Citycon Oyj - Corporate Action

Citycon Board of Directors decided on a rights issue and related adjustment to its EPRA EPS (basic) outlook

CITYCON OYJ       Stock Exchange Release 7 September 2012 at 11:30 a.m.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR
INTO THE UNITED STATES, CANADA, AUSTRALIA, HONG KONG, SOUTH AFRICA OR JAPAN OR
ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL. 

Rights issue

The Board of Directors of Citycon Oyj (“Citycon” or the “Company”) has today
decided on a rights issue of approximately EUR 90.7 million based on the
authorization granted at the Annual General Meeting on 21 March 2012 (the"Offering"). Citycon will offer a maximum of 49,032,002 new shares (“Shares”)
in accordance with the shareholders' pre-emptive subscription right. The Shares
to be issued in the Offering represent a maximum of approximately 17.6 percent
of the total shares and voting rights in the Company prior to the Offering. 

The subscription price for the Shares is EUR 1.85 per Share. The subscription
period begins on 17 September 2012 at 9:30 a.m. and ends on 1 October 2012 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 September 2012,
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 seventeen (17) Subscription Rights will entitle
holders to subscribe for three (3) Shares. Trading in the Subscription Rights
on NASDAQ OMX Helsinki Ltd will commence on 17 September 2012 at 9:30 a.m. and
end on 24 September at 6:30 p.m. (Finnish time). A shareholder or other
investor who has subscribed for Shares based on the primary subscription right
is entitled to participate in the secondary subscription. 

Citycon will announce the final result of the Offering through a stock exchange
release on or about 5 October 2012. The full terms and conditions of the
Offering are set out in the appendix to this release. 

Citycon continues to focus on increasing its net cash from operating activities
and direct operating profit. In order to implement this growth strategy, the
Company will pursue value-added activities, redevelopment projects, selected
acquisitions and proactive asset management. Citycon also intends to continue
the divestment of its non-core properties, in order to improve the property
portfolio and strengthen the Company's financial position. 

In the execution of its growth strategy the Company intends to utilize equity,
equity-linked financing and debt financing in a flexible manner in order to
ensure optimal balance sheet structure of the Company taking into account the
progression of its investment plans. 

The aggregate net proceeds to Citycon from the Offering, after deduction of the
fees and expenses payable by Citycon, will be approximately EUR 89.7 million
provided that the Offering is subscribed in full. The net proceeds of the
Offering are intended to be used to finance redevelopment projects and
potential acquisitions in accordance with the Company's strategy, to strengthen
the Company's balance sheet, to repay existing debt and for general corporate
purposes. 

The two largest shareholders of the Company, Gazit-Globe Ltd. and Ilmarinen
Mutual Pension Insurance Company, have provided subscription undertakings
according to which they undertake to subscribe for Shares in the Offering as
follows: Gazit-Globe Ltd. 23,551,221 Shares and Ilmarinen Mutual Pension
Insurance Company 4,401,708 Shares. The two subscription undertakings represent
in the aggregate approximately 57.0 percent of the maximum amount of Shares
issued in the Offering. The execution of the subscription undertakings is
subject to certain customary conditions. 

The undertaking by Gazit-Globe Ltd. is further conditional upon the Finnish
Financial Supervisory Authority granting a permanent exemption to Gazit-Globe
Ltd. from the obligation to make a mandatory public tender offer for the
remaining shares in the Company and securities issued by the Company entitling
to shares in the Company pursuant to the Finnish Securities Market Act in the
event that Gazit-Globe Ltd.'s shareholding would based on the subscription
undertaking exceed 50 percent of the votes in the Company as a result of the
Offering. Gazit-Globe Ltd. has informed the Company that it has applied for
such an exemption from the Finnish Financial Supervisory Authority. 

Pohjola Corporate Finance Ltd. will act as the lead manager of the Offering
(the “Lead Manager”). 

Adjustment to the EPRA EPS (basic) outlook based on the Offering

According to the outlook announced by Citycon on 11 July 2012, the Company
forecasted, based on the existing property portfolio and number of shares, that
its EPRA EPS (basic) will in 2012 be EUR 0.21 - 0.23. As the EPRA EPS (basic)
forecast is based on the number of shares in the Company, Citycon adjusts the
EPRA EPS (basic) forecast to reflect the increased number of shares as a result
of the Offering. Assuming that the Offering is subscribed in full, Citycon now
forecasts that its EPRA EPS (basic) will be EUR 0.195-0.215 based on the
existing property portfolio and the increased number of shares. 

Adjustment of conversion price of 2006 convertible capital bonds

As a consequence of the Offering, the Board of Directors of Citycon determined
today an adjustment to the conversion price of the convertible capital bonds
listed on 22 August 2006, subject to the Offering being executed in full as
described in the terms and conditions of the Offering. The Board adjusted the
conversion price in accordance with Condition 6(b)(iv) of the convertible bonds
from EUR 4.20 to EUR 4.05. The new conversion price will be effective as of 2
October 2012 provided that the Offering is executed in full as described in the
terms and conditions of the Offering. Assuming that the new conversion price
becomes effective, the total number of shares that can be subscribed for on the
basis of the convertible bonds is 10,185,185 and the maximum increase in the
share capital of the Company as a consequence of such subscriptions is EUR
13,749,999.75. 

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 Citycon has today, due
to the Offering, 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. As regards stock options 2011A—D(I), the subscription ratio
shall be amended to 1.1765 and the subscription price shall be amended to EUR
2.9720 per share. As regards stock options 2011A—D(II), the subscription ratio
shall be amended to 1.1765 and the subscription price shall be amended to EUR
3.0910 per share. As regards stock options 2011A—D(III), the subscription ratio
shall be amended to 1.1765 and the subscription price shall be amended to EUR
2.5130 per share. 

The total amount of shares is rounded down to full shares in connection with
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 Board of Directors has also adjusted the
maximum total number of shares to be subscribed for based on the 2011 stock
options to 8,106,085 shares, as permitted by the share issue authorization
available to the Company after the completion of the Offering. 

The foregoing adjustments to the terms and conditions of the 2011 stock options
due to the Offering will be in force as of the registration of the adjusted
maximum total number of shares to be subscribed for based on the 2011 stock
options with the Finnish Trade Register on or about 8 October 2012, provided
that the Offering will be completed in full as planned. Thus, the 2011 stock
options do not entitle holders to participate in the Offering. 

Helsinki, 7 September 2012

CITYCON OYJ
Board of Directors


APPENDIX: Terms and conditions of the Offering

For further information, please contact:
Marcel Kokkeel, CEO
Tel. +358 20 766 4521 or +358 40 154 6760
marcel.kokkeel@citycon.fi



Eero Sihvonen, Executive VP and CFO
Tel +358 20 766 4459 or +358 50 557 9137
eero.sihvonen@citycon.fi



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



DISCLAIMER

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. 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 Corporate Finance Oy assume no responsibility in the event there is
a violation by any person of such restrictions. 

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. 

APPENDIX: TERMS AND CONDITIONS OF THE OFFERING

TERMS AND CONDITIONS OF THE OFFERING

On 21 March 2012, the Annual General Meeting of Citycon Oyj (the “Company”)
authorised the Company's Board of Directors to decide by one or several
decisions on the issuance of shares and special rights entitling to shares
referred to in Chapter 10 Section 1 of the Finnish Companies Act and conveyance
of own shares held by the Company either against payment or free. The maximum
number of new shares to be issued and own shares held by the Company to be
conveyed, including the shares received on the basis of the special rights, may
not exceed 50,000,000 shares, which corresponds to approximately 18 per cent of
all the shares in the Company at the date hereof. The authorization will be
valid until the end of the next Annual General Meeting. Out of this
authorization, 36,713 new shares have been issued based on a decision by the
Board of Directors on 29 May 2012 in order to implement the Company's
share-based incentive scheme established on 26 April 2007. 

On 7 September 2012, the Board of Directors of the Company resolved, based on
the above authorization of the Annual General Meeting, to issue a maximum of
49,032,002 new shares (the “Shares”) through a share issue based on the
pre-emptive subscription right of shareholders as set forth in these terms and
conditions of the Offering (the “Offering”). 

The Shares to be issued in the Offering represent approximately 17.6 per cent
of the total shares and voting rights in the Company before the Offering and
approximately 15.0 per cent of the total shares and voting rights in the
Company after the Offering provided that the Offering is subscribed in full. 

Right to Subscribe

Primary Subscription Right

The Shares will be offered for subscription by the shareholders of the Company
in proportion to their shareholding in the Company. 

A shareholder who is registered in the Company's shareholders' register
maintained by Euroclear Finland Ltd on the record date of 12 September 2012 of
the Offering (“Record Date”) will automatically receive one (1) freely
transferable subscription right (the “Subscription Right”) as a book-entry
(ISIN FI4000047311) for every one (1) share owned on the Record Date (the
“Primary Subscription Right”). 

A shareholder, or a person or an entity to whom such Primary Subscription
Rights have been transferred, is entitled to subscribe for three (3) Shares for
every seventeen (17) Subscription Rights. No fractions of Shares will be
allotted. 

Secondary Subscription

Further, a shareholder or other investor who has subscribed for Shares based on
the Primary Subscription Right, is entitled to subscribe for Shares not
subscribed for by virtue of the Primary Subscription Right (the “Secondary
Subscription”). 

Subscription Undertakings

The largest shareholders of the Company, Gazit-Globe Ltd. and Ilmarinen Mutual
Pension Insurance Company, have provided subscription undertakings according to
which they undertake to subscribe for Shares in the Offering as follows:
Gazit-Globe Ltd 23,551,221 Shares and Ilmarinen Mutual Pension Insurance
Company 4,401,708 Shares. 

The execution of the subscription undertakings is subject to certain customary
conditions. The subscription undertakings represent approximately 57.0 per cent
of the maximum amount of Shares in the Offering. 

Subscription Price

The Shares may be subscribed for in the Offering at the subscription price of
EUR 1.85 per Share (the “Subscription Price”). The Subscription Price will be
recorded in its entirety under the invested unrestricted equity fund. The Share
Subscription Price has been set such that it includes a discount of
approximately 25 per cent compared to the closing price of the Company's share
on the trading day preceding the decision on the Offering. 

Subscription Period

The subscription period will commence on 17 September 2012 at 9:30 a.m. Finnish
time and expire on 1 October 2012 at 4:30 p.m. Finnish time (the “Subscription
Period”). Account operators may impose a deadline for subscription that is
earlier than the expiry of the Subscription Period. 

Subscription for Shares and Payments

A holder of Subscription Rights may participate in the Offering by subscribing
for Shares pursuant to the Subscription Rights registered on his or her
book-entry account and by paying the Subscription Price. Each seventeen (17)
Subscription Rights entitle their holder to subscribe for three (3) Shares.
Fractional Shares cannot be subscribed. In order to participate in the
Offering, a holder of Subscription Rights must submit a subscription assignment
in accordance with the instructions given by the Lead Manager or the relevant
account operator. 

Subscription orders can be submitted in the following subscription places:



  -- at the offices of the cooperative banks belonging to the OP-Pohjola Group
     and of Helsinki OP Bank Plc during their business hours;



  -- via the OP call service at +358 (0) 100 0500. Customers subscribing through
     the call service need a personal network service agreement with the
     OP-Pohjola Group. When subscribing through the call service, the
     identification of the shareholder will be confirmed by network
     identification codes; and



  -- with account operators who have an agreement with the Lead Manager
     regarding receipt of subscriptions.



The Subscription Price of the Shares subscribed for in the Offering shall be
paid in full at the time of submitting the subscription assignment in
accordance with the instructions given by the Lead Manager or the relevant
account operator. 

Shareholders and other investors participating in the Offering whose shares or
Subscription Rights are held through a nominee must submit their subscription
assignments in accordance with the instructions given by their custodial
nominee account holder. 

Any exercise of the Primary Subscription Right and the Secondary Subscription
is irrevocable and may not be modified or cancelled otherwise than as stated in
section “Cancellation of Subscriptions under Certain Circumstances” in these
terms and conditions. 

Any Subscription Rights remaining unexercised at the end of the Subscription
Period on 1 October 2012 will expire without any compensation. 

Cancellation of Subscriptions under Certain Circumstances

In accordance with the Finnish Securities Market Act, if the prospectus
relating to the Offering is supplemented between the time the prospectus was
approved by the FSA and the time when trading in the Shares begins due to a
material mistake or inaccuracy relating to the information in the prospectus
which could be of material relevance to the investor, then investors who have
already agreed to subscribe for Shares before the supplement is published,
shall have the right to withdraw their subscription. The investors have a right
to withdraw their subscription within two (2) banking days or within a longer
period determined by the FSA for special reasons, however, at the latest four
(4) banking days after the supplement has been published. The right to withdraw
can only be exercised if an investor has subscribed for Shares before the
supplement is published and such supplement has been published during a time
period between the beginning of the Subscription Period and when the trading of
the interim shares corresponding to the Shares subscribed for by the virtue of
the Subscription Rights has begun on the Helsinki Stock Exchange. The
withdrawal of a subscription applies to the subscription to be withdrawn as a
whole. The right to withdraw and the procedure for such withdrawal right will
be announced together with any such possible supplement to the prospectus
through a stock exchange release. If the holder of a Subscription Right has
sold or otherwise transferred the Subscription Right, such sale or transfer
cannot be cancelled. 

Public Trading of the Subscription Rights

The holders of Subscription Rights may sell their Subscription Rights any time
before the public trading in Subscription Rights ends. The Subscription Rights
are subject to public trading on the Helsinki Stock Exchange between 17
September 2012 at 9:30 a.m. Finnish time and 24 September 2012 at 6:30 p.m.
Finnish time. 

Approval of the Subscriptions

The Board of Directors of the Company will approve all subscriptions pursuant
to the Primary Subscription Right made in accordance with these terms and
conditions of the Offering and applicable laws and regulations. 

