UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act Of 1934
Repap Enterprises Inc.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
76026M309
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(CUSIP Number)
Reko Aalto-Setala with copies to:
General Counsel Timothy B. Goodell, Esq.
UPM-Kymmene Corporation White & Case LLP
Etelaesplanadi 2 1155 Avenue of the Americas
P.O. Box 380 New York, NY 10036
FIN-00101 Helsinki, Finland (212) 819-8200
358-204-15-111
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
August 28, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
<PAGE>
CUSIP No. 76026M309
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
UPM-Kymmene Corporation I.R.S. Identification No.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)|_|
(b)|_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED |_|
PURSUANT TO ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Republic of Finland
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NUMBER OF SHARES BENEFICIALLY 7 SOLE VOTING POWER
OWNED BY EACH REPORTING PERSON 155,593,177(1)
WITH
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8 SHARED VOTING POWER
228,987,702
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9 SOLE DISPOSITIVE POWER
155,593,177(1)
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10 SHARED DISPOSITIVE POWER
None
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
384,580,879(1)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.7%
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14 TYPE OF REPORTING PERSON
CO
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(1) The number of shares indicated includes 10 shares owned by Blandin Paper
Company, a wholly-owned subsidiary of UPM, but does not include shares
which may be held by any of UPM's employee benefits plans.
<PAGE>
SCHEDULE 13D
Item 1. Security and Issuer
This statement on Schedule 13D relates to the common shares ("Common
Shares") of Repap Enterprises Inc., a corporation organized under the laws of
Canada ("Repap"), the principal executive offices of which are located at 300
Atlantic Street, Suite 200, Stamford, Connecticut 06901.
Item 2. Identity and Background
(a) - (c); (f) This statement on Schedule 13D is being filed by
UPM-Kymmene Corporation ("UPM"), a corporation organized under the laws of the
Republic of Finland which is one of the world's largest forest product companies
and paper producers and which maintains holdings in a number of jurisdictions.
The address of UPM's principal place of business is Etelaesplanadi 2, P.O. Box
380, FIN-00101 Helsinki, Finland.
On August 28, 2000, UPM entered into an Acquisition Agreement (the
"Acquisition Agreement") with Repap. Subject to the terms and conditions
contained in the Acquisition Agreement, UPM will acquire Repap in a transaction
to be effected by the amalgamation of 3796477 Canada Inc. ("Acquireco"), a
wholly owned subsidiary of UPM, with Repap in accordance with the Canada
Business Corporations Act (the "Amalgamation"). Upon the Amalgamation, Repap's
shareholders will receive CAD 0.20 per Common Share. The Acquisition Agreement
is incorporated herein by reference and is filed as Exhibit 2 hereto.
As a condition to UPM's entering into the Acquisition Agreement, and
to induce UPM to enter into the Acquisition Agreement, Repap granted UPM an
option to purchase from the treasury of Repap, in accordance with the terms of
an Option Agreement dated August 28, 2000 (the "Option Agreement"), up to 19.9%
of the issued and outstanding Common Shares. The Option Agreement is described
in Item 6 below, is incorporated herein by reference and is filed as Exhibit 3
hereto.
The transaction has been unanimously approved by the boards of
directors of both UPM and Repap. In addition, two of Repap's largest
shareholders, The Third Avenue Trust ("Third Avenue"), for the Third Avenue
Value Fund Series and the Third Avenue Small Cap Value Fund Series and TD Asset
Management Inc. ("TD" and together with Third Avenue, the "Supporting
Shareholders"), have entered into certain agreements with UPM (the "Letter
Agreements") pursuant to which they have agreed, subject to the terms and
conditions set forth therein, to support the transaction and vote their combined
total of approximately 30.8% of the Common Shares, in favor of the Amalgamation
and against any action which would impede the Amalgamation. The Letter
Agreements are described in Item 6 below. The Letter Agreement between UPM and
Third Avenue is incorporated herein by reference and is filed as Exhibit 4
hereto. The Letter Agreement between UPM and TD is incorporated herein by
reference and is attached as Exhibit 5 hereto.
Attached as Schedule I hereto is a list of the executive officers and
directors of UPM, which contains the following information with respect to each
such person: (i) name; (ii) business address; and (iii) present principal
occupation or employment and the name, principal business and address of any
corporation or other organization in which such employment is conducted. All
such persons are citizens of the Republic of Finland, except for Carl H. Amon
III and Anton Lenstra, who are citizens of the United States and The
Netherlands, respectively.
(d) - (e) During the last five years neither UPM nor to the best of
UPM's knowledge, any person named on Schedule I hereto has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
has been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which such person was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
UPM will use existing working capital to pay to the holders of Common
Shares the consideration to which they will be entitled upon the Amalgamation.
Item 4. Purpose of the Transaction
The purpose of the transaction described herein is to enable UPM to
acquire the entire equity interest in Repap. Upon consummation of the
Amalgamation, the common shares of the corporation succeeding Acquireco and
Repap ("Amalco") will be wholly owned by UPM.
Subject to certain matters described below, it is currently expected
that, initially following the Amalgamation, the business and operations of
Amalco will generally continue as they are currently being conducted. UPM
currently intends to cause Amalco's operations to continue to be run and managed
initially by, amongst others, Repap's existing executive officers. UPM will
continue to evaluate all aspects of the business, operations, capitalization and
management of Repap during the pendency of the Amalgamation and after the
Amalgamation and will take such further actions as it deems appropriate under
the circumstances then existing. UPM intends to seek additional information
about Repap during this period. Thereafter, UPM intends to review such
information as part of a comprehensive review of Amalco's business, operations,
capitalization and management.
If the Amalgamation is consummated, UPM's interest in Repap's book
value and net earnings and in Repap's equity generally will equal 100% and UPM
will be entitled to all benefits resulting from such interest, including all
income generated by Amalco's operations and any future increase in Amalco's
value. Similarly, UPM will also bear the risk of losses generated by Amalco's
operations and any future decrease in the value of Amalco after the
Amalgamation. Subsequent to the Amalgamation, current holders of the Common
Shares will cease to have any equity interest in Repap, will not have the
opportunity to participate in the earnings and growth of Amalco after the
Amalgamation and will not have any right to vote on corporate matters.
Similarly, holders of the Common Shares will not face the risk of losses
generated by Amalco's operations or decline in the value of Amalco after the
Amalgamation.
The Common Shares are currently traded on The Toronto Stock Exchange
(the "TSE") and are quoted on The Nasdaq Stock Market, Inc. OTC Bulletin Board
(the "Nasdaq BB"). Following the consummation of the Amalgamation, the Common
Shares will no longer be listed on the TSE or quoted on the Nasdaq BB and the
registration of the Common Shares under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") will be terminated. Accordingly, after the
Amalgamation there will be no publicly-traded equity securities of Repap
outstanding and Amalco will no longer be required to file periodic reports with
the Securities and Exchange Commission.
UPM may at any time and from time to time acquire additional Common
Shares or securities convertible or exchangeable for Common Shares or dispose of
Common Shares. Any such transactions may be effected at any time and from time
to time, subject to any applicable limitations of the Securities Act of 1933, as
amended and the Exchange Act.
Except as described herein, UPM has no present plans or proposals that
would result in any extraordinary corporate transaction, such as a merger,
reorganization, liquidation involving Repap or any of its subsidiaries, or
purchase, sale or transfer of a material amount of assets of Repap or any of its
subsidiaries or in any other material changes to Repap's capitalization,
dividend policy, corporate structure, business or composition of the board of
directors of Repap or the management of Repap, except that UPM intends to review
the composition of the boards of directors (or similar governing bodies) of
Repap and its subsidiaries and to cause the election to such boards of directors
(or similar governing bodies) of certain of its representatives following the
Amalgamation.
Item 5. Interest in Securities of the Issuer
(a) As a result of the Option Agreement, the Letter Agreements and
other holdings, UPM may be deemed to be the beneficial owner of 384,580,879
Common Shares, which would represent approximately 51.7% of the Common Shares
outstanding (based on 743,960,637 Common Shares outstanding as reported in
Repap's Form 10-Q filed on August 4, 2000 and as represented to UPM by Repap in
the Acquisition Agreement). UPM, the sole shareholder of Blandin Paper Company
("Blandin"), may be deemed to be the beneficial owner of the 10 Common Shares
beneficially owned by Blandin pursuant to Rule 13d-3 of the Exchange Act. Since
August 28, 2000 UPM has acquired Common Shares in the open market over the TSE.
On August 31, 2000 UPM acquired 5,518,000 Common Shares at a price of CAD 0.1995
per Common Share. On September 1, 2000 UPM acquired 1,584,000 Common Shares at a
price of CAD 0.1994 per Common Share. Finally, on September 5, 2000 UPM acquired
443,000 Common Shares at a price of CAD 0.20 per Common Share.
(b) UPM currently has the sole power to vote or to direct the vote of,
and the sole power to dispose or direct the disposition of 7,545,010 Common
Shares. UPM would have the sole power to vote or to direct the vote of, and sole
power to dispose or direct the disposition of, all the Common Shares acquired
upon the exercise of the option set forth in the Option Agreement (148,048,167
Common Shares). Pursuant to the Letter Agreements, UPM has shared power to vote
all the Common Shares owned by the Supporting Shareholders (228,987,702 Common
Shares) in the limited circumstances set forth in the Letter Agreements.
(c) Except as described herein, neither UPM nor, to the best of UPM's
knowledge, any other person referred to in Schedule I attached hereto,
beneficially owns or has acquired or disposed of any Common Shares during the
past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
Except as described herein, neither UPM nor, to the best of UPM's
knowledge, the persons named in Schedule I hereto has any contracts,
arrangements, understandings or relationships (legal or otherwise) with any
persons with respect to any securities of Repap, including, but not limited to,
transfers or voting of any securities, finder's fees, joint ventures, loan or
option arrangements, puts or calls, guarantees or profits, division of profits
or loss, or the giving or withholding of proxies.
1. Option Agreement.
Pursuant to the terms of the Option Agreement, Repap has granted to
UPM an irrevocable option (the "Option") to purchase from the treasury of Repap
up to the greater of 19.9% of the issued and outstanding Common Shares on the
date thereof (currently being 148,048,167 Common Shares) and 19.9% of the issued
and outstanding Common Shares on the first date UPM sends a written notice
indicating its desire to exercise the Option (in each case the "Option Shares")
at a purchase price per Option Share equal to CDN 0.20 in cash per share. At no
time, however, shall the number of Common Shares for which the Option is
exercisable exceed 19.9% of the issued and outstanding Common Shares at the time
of exercise (the aggregate amount being subject to certain anti-dilution
adjustments).
The Option may be exercised upon the occurrence of the following
events (each an "Exercise Event"): (i) upon an "Acquisition Proposal" (as
defined in the Acquisition Agreement) being made and such Acquisition Proposal
being publicly announced or otherwise publicly disclosed by any person other
than UPM prior to the special meeting of Repap shareholders, including any
adjournment or postponement, thereof, to be called and held to consider the
Amalgamation (the "Repap Meeting"); or (ii) if the prospect of there being an
Acquisition Proposal has been disclosed to holders of more than 20 percent of
the Common Shares or the Preferred Shares, Series C and the Preferred Shares,
Series F in the capital of Repap prior to or during the Repap Meeting, Repap
shareholder approval of the Amalgamation is not obtained at the Repap Meeting
and an Acquisition Proposal is made, publicly announced or otherwise publicly
disclosed, prior to the expiration of six months following termination of the
Acquisition Agreement.
The Option Agreement will terminate upon the occurrence of the first
of any of the following conditions: (i) the date shown on the certificate of
amalgamation to be issued by the Director under the Canada Business Corporations
Act giving effect to the Amalgamation (the "Effective Date"); (ii) the date
which is six months following termination of the Acquisition Agreement; (iii)
the date on which the Option shall have been exercised in full; (iv) the next
day preceding the date on which the Acquisition Proposal constituting an
Exercise Event is to be consummated; or (v) if the Acquisition Agreement is
terminated in circumstances where no "Break Fee" (as defined in the Acquisition
Agreement) is payable pursuant to the Acquisition Agreement.
2. Letter Agreements with Major Shareholders.
Under the Letter Agreements, TD and Third Avenue have agreed to
support the transaction and vote their total of approximately 30.8% of the
Common Shares in favor of approving the Amalgamation. More specifically, TD is
providing the support of a total of 106,559,523 Common Shares (equal to
approximately 14.3% of the Common Shares) and Third Avenue is providing the
support of its 122,428,179 Common Shares (equal to approximately 16.5% of the
Common Shares). This support is being granted subject to certain conditions
outlined below.
Pursuant to the Letter Agreements, the Supporting Shareholders agree
that, between the date of the Letter Agreements and the earlier of: (a) the date
of termination of the Acquisition Agreement in accordance with its terms, (b)
the date of termination of the Letter Agreements in accordance with their terms;
and (c) the Effective Date of the transaction (such earlier date being the
"Expiry Date"), the Supporting Shareholders will not: (i) sell, transfer, gift,
assign, pledge, hypothecate, encumber or otherwise dispose of any of their
Common Shares or enter into any agreement, arrangement or understanding in
connection therewith, without having first obtained the prior written consent of
UPM, or (ii) except as contemplated in the Letter Agreements themselves, grant
any proxies or powers of attorney, deposit their Common Shares into a voting
trust or enter into a voting agreement, understanding or arrangement with
respect to such Common Shares, without having first obtained the prior written
consent of UPM. The Supporting Shareholders agree that, until the Expiry Date,
they will not, directly or indirectly, negotiate with, solicit, initiate or
encourage submission of proposals or offers from, or provide information to, any
other person, entity or group relating to an Acquisition Proposal.
Pursuant to the Letter Agreements the Supporting Shareholders also
agree, until the Expiry Date, to vote (or cause to be voted) all the Common
Shares at any meeting of the shareholders of Repap, and in any action by written
consent of the shareholders of Repap: (i) in favor of the approval, consent,
ratification and adoption of the Amalgamation, (ii) against any action that
would impede, interfere or discourage the Amalgamation and against any action
that would result in any breach of any representation, warranty or covenant of
Repap in the Acquisition Agreement. Upon the written request or direction of
UPM, the Supporting Shareholders shall each execute a form of proxy (effective
only until the Expiry Date) in respect of any such resolution appointing such
person or persons as UPM may request or direct as proxy for such Supporting
Shareholders, with full power of substitution, to attend, vote and otherwise act
for and on behalf of the Supporting Shareholders in respect of all Common Shares
and in respect of all such matters which may come before a meeting of the
shareholders of Repap relating to the Amalgamation (other than any change in the
terms of the Amalgamation which would decrease the value of the consideration to
be received by the Supporting Shareholders) including any action that would
impede, interfere or discourage the Amalgamation and the Supporting Shareholders
shall not be responsible for the voting under such proxy. The Supporting
Shareholders also agree, until the Expiry Date, not to, without the prior
written consent of UPM, requisition or join in the requisition of any meeting of
the shareholders of Repap for the purpose of considering any resolution with
respect to any of the matters referred to above.
In the event that a "Superior Proposal" (as defined in the Acquisition
Agreement) is made, announced or otherwise disclosed to Repap's shareholders on
or prior to the Expiry Date, and either (a) the "Match Period" (as defined in
the Acquisition Agreement) has expired without UPM having offered to amend the
terms of the Acquisition Agreement as contemplated by the Acquisition Agreement;
or (b) such Match Period has expired, and the Board of Directors of Repap has
rejected an offer made by UPM to amend the terms of the Acquisition Agreement,
the Supporting Shareholders shall have the right to terminate the Letter
Agreements upon notice to UPM.
Item 7. Material to be filed as Exhibits
1. Joint Press Release dated August 29, 2000, issued by UPM-Kymmene
Corporation and Repap Enterprises Inc.
2. Acquisition Agreement dated August 28, 2000, between UPM-Kymmene
Corporation and Repap Enterprises Inc.
3. Option Agreement dated August 28, 2000, between UPM-Kymmene
Corporation and Repap Enterprises Inc.
4. Letter Agreement dated August 28, 2000, between UPM-Kymmene
Corporation and the Third Avenue Trust, for the Third Avenue Value
Fund Series and the Third Avenue Small Cap Value Fund Series.
5. Letter Agreement dated August 28, 2000, between UPM-Kymmene
Corporation and TD Asset Management Inc.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: September 6, 2000
UPM-KYMMENE CORPORATION
By: /s/ Reko Aalto-Setala
----------------------------------
Name: Reko Aalto-Setala
Title: General Counsel
By: /s/ Jaakko Palsanen
---------------------------------
Name: Jaakko Palsanen
Title: Vice President
<PAGE>
The following table sets forth for the executive officers and directors of UPM:
(i) the name of each such person; and (ii) the present principal occupation or
employment of each such person. The principal business address of UPM and the
current business address for each of its officers and directors is UPM-Kymmene
Corporation, Etelaesplanadi 2, P.O. Box 380, FIN-00101, Helsinki, Finland.
Executive Officers and Directors of UPM-Kymmene Corporation
Present principal occupation or
Name/Position employment and name of employer
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Tauno Matomaki Chairman of the Board of UPM-Kymmene
Corporation
Jouko K. Leskinen Vice Chairman of the Board of UPM-Kymmene
Corporation; President and Chief Executive
Officer of Sampo Group
Carl H. Amon III Director of UPM-Kymmene Corporation; Partner
of White & Case LLP
L.J. Jouhki Director of UPM-Kymmene Corporation; Managing
Partner of Thom Companies
Anton Lenstra Director of UPM-Kymmene Corporation; Executive
Vice President of Unilever N.V.
Juha Niemela President and Chief Executive Officer of
UPM-Kymmene Corporation
Jorma Ollila Director of UPM-Kymmene Corporation; Chairman
and Chief Executive Officer of Nokia
Corporation
Gustaf Serlachius Director of UPM-Kymmene Corporation; Chairman
of the Administrative Board and Management of
the Gosta Serlachius Fine Arts Foundation
Vesa Vainio Director of UPM-Kymmene Corporation; Chairman
of Nordic Baltic Holding
Matti Kavetvuo Director of UPM-Kymmene Corporation; President
and CEO of Pohjola Group Insurance Corporation
Martti Ahtisaari Director of UPM-Kymmene Corporation; Former
President of the Republic of Finland
Martin Granholm Executive Vice President of UPM-Kymmene
Corporation
Jan-Henrik Kulp Chief Financial Officer of UPM-Kymmene
Corporation
Heikki Sara Senior Vice President, Resources, of
UPM-Kymmene Corporation
Kari Toikka Senior Vice President, Investor Relations and
Administration, of UPM-Kymmene Corporation
Pentti Kallio President, Converting Materials, UPM-Kymmene
Corporation
Ismo Lepola President, Magazine Papers, of UPM-Kymmene
Corporation
Matti J. Lindahl President, Fine Papers, of UPM-Kymmene
Corporation
Kari Makkonen President, Wood Materials, of UPM-Kymmene
Corporation
<PAGE>
EXHIBIT INDEX
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1. Joint Press Release, dated August 29, 2000, issued by UPM-Kymmene
Corporation and Repap Enterprises, Inc.
2. Acquisition Agreement dated August 28, 2000, between UPM-Kymmene
Corporation and Repap Enterprises Inc.
3. Option Agreement dated August 28, 2000, between UPM-Kymmene Corporation and
Repap Enterprises Inc.
4. Letter Agreement dated August 28, 2000, between UPM-Kymmene Corporation and
the Third Avenue Trust, for the Third Avenue Value Fund Series and the
Third Avenue Small Cap Value Fund Series.
5. Letter Agreement dated August 28, 2000, between UPM-Kymmene Corporation and
TD Asset Management Inc.
