Fortum - Company Announcement

Fortum concludes the divestment of its electricity distribution business by selling the Swedish business for approx. EUR 6.6 billion

Espoo, Finland, 2015-03-13 16:30 CET (GLOBE NEWSWIRE) -- FORTUM CORPORATION
STOCK EXCHANGE RELEASE 13 March 2015 at 17.30 EET 

Fortum and a consortium comprising Swedish national pension funds Första
AP-Fonden (AP 1) (12.5%) and Tredje AP-Fonden (AP 3) (20.0%), Swedish mutual
insurance and pension savings company Folksam (17.5%)  and the international
infrastructure investor, Borealis Infrastructure Management Inc. (50%), have
today signed a binding agreement for the sale and purchase of Fortum
Distribution AB, which operates and owns Fortum's electricity distribution
business in Sweden. 

The total consideration is approximately SEK 60.6 billion on a debt- and
cash-free basis (corresponding to approximately EUR 6.6 billion). Fortum
expects to complete the divestment process during the second quarter of 2015
subject to the necessary regulatory approvals as well as customary closing
conditions. 

Fortum expects to book a one-time sales gain of approximately EUR 4.4 billion
corresponding to approximately EUR 5 per share in its second quarter 2015
results. In the first quarter 2015 Interim Report the Distribution Segment will
be presented as discontinued operations. "A competent and experienced buyer with a long-term commitment to
infrastructure and customer service is a very good solution for our 906,000
distribution customers in Sweden. At the same time, this is very good for our
some 390 distribution employees, who will transfer with the business at closing
with the existing terms of employment. The business is financially and
operationally in a very good shape. It will now have a new owner that will
develop the business as a core business," says Timo Karttinen, Fortum's Interim
President and CEO. 

Fortum's focus on power generation and electricity sales

The transaction concludes the divestment of Fortum's distribution business
activities. The total consideration from divestments in Finland, Sweden and
Norway will be approximately EUR 9.3 billion on a debt- and cash-free basis
with approximately EUR 6.3 billion sales gain booked during 2014 and 2015. The
strategic assessment of the future alternatives of Fortum's electricity
distribution business was originally made in 2013. "After the divestment of its distribution businesses Fortum will concentrate on
the growth and development of our core businesses, based on our competences:
CO2-free hydro and nuclear power generation and efficient combined heat and
power (CHP) production. We will also continue to develop electricity sales and
related customer solutions to our 1.3 million electricity retail customers,"
says Timo Karttinen. "We continue to have a strong presence in Sweden, and
remain committed to develