Citycon Oyj - Company Announcement

Citycon Board of Directors decided on a directed share issue and a rights issue and related adjustment to the Company’s EPRA Earnings and EPRA EPS (basic) outlook

CITYCON OYJ Stock exchange release 9 June 2014 at 9:00 hrs

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Citycon Oyj (“Citycon” or the “Company”) announced on 13 May 2014 that Citycon
and CPP Investment Board European Holdings S.à r.l (“CPPIBEH”), a wholly owned
subsidiary of Canada Pension Plan Investment Board, have on 12 May 2014 entered
into an agreement on an overall arrangement whereby Citycon would strengthen
its balance sheet by raising approximately EUR 400 million of new capital and
CPPIBEH would become a significant strategic shareholder in Citycon. The
arrangement consists of a directed share issue of approximately EUR 206.4
million to CPPIBEH as well as a subsequent fully underwritten rights issue of
approximately EUR 196.5 million pursuant to the pre-emptive subscription right
of the Company's shareholders (together the “Transaction”). The Transaction was
conditional on the granting of necessary authorisations and election of new
Board members by an Extraordinary General Meeting (“EGM”) of Citycon. The EGM
held on 6 June 2014 passed the necessary resolutions, including an
authorisation for the Board of Directors of Citycon to decide on a directed
share issue to CPPIBEH as well as a rights issue based on the pre-emptive
subscription right of shareholders. 

Directed share issue

The Board of Directors of Citycon has on 8 June 2014 decided on a directed
share issue of approximately EUR 206.4 million based on the authorisation
granted by the EGM on 6 June 2014 (the "Directed Share Issue"). Citycon will
offer 77,874,355 new shares (“Directed Issue Shares”) to CPPIBEH in deviation
from the shareholders' pre-emptive subscription right. The Directed Issue
Shares represent approximately 17.6 per cent of the total number of shares and
voting rights in the Company prior to the Directed Share Issue, and
approximately 15.0 per cent of the total number of shares and voting rights in
the Company after the Directed Share Issue. 

The subscription price is EUR 2.65 per share. The subscription price has been
agreed in negotiations between CPPIBEH and the Company and the Company believes
that it represents a fair price in light of other equity issues in the real
estate sector in Europe in the past and reflects the historical average trading
prices of the Company over the last six (6) months. The subscription price is
approximately 2.2 per cent lower than the closing price of the Company's share
on 12 May 2014, the date preceding the announcement of the Transaction, and
approximately 1.7 per cent higher than the dividend adjusted volume-weighted
average trading price of the Company's share on NASDAQ OMX Helsinki Ltd. during
the three (3) months preceding the announcement of the Transaction. The
subscription price will be recorded in its entirety in the invested
unrestricted equity fund of the Company. 

CPPIBEH will subscribe and pay for the Directed Issue Shares and the Board of
Directors of Citycon will approve the share subscriptions today, on 9 June
2014. The Directed Issue Shares will entitle their holder to full dividends
declared by the Company, if any, and to other shareholder rights in the Company
after the Directed Issue Shares have been registered with the Finnish Trade
Register and recorded in the Company's shareholders' register, on or about 10
June 2014. Thus, the Directed Issue Shares will entitle CPPIBEH to participate
in the rights issue described below, the record date of which is 12 June 2014.
Following the registration of the Directed Issue Shares, the total number of
shares outstanding in the Company will amount to 519,162,367 shares. In order
to list the Directed Issue Shares, Citycon has prepared a prospectus that is
expected to be approved by the Finnish Financial Supervisory Authority today,
on 9 June 2014. Public trading in the Directed Issue Shares is expected to
commence on or about 11 June 2014. 

Rights issue

The Board of Directors of Citycon has on 8 June 2014 decided on a rights issue
of approximately EUR 196.5 million based on the authorisation granted by the
EGM on 6 June 2014 (the "Rights Issue"). Citycon will offer a maximum of
74,166,052 new shares (“New Shares”) in accordance with the shareholders'
pre-emptive subscription right. The New Shares to be issued in the Rights Issue
represent a maximum of approximately 14.3 per cent of the total shares and
voting rights in the Company after the registration in the Trade Register of
the Directed Issue Shares on or about 10 June 2014 and approximately 12.5 per
cent of the total shares and voting rights in the Company after the Rights
Issue assuming that the Rights Issue is subscribed in full. 

CPPIBEH, who as a result of the Directed Share Issue will own 77,874,355 shares
in the Company on the record date of the Rights Issue, and the two other
largest shareholders of the Company, Gazit-Globe Ltd. and Ilmarinen Mutual
Pension Insurance Company, have undertaken, subject to certain conditions, to
subscribe for their respective pro rata share of the New Shares to be issued in
the Rights Issue as follows: CPPIBEH 11,124,907 New Shares, Gazit-Globe Ltd.
31,082,098 New Shares and Ilmarinen Mutual Pension Insurance Company 5,659,341
New Shares. The three subscription undertakings represent in the aggregate
approximately 64.5 per cent of the maximum amount of New Shares to be issued in
the Rights Issue. 

In addition, Gazit-Globe Ltd. and CPPIBEH (the “Underwriters”) have provided
underwriting commitments according to which they commit, subject to certain
conditions, to underwrite the Rights Issue up to an aggregate subscription
price of EUR 42.6 million and EUR 27.1 million, respectively (less the
subscription price for any New Shares potentially subscribed for in the
secondary subscription). The underwriting by CPPIBEH will only apply to New
Shares to be issued in the Rights Issue that may remain unsubscribed for after
the underwriting commitment provided by Gazit-Globe Ltd. has been used in full. 

The subscription price for the New Shares is EUR 2.65 per New Share. The
subscription price is the same as in the Directed Share Issue. The subscription
price will be recorded in its entirety in the invested unrestricted equity fund
of the Company. 

The subscription period begins on 17 June 2014 at 9:30 a.m. (Finnish time) and
ends on 2 July 2014 at 4:30 p.m. (Finnish time). Shareholders of the Company
who are registered in the shareholders' register maintained by Euroclear
Finland Ltd. on the record date of 12 June 2014, shall automatically receive
one (1) freely transferable subscription right (“Subscription Right”) in the
form of a book-entry for every one (1) share owned on the record date. Each
seven (7) Subscription Rights will entitle their holders to subscribe for one
(1) New Share. Trading in the Subscription Rights on NASDAQ OMX Helsinki Ltd
will commence on 17 June 2014 at 9:30 a.m. (Finnish time) and end on 25 June
2014 at 6:30 p.m. (Finnish time). Further, a shareholder or other investor,
including any of the Underwriters, who has subscribed for New Shares based on
the primary subscription right, is entitled to subscribe for New Shares not
subscribed for by virtue of the primary subscription right in the secondary
subscription. 

The ex rights date for the Rights Issue is on 10 June 2014. The prospectus for
the Rights Issue is expected to be published on or about 13 June 2014. 

Citycon will announce the final result of the Rights Issue through a stock
exchange release on or about 8 July 2014. Public trading in the New Shares
subscribed for in the Rights Issue based on the primary subscription right as
interim shares is expected to commence on or about 3 July 2014. The interim
shares will be combined with the existing shares of the Company on or about 9
July 2014 and public trading in the New Shares is expected to commence on or
about 10 July 2014. The full terms and conditions of the Rights Issue are set
out in the appendix to this release. 

Pohjola Bank plc is acting as the lead manager of the Rights Issue (the “Lead
Manager”). 

Citycon has entered into a lock-up agreement with the Lead Manager under which
it has, subject to certain exceptions, agreed not to issue or sell any shares
in Citycon for a period ending 180 days after the closing of the Rights Issue.
The Company has also on 12 May 2014 entered into a lock-up agreement with
CPPIBEH under which it has, subject to certain exceptions, agreed not to issue
or sell any shares in Citycon for a period ending 270 days after the date of
the Rights Issue prospectus. CPPIBEH has also agreed on a lock-up under which
it has, subject to certain exceptions, agreed not to sell or transfer any
shares in Citycon for a period ending 270 days after said date. 

Use of proceeds

The Company intends to use the proceeds of the Directed Share Issue and Rights
Issue to make an approximately EUR 300 million debt repayment thereby further
deleveraging the Company's balance sheet and giving it the freedom to recycle
capital accretively by pursuing select acquisitions and (re)development
projects of supermarket-anchored shopping centres in dense urban locations in
the Nordic and Baltic regions as well as proactive asset management and other
value-added activities. The Directed Share Issue enables the Company to raise
large amount of equity capital within a short timeframe and on terms deemed
more favourable than those which might have been achieved through a standard
equity issue. The Company believes that the addition of a globally recognised
real estate investor as one of its strategic shareholders will also increase
Citycon's profile as a shopping centre industry leader, which should enhance
the Company's attractiveness to investors. In addition, the agreement entered
into between CPPIBEH and Gazit-Globe Ltd. in connection with the Transaction on
the parties' objectives in certain governance matters relating to the Company
should further enhance the Company's corporate governance structure to reflect
the highest international market standards. There are, therefore, weighty
financial reasons from the Company's perspective for deviating from the
pre-emptive subscription rights of the shareholders in the Directed Share
Issue. In addition, the Company's shareholders are offered the possibility to
invest in the Company at the same subscription price through the subsequent
Rights Issue. 

Adjustment to the EPRA Earnings and EPRA EPS (basic) outlook based on the
Transaction 

According to the outlook announced by Citycon on 24 April 2014, the Company
forecasted its EPRA Earnings to increase by EUR 2 to 10 million in 2014
compared to 2013 and its EPRA EPS (basic) to be EUR 0.20-0.22 in 2014 based on
the existing number of shares. Following the Transaction impacting both
earnings and number of shares, Citycon adjusts the EPRA Earnings and EPRA EPS
(basic) forecasts. Assuming that the Directed Share Issue is completed and the
Rights Issue is subscribed in full, Citycon now forecasts that its EPRA
Earnings will increase by EUR 7 to 15 million and its EPRA EPS (basic) will be
EUR 0.175-0.195 based on the existing property portfolio and the increased
number of shares after the completion of the Transaction. 

Adjustment of the terms and conditions of the 2011 stock options

In order to ensure the equal treatment of shareholders and the holders of the
Company's 2011 stock options, the Board of Directors of the Company has on 8
June 2014, due to the Rights Issue, adjusted the subscription ratio and the
subscription price of the 2011 stock options in accordance with the terms and
conditions of the 2011 stock options. Provided that the Directed Share Issue is
completed and the Rights Issue is executed in full as described in the terms
and conditions of the Rights Issue, the subscription price for stock options
2011A—D(I) shall be adjusted to EUR 2.7820 per share and the subscription ratio
to 1.3446. As regards stock options 2011A—D(II), the subscription price shall
be adjusted to EUR 2.8862 per share and the subscription ratio shall be
adjusted to 1.3446. As regards stock options 2011A—D(III), the subscription
price shall be adjusted to EUR 2.3804 per share and the subscription ratio
shall be adjusted to 1.3446. 

The total amount of shares is rounded down to full shares in connection with
the subscription of the shares and the total subscription price is calculated
using the rounded amount of shares and rounded to the closest cent. Due to the
above adjustments, the adjusted maximum total number of shares to be subscribed
for based on the 2011 stock options shall be 9,748,350. 

The foregoing adjustment to the terms and conditions of the 2011 stock options
due to the Rights Issue will be effective as of its registration in the Trade
Register on or about 9 July 2014, provided that the Rights Issue is executed in
full as described in the terms and conditions of the Rights Issue. The 2011
stock options do not entitle their holders to participate in the Rights Issue. 

Helsinki, 9 June 2014

CITYCON OYJ
Board of Directors


APPENDIX: Terms and conditions of the Rights Issue

For further information, please contact:

Marcel Kokkeel, CEO
Tel. +358 20 766 4465
marcel.kokkeel@citycon.com

Eero Sihvonen, Executive VP and CFO
Tel +358 20 766 4459
eero.sihvonen@citycon.com

Distribution:
NASDAQ OMX Helsinki
Major media
www.citycon.com

DISCLAIMER

This stock exchange release is not an offer for subscription for shares in the
Company. A Finnish prospectus relating to the rights issue referred to in this
stock exchange release and the subsequent listing of the new shares at NASDAQ
OMX Helsinki Ltd. will be published once the Finnish Financial Supervisory
Authority has approved it. 

In particular, the information contained herein is not for publication or
distribution, directly or indirectly, in or into the United States, Canada,
Australia, Hong Kong, South Africa or Japan, unless the Company in its sole
discretion determines otherwise. These written materials do not constitute an
offer of securities for sale in the United States, nor may the securities be
offered or sold in the United States absent registration or an exemption from
registration as provided in the U.S. Securities Act of 1933, as amended, and
the rules and regulations thereunder. The Company does not intend to register
any portion of the offering in the United States or to conduct a public
offering of securities in the United States. 

The issue, exercise and/or sale of securities in the offering are subject to
specific legal or regulatory restrictions in certain jurisdictions. The Company
and Pohjola Bank plc assume no responsibility in the event there is a violation
by any person of such restrictions. Pohjola Bank plc is acting exclusively for
the Company and no one else in connection with the rights issue and will not
regard any other person (whether or not a recipient of this presentation) as
its client in relation thereto and will not be responsible to anyone other than
the Company for providing the protections afforded to its clients, nor for
giving advice in relation to the rights issue or any arrangement referred to
herein. 

The information contained herein shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of the securities
referred to herein in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration, exemption from registration or
qualification under the securities laws of any such jurisdiction. Investors
must neither accept any offer for, nor acquire, any securities to which this
document refers, unless they do so on the basis of the information contained in
the applicable prospectus published or offering circular distributed by the
Company. 

The Company has not authorized any offer to the public of securities in any
Member State of the European Economic Area other than Finland. With respect to
each Member State of the European Economic Area other than Finland and which
has implemented the Prospectus Directive (each, a “Relevant Member State”), no
action has been undertaken or will be undertaken to make an offer to the public
of securities requiring publication of a prospectus in any Relevant Member
State. As a result, the securities may only be offered in Relevant Member
States (a) to any legal entity which is a qualified investor as defined in the
Prospectus Directive; or (b) in any other circumstances falling within Article
3(2) of the Prospectus Directive. For the purposes of this paragraph, the
expression an “offer of securities to the public” means the communication in
any form and by any means of sufficient information on the terms of the offer
and the securities to be offered so as to enable an investor to decide to
exercise, purchase or subscribe the securities, as the same may be varied in
that Member State by any measure implementing the Prospectus Directive in that
Member State and the expression “Prospectus Directive” means Directive
2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive,
to the extent implemented in the Relevant Member State), and includes any
relevant implementing measure in the Relevant Member State and the expression
“2010 PD Amending Directive” means Directive 2010/73/EU. 

This communication is directed only at (i) persons who are outside the United
Kingdom or (ii) persons who have professional experience in matters relating to
investments falling within Article 19(5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005 (the “Order”) and (iii) high net
worth entities, and other persons to whom it may lawfully be communicated,
falling within Article 49(2) of the Order (all such persons together being
referred to as “relevant persons”). Any investment activity to which this
communication relates will only be available to and will only be engaged with,
relevant persons. Any person who is not a relevant person should not act or
rely on this document or any of its contents.

Attachments:

Terms and Conditions of the Rights Issue.pdf