Incap - Tender offer

Statement of Incap Corporation's Board of Directors regarding Inission AB's mandatory public tender offer

Incap Corporation
Stock Exchange Release       16 January 2015 at 10 am (EET)



STATEMENT OF INCAP CORPORATION'S BOARD OF DIRECTORS REGARDING INISSION AB'S
MANDATORY PUBLIC TENDER OFFER

Not to be published or distributed, directly or indirectly, in United States,
Canada, Australia, New Zealand, South Africa, China, Hong Kong, Singapore or
Japan or in any other state where distribution or publishing would be prohibited
by applicable law.

1. Background information

Incap Corporation ("Incap" or "Company") announced on 12 December 2014 that
Inission AB's ("Inission" or "Offeror") holding in Incap had exceeded 30 per
cent of the Company's shares and related voting rights. Inission acquired on 11
December 2014 4,522,948 shares of the Company. As a result, the holding of
Inission in Incap increased from 28,500,000 shares to 33,022,948 shares,
representing approximately 30.27 per cent of all Incap shares and related voting
rights. Following the acquisition of shares, Inission became obligated in
accordance with Chapter 11, Section 19 of the Finnish Securities Market Act to
make a mandatory public tender offer for all Incap shares and securities
entitling to the shares. After having on 22 December 2014 acquired 7,684,615
Incap shares owned by Varma Mutual Pension Insurance Company Inission owns
altogether 40,707,564 Incap shares corresponding approximately 37.31 per cent of
all shares and related voting rights of the Company.

Inission published on 23 December 2014 a release ("Release") concerning their
mandatory public tender offer ("Tender Offer") for all Incap shares. Based on
the Release Incap published its own Stock Exchange Release on the same day.

According to the Tender Offer the price offered is EUR 0.03 in cash for each
Incap share validly tendered ("Offer Price"). The acceptance period of the
Tender Offer started on 7 January 2015 at 9.30 am and ends on 30 January 2015 at
4 pm, unless the offer period is prolonged in accordance with the terms and
conditions of the Tender Offer. Detailed conditions of the Tender Offer are
available in the offer document ("Offer Document"), which the Offeror has
published on 2 January 2015.

With reference to the Release Incap's Board of Directors is giving its statement
on the Tender Offer pursuant to the Finnish Securities Market Act (746/2012,
incl. amendments) ("SMA") Chapter 11, Section 13. This statement is considering
the Tender Offer from the perspective of Incap and Incap's shareholders.

2.  Statement of the Board of Directors

2.1 Recommendation of the Board of Directors

The opinion of the Board of Directors on the date of this statement is that the
price offered in the Tender Offer, i.e. EUR 0.03, is too low when taking into
account the current share price of the Company, the outlook for future of Incap
and the enclosed Fairness Opinion by UB Capital Oy ("United Bankers"), and
therefore, the Tender Offer is not fair from the perspective of the shareholders
of the Company.

Based on the evaluations and facts given below, the members of the Board of
Directors of Incap who have participated in the decision-making recommend the
refusal of the Tender Offer. The members of the Board are unanimous in their
view.

2.2 Background to the Statement

The Board of Directors of Incap has formed a task force for the evaluation of
the Tender Offer consisting of the independent members of the Board as follows:
Lassi Noponen, Chairman of the Board, Susanna Miekk-oja, member of the Board and
Raimo Helasmäki, member of the Board. The Board of Directors constitutes a
quorum with these named independent members of the Board. Only independent
members of the Board have participated in the assessment of the Tender Offer and
the decision-making and preparations required for it. The Board members in
question own Incap shares as follows: Chairman of the Board Lassi Noponen
directly and together with interest parties 306,484 shares, Susanna Miekk-oja
directly and with interest parties 233,021 shares and Raimo Helasmäki 89,944
shares.

Other members of the Board, Fredrik Berghel and Olle Hulteberg, are the only
shareholders of the Offeror and therefore non-independent of the Offeror.
Berghel and Hulteberg have not participated in the preparation of this
statement.

To support the assessment of the Tender Offer the Board of Directors has engaged
United Bankers to draft and submit a Fairness Opinion on the Offer Price. The
Fairness Opinion in its entity is attached to this statement and according to
it, the Offer Price is not fair from a financial point of view.

As to the Tender Offer, Incap is committed to comply with the recommendation
given in Chapter 11, Section 28 of the SMA (Takeover Code).

2.3 Assessment of the Tender Offer from the point of view of Incap and its
shareholders

The closing price of Incap on NASDAQ OMX Helsinki on 10 December 2014, i.e. on
the last trading day preceding the date when Inission became obligated to make
the public Tender Offer was EUR 0.06. The volume-weighted average trading price
of the share on NASDAQ OMX Helsinki during the three-month period preceding the
date when Inission became obligated to make the public Tender Offer, i.e. from
11 September 2014 to 10 December 2014 was EUR 0.06. Accordingly, the volume-
weighted average trading price of the share during the 12-month period preceding
the date when Inission became obligated to make the public Tender Offer, i.e.
from 11 December 2013 to 10 December 2014 was EUR 0.06, during the nine-month
period, i.e. from 11 March 2014 to 10 December 2014 was EUR 0.05 and during the
six-month period, i.e. from 11 June 2014 to 10 December 2014 was EUR 0.06.

The Offer Price of EUR 0.03 is approximately 50 per cent lower than the volume-
weighted average trading price of Incap share on NASDAQ OMX Helsinki during the
12-month period preceding the date when Inission became obligated to make a
public Tender Offer and approximately 50 per cent lower than the closing price
on NASDAQ OMX Helsinki on 10 December 2014, i.e. on the last trading day prior
to the obligation of make the public Tender Offer. The Offer Price is
approximately 45 per cent lower than the volume-weighted average trading price
during the nine-month period prior to the obligation to make the public Tender
Offer and 49 per cent lower than the volume-weighted average trading prices
during the six- and three-month periods.

According to the Offer Document the Offeror believes in the Company's business
and wants through increased ownership to commit itself more closely to the
development of the Company, and the primary purpose of the Offeror is not to
delist the Company from NASDAQ OMX Helsinki. The Offeror has announced that it
is, as a part of the financing arrangement in connection with the Tender Offer,
committed to aim at receiving a holding of 42.0 per cent in the Company in any
outcome of the Tender Offer. The Board of Directors notes that in regard to the
present shareholder base such a significant minority share of holdings may
enable the majority in general meeting. The Board of Directors further notes
that the trading with the Company's share can in future be weaker than today and
the price formation in the Stock Exchange can be more insecure.

The Board of Directors notes that the Offeror is the Company's biggest
shareholder and a direct competitor. The Offeror has in the Tender Offer
referred to the weakened financial position of the Company during the past
years. It is the opinion of the Board of Directors that the Offer Price does not
take into consideration the latest development in the Company's business. The
Company continued during 2014 the actions to improve efficiency in line with the
Turnaround program, which was launched in 2013. After the end of the actual
Turnaround program the Company has focused on stabilizing its operations and
financial position. The Company has further negotiated with the financing
partners on the volumes and schedule of debt instalments as well as on other
financing arrangements. The systematic work which has been carried out during
the past six months in the leadership of the new CEO is now bearing fruit and is
reflecting positively in the profitability of the Company. The divestment of the
Vaasa mechanics factory to the local management enables Incap's strategic focus
on contract manufacturing of electronics only, so that the Company has factories
concentrating on electronics and related assembly in Kuressaare, Estonia and in
Tumkur, India. Volumes of electronics manufacturing in the factory in Kuressaare
are growing. The development in India continues to be strong. The new government
in India has announced that its target is to improve the local business
environment, and this is estimated to support Incap's growth targets especially
in local markets. Incap has also received positive feedback from its customers
and believes that their trust in the company has recovered and strengthens
further. The Board of Directors also notes that especially with regard to the
low level of the Offer Price, the Board has carefully assessed and followed the
Company's obligation to disclose all such decisions and other factors concerning
the Company that are likely to affect the value of the Company's share.

The Board of Directors notes that according to the Fairness Opinion given by
United Bankers, the Offer Price is not fair from a financial point of view.

The Board of Directors has also assessed eventual alternative arrangements to
the Tender Offer as follows:

The Offeror has been the Company's biggest shareholder since 2013. The Offeror
and the Company agreed in July 2013 on a conditional transaction, according to
which the Offeror and the Company would be merged so that the Company would buy
the shares and business operations of the Offeror's subsidiaries. The
Extraordinary General Meeting of the Company approved the transaction in August
2013. The realization of the transaction was however conditional to the fact
that the Offeror would decide to use its option for merger in line with the
conditions of the agreement by the end of the year 2013. The merger option was
based on the market price of Incap at the time concerned. Even though the
Offeror did not use its option to merge the operations of the Company and the
Offeror, it announced in January 2014 its continued interest in the merger.
After that the Offeror has given to the Company proposals on the implementation
of the merger essentially in the same way as described above to a price which is
lower than the market price. The Board of Directors has rejected these proposals
because they were unfavorable to the shareholders.

The Company has, in line with the decision published on 23 January 2014,
evaluated during the year 2014 the strategic options and eventual alliances to
develop the Company's business further. Thereby the Company has discussed both
with the Offeror and third parties, and there has been preliminary interest
concerning the consolidation with the Company. The Board of Directors considers
consolidation to be one potential alternative for the development of the
Company. However, its strategy has been to strengthen the Company before
entering any consolidation, and these efforts have continued also after the
publication of the Tender Offer. Because of the Offeror's holding of
approximately 37 per cent and the tight schedule of the Tender Offer, as well as
having taken into consideration the previous assessments by the Board, the Board
of Directors has not specifically searched for alternative or competing offers
after the publication of the Tender Offer.

2.4 Evaluation concerning strategy, operations and employees

According to the Offer Document the Offeror does not expect the execution of the
Tender Offer to have any imminent effect on Incap's business or assets or its
management's or other employees' position. The Offeror believes that the
increased commitment of the Company's biggest shareholder to the ownership of
the Company has a positive influence both on the Company's business and its
possibilities to improve the financing position. According to the Offer Document
the target of the Offeror is, despite the grade of the execution of the Tender
Offer, to support more than previously the possibilities of Incap to develop its
business and the efforts to improve the financials of the Company, so that the
management and the personnel can focus on the Company's business and its
development.

According to the Offer Document the Offeror does not expect the Tender Offer to
have any imminent effect on the Company's business activities or locations or
the number of employees. Because the customer segments of the Offeror and the
Company are complementing each other well, the Offeror intends in medium-term to
investigate the possibilities for cooperation between it and the Company among
others in relation to sales and purchasing.

Incap has not received any separate statement from the representatives of its
personnel on the effects of the Tender Offer to the employments at Incap.

According to the Offer Document the Offeror has negotiated with two Finnish
financial institutions an agreement, in which these institutions agree that the
annual repayments of Incap under its financing arrangements with these
institutions would not exceed EUR 0.5 million in 2015-2017, if so decided by the
Company and subject to a detailed agreement with the Company and these
institutions. However, should Incap not raise a minimum amount of EUR 1 million
new capital in a share issue prior to 31 August 2015, the annual repayments of
the Company under the financing arrangements would again become payable as prior
to agreeing on the above-mentioned amendment. The financing arrangement has been
described more in detail in the Offer Document.

The Board of Directors notes that the Company has not authorized the Offeror or
their owners to enter into negotiations described above or to give any
information on the Company to financial institutions, and therefore, the
independent members of the Board of Directors or the management of the Company
are not aware, which financial institutions have been involved in negotiations.
The Board of Directors notes that the management of Incap has despite the Tender
Offer negotiated on amendments in the repayment programs in order to better
allocate the cash enabling the business growth. Despite the Tender Offer the
Board of Directors will study the financing solutions presented by the Offeror
more in detail after having received more specific information on them.

The Board of Directors further notes that the share issue as proposed by the
Offeror in the first half of the year 2015 is evaluated to be a potential
alternative to finance the growth of Incap. The Board of Directors notes that it
has with all Board members involved, already prior to the publication of the
Tender Offer, decided to evaluate the possibilities of arranging a share issue
as one alternative. The Company disclosed the decision in connection with the
Interim Management Statement on 13 November 2014.

Based on the information given in the Offeror's Offer Document the Board of
Directors estimates that the result of the Tender Offer does not have any
imminent and/or direct effect on Incap's current business operations or the
employments in the Company.

The Board of Directors is of the opinion that the information given in the Offer
Document on the longer-term plans of the Offeror concerning Incap is rather
limited and of general nature. Because of the lack of detailed information the
Board of Directors cannot form a more specific opinion on the strategic plans of
the Offeror after the Tender Offer and their likely effect on the Company's
business and the position of its employees. The Board of Directors, however, is
aware of the consolidation strategy, which was published by the Offeror in
connection with the arrangements made in 2013. The Offeror has announced in the
Offer Document its intention to investigate the possibilities of cooperation
among others in sales and purchasing. The advantages and disadvantages of the
eventual cooperation in sales and purchasing are in the opinion of the Board of
Directors totally dependent on the terms and conditions of the cooperation, and
therefore the Board of Directors cannot give any specific opinion on the issue
in this connection.

3. Information concerning this statement

This statement of the Board of Directors shall by its nature constitute no
investment or taxation advice to shareholders or any other parties, and it
cannot be expected that the Board of Directors specifically evaluates the
general share price development or risks relating to investments in general. The
shareholders shall independently by themselves consider and decide on the
acceptance or the refusal of the Tender Offer taking into consideration all the
available information, including the Offer Document and the views and
information given in this statement of the Board of Directors. The Board of
Directors cannot guarantee that the Company's shareholders would in future
receive a better price than the price offered.

United Bankers has acted as the financial advisor of the Board of Directors in
the evaluation of the fairness of the Offer Price. Fondia Oy has acted as the
legal advisor of Incap concerning this statement.

In Helsinki, 16 January 2015

INCAP CORPORATION
Board of Directors



Further information:
Lassi Noponen, Chairman of the Board of Directors, tel. +358 40 501 5127


Appendix:
Fairness Opinion by United Bankers concerning the fairness of the Tender Offer

Distribution
NASDAQ OMX Helsinki Ltd
Financial Supervisory Authority
Inission AB
Principal media


INCAP IN BRIEF
Incap Corporation is an international contract manufacturer whose comprehensive
services cover the entire life-cycle of electromechanical products from design
and sourcing to actual manufacture and further to maintenance services. Incap's
customers are leading suppliers of high-technology equipment in their own
business segments, and Incap increases their competitiveness as a strategic
partner. Incap has operations in Finland, Estonia, India and China. The Group's
revenue in 2013 amounted to approximately EUR 36.8 million, and the company
currently employs approximately 500 people. Incap's share has been listed on the
NASDAQ OMX Helsinki Ltd since 1997. Additional information: www.incap.fi.



APPENDIX
Fairness Opinion by United Bankers concerning the fairness of the Tender Offer



Board of Directors
Incap Oyj
Keilaranta 4
02150 Espoo
Finland

                                                      Helsinki, January 15, 2015

Members of the Board of Directors:
Inission  AB ("Inission") has on December  12, 2014 disclosed its duty to make a
mandatory  public Tender Offer  ("Transaction") in accordance  with Chapter 11,
Section  19 of  the  Finnish  Securities  Market  Act  for  all  the  shares and
securities  entitling to  the shares  of Incap  Oyj ("Incap"  or the "Company").
Today  Inission  owns  altogether  40,707,563 shares  in Incap, corresponding to
approximately  37.71 per cent  of the  shares and  related voting  rights in the
Company.

The  price to  be offered  in the  mandatory public  Tender Offer for each Incap
share validly tendered in accordance with the Terms and Conditions of the Tender
Offer  will  be  EUR  0.03 in  cash  (the  "Offer  Price").  Incap  has no other
securities,  such as option rights or convertible loans with existing conversion
rights,  entitling to the shares. On December 10, 2014, i.e. on the last trading
day  preceding the date  when Inission was  obligated to make  the public Tender
Offer, the closing price of Incap share on NASDAQ OMX Helsinki was EUR 0.06.

Incap's Board of Directors has engaged UB Capital Oy ("UB Capital") to submit an
opinion as to the fairness, from a financial point of view, of the consideration
to be received by the Incap shareholders in the proposed Transaction.

In arriving at its Fairness Opinion, UB Capital has, among other things:

 1. Reviewed publicly available financial information regarding Incap and the
    industry in which it operates
 2. Reviewed certain forecasts and analyses prepared by Incap relating to its
    business and financial performance
 3. Compared the financial and operating performance of Incap with publicly
    available information regarding other selected companies
 4. Performed other analyses and financial studies UB Capital considered as
    relevant for the purpose of this opinion
In  giving its opinion, UB Capital has  relied upon and assumed the completeness
and  accuracy of all information that was  publicly available or was provided to
or  discussed  with  UB  Capital  by  Incap  or  otherwise reviewed by or for UB
Capital.  Further, UB  Capital did  neither independently  verify nor assume any
responsibility  or liability of independently  verifying any such information or
its  completeness or accuracy. In relying on any financial analyses or forecasts
prepared  by  Incap,  UB  Capital  assumed  that  they  were  prepared  based on
assumptions  reflecting the  best available  estimates and  judgments as  to the
expected future financial prospects.

The  Fairness  Opinion  is  based  on  prevailing  economic,  market  and  other
conditions  and the  information made  available to  UB Capital  as of  the date
hereof.  Further, it should be understood  that subsequent developments may have
an  effect on this opinion and that  UB Capital assumes no obligation to update,
reaffirm  or revise its opinion. The opinion  is limited to the fairness, from a
financial  point of view, of the consideration received by Incap shareholders in
the proposed Transaction.

Based  on the valuation  of the peer  group, previous transactions and estimates
given  to us by the management, our final  conclusion is that the Offer Price of
EUR 0.03 per share is not fair from a financial point of view.

This  letter is intended exclusively to the  Board of Directors of Incap for the
purposes of its evaluation of the Transaction. The opinion does not constitute a
recommendation  to any shareholder of Incap with  respect to the Tender Offer or
any  other matter. Furthermore, this opinion  may not be disclosed, referred to,
or  communicated to  any third  party without  the prior  written consent  of UB
Capital.


Sincerely,

UB Capital Oy



[HUG#1887633]