If all Shares to be issued in the Offering have not been subscribed for by
virtue of the Primary Subscription Right, the Board of Directors of the Company
will resolve to allocate such unsubscribed Shares among shareholders or
investors having made a Secondary Subscription. In case of over-subscription by
virtue of Secondary Subscription, the subscriptions made by shareholders or
other investors will be approved in proportion to their Subscription Rights
exercised in accordance with the Primary Subscription Right but not more than
up to the maximum amount of the subscription made per book-entry account, and
if this is not possible, by drawing lots. If several subscription assignments
are given concerning a certain book-entry account, these subscription
assignments are combined as one subscription assignment concerning a certain
book-entry account. Should the subscriber not receive all Shares subscribed for
by virtue of the Secondary Subscription, the subscription price for the Shares
not received by the subscriber will be repaid to the bank account informed by
the subscriber in connection with the subscription on or about 8 October 2012.
No interest will be paid for the repayable funds. 

The Company's Board of Directors will approve the subscriptions on or about 5
October 2012. The Company will publish the final result of the Offering in a
stock exchange release on or about 5 October 2012. 

Registration of the Shares to the Book-entry Accounts

The Shares subscribed for in the Offering by virtue of the Primary Subscription
Right will be recorded on the subscriber's book-entry account after the
registration of the subscription as interim shares (ISIN Code FI4000047329),
corresponding to the new Shares. The interim shares are combined with the
existing share class of the Company (ISIN Code FI0009002471) on or about 9
October 2012. The Shares subscribed for and approved by virtue of the Secondary
Subscription will be recorded on the subscriber's book-entry account after the
registration of new Shares with the Trade Register, on or about 8 October 2012. 

Shareholder Rights

The Shares will entitle their holders to full dividend and other distribution
of funds declared by the Company, if any, and to other shareholder rights in
the Company after the new Shares have been registered with the Trade Register
and in the Company's shareholder register, on or about 8 October 2012. 

Treatment of Holders of Stock Options and Convertible Bonds

According to the terms and conditions of the stock options resolved upon by the
Board of Directors of the Company on 3 May 2011 (“2011 Stock Options”) by
virtue of an authorization granted by the Annual General Meeting of the Company
held on 13 March 2007, a 2011 Stock Option holder shall have the same right as,
or an equal right to, that of a shareholder should the Company, before the
share subscription based on the 2011 Stock Options, decide on an issue of
shares or an issue of new stock options or other special rights entitling to
shares so that shareholders have pre-emptive rights of subscription. Equality
is reached in the manner determined by the Board of Directors by adjusting the
number of shares available for subscription, the share subscription prices or
both of these. 

In order to ensure the equal treatment of shareholders and the 2011 Stock
Option holders the Board of Directors of the Company has on 7 September 2012,
due to the Offering, 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. As regards stock options 2011A—D(I), the subscription ratio
shall be amended to 1.1765 and the subscription price shall be amended to EUR
2.9720 per share. As regards stock options 2011A—D(II), the subscription ratio
shall be amended to 1.1765 and the subscription price shall be amended to EUR
3.0910 per share. As regards stock options 2011A—D(III), the subscription ratio
shall be amended to 1.1765 and the subscription price shall be amended to EUR
2.5130 per share. 

The total amount of shares is rounded down to full shares in connection with
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 8,106,085. 

The foregoing amendments to the terms and conditions of the 2011 Stock Options
due to the Offering will be in force as of the registration of the adjusted
maximum total number of shares to be subscribed for based on the 2011 stock
options with the Trade Register on or about 8 October 2012, provided that the
Offering will be completed in full as planned. Thus, the 2011 Stock Options do
not entitle holders to participate in the Offering. 

According to provision 6(b)(iv) of the terms and conditions of Citycon's
convertible capital bonds listed on 22 August 2006, the conversion price of the
convertible bonds shall be adjusted, among other things, when the Company
issues its shares to its shareholders at a price which is less than 95 per cent
of the market price of the shares. According to provision 6(f) of the terms and
conditions of the convertible bonds the Company must give notice of any
adjustments to the conversion price to bondholders after the determination of
the adjustment. The Company's Board of Directors has in its meeting on 7
September 2012 determined an adjustment to the conversion price of the
convertible bonds from EUR 4.20 to EUR 4.05, provided that the Offering is
executed in full as described in these terms and conditions. If so, the new
conversion price will be effective as of 2 October 2012. A notice regarding the
new conversion price will be given to the holders of convertible bonds on or
about 10 September 2012. 

Information

Documents mentioned in Chapter 5, Section 21 of the Finnish Companies Act are
available for review as of the start of the Subscription Period at the head
office of the Company, Pohjoisesplanadi 35 AB, FI-00100 Helsinki, Finland. 

Applicable Law and Dispute Resolution

The Offering and the Shares shall be governed by the laws of Finland. Any
disputes arising in connection with the Offering shall be settled by the court
of jurisdiction in Finland. 

Other Issues

Other issues and practical matters relating to the Offering will be resolved by
the Board of Directors of the Company.