[Slide 26]
WORLD'S LARGEST FOREST PRODUCT COMPANIES BY NET SALES
Consolidated Sales (USD billions - 1998)
International Paper 19.541
CHAMPION 14.959 (UPM-Kymmene, 9306 + Champion, 5653)
Weyerhauser 13.62 (Weyerhauser, 10800 + McMillan Bloedel, 2819)
Georgia-Pacific 13.376
Stora Enso 9.366
[Slide 27]
WORLD'S LARGEST PAPER AND PAPER BOARD PRODUCERS 1999
[Bar graph representing the following information :
Paper Paperboard
(capacity in million tons)
International Paper 1) 7,1 6,6
Stora Enso 9,3 3,57
CHAMPION 11,698 0,372
Abitibi-Consolidated 2) 7,2 --
Smurfit-Stone Container 0,1 7,1
Georgia-Pacific 3) 3,2 3,6
Oji Paper 5 1,7
Nippon Group 4) 4,9 1,7
Weyerhaeuser 5) 1,9 3,8
Metsa-Serla, Myllykoski 4,4 1,25
1) incl. 1/2 of Carter Holt Harvey (50,3%)
2) incl. Donohue and 1/3 of PAPCO and Boise Cascade marketing agreement
3) incl. Georgia-Pacific Tissue
4) incl. 1/2 of NORPAC, joint venture (50%)
5) incl. MacBlo and 1/2 of NORPAC, joint venture (50%)]
[Slide 28]
WORLD'S LARGEST PUBLICATIONS PAPER PRODUCERS 1999
[Bar graph representing the following information :
LWC SC news
(capacity in million tons)
Abitibi-Consolidated* -- 724 6330
CHAMPION 3399 1292 2015
Stora Enso 1615 1150 3175
Bowater 450 -- 2955
Norske -- 540 2250
Haindl** 810 560 1350
Fletcher Challenge -- 75 2350
MS Mylly 1280 777 --
Holmen -- 150 1210
Burgo*** 1215 -- --
*) Including Boise Cascade marketing agreement + 1/3 stake in PAPCO
**) incl. Haindl's new PM in Augsburg on stream in June 2000
***) incl. Burgo's new PM at Verzuolo on stream in end 2001]
[Slide 29]
WORLD'S LARGEST FINE PAPER PRODUCERS 1999
[Bar graph reflecting the following information :
Uncoated Coated
(Capacity in '000 tons)
International Paper 4010 680
CHAMPION 2472 1120
APP 2330 1250
Sappi 430 2815
Stora Enso 1340 1660
Georgia-Pacific 1955 55
MoDo+SCA 1240 500
Oji Paper 850 850
Metsa-Serla 525 1015]
[Slide 30]
LEADER POSITIONS IN OTHER CHOSEN PRODUCTS
Europe Global
Converting materials
Label papers and self-adhesive label 1 2
Siliconized papers 1 1-2
Industrial wrapping 1 -
Envelope papers 1 -
Wood Products
Plywood 1 4
Sawn timber 3 5
[Slide 31]
SALES BY BUSINESS 1999 (Proforma)
[Pie charts reflecting the following information:
Magazine 24%
Newsprint 8%
Fine papers 21%
Converting 15%
Wood Products 16%
Chemical pulp 4%
Forest 4%
Energy 1%
Other 7%]
[Slide 32]
PAPER & PULP PRODUCTION
GEOGRAPHICALLY, % in 1999 (Proforma)
[Pie charts reflecting the following information:
Finland 43%
Other Europe 14%
North America 38%
Latin America 6%]
[Slide 33]
PERSONNEL 31.12.1999 (Proforma)
[Pie charts reflecting the following information:
Finland 43%
Other Europe 17%
North America 32%
Latin America 8%
Other 0%]
[Slide 34]
BALANCE SHEET (Proforma)
Million euros 1997 1998 1999
31.12.97 31.12.98 31.12.99
Assets
Non-Current Assets 15 516 14 856 15 311
Stocks 1 458 1 486 1 427
Cash and Cash Equivalents 686 671 737
Other current assets 2 053 1 724 2 150
Total 19 713 18 737 19 625
Equity and liabilities
Shareholders' equity 7 468 7 675 8 382
Deferred tax liability 1 531 1 455 1 818
Provisions 171 179 199
Non-current liabilities 6 630 6 132 6 128
Current liabilities 3 913 3 296 3 098
Total 19 713 18 737 19 625
Excluding own shares
Rates of exchange 1,09686 1,16674 1,00460
[Slide 35]
OPERATING PROFIT
[Bar graph representing the following information:
Capital gains Write-offs
(in MEUR)
1997 1130 -504
1998 1354 49
1999 1442 614]
[Slide 36]
NET INTEREST-BEARING DEBT AND GEARING
[Bar graph reflecting the following information:
Debt Gearing
97 7221 96%
98 6229 81%
99 5278 63%]
[Slide 37]
RETURN ON EQUITY
[Bar graph reflecting the following information:
%, excluding non-recurring items
97 7,5
98 9,7
99 9,7]
[Slide 38]
RETURN ON CAPITAL EMPLOYED
[Bar Graph reflecting the following information:
%, excluding non-recurring items
97 7,2
98 9,2
99 10,1]
[Slide 39]
EQUITY TO ASSETS RATIO
[Bar graph reflecting the following information:
%
97 37,9
98 41
99 42,8]
[Slide 40]
GROSS CAPITAL EXPENDITURE
[Bar graph reflecting the following information:
Depreciation % of turnover
97 1747 928 12,7
98 1076 917 8,1
99 927 921 6,9]
[Slide 41]
HOW TO DELIVER VALUE TO SHAREHOLDERS
o increased earnings and dividends
o improved growth opportunities
o strengthened position among the largest companies in the sector
[Slide 42]
TIME TABLE
Closing in May 2000
preceded by :
o shareholders' approval
o approval of requisite authorities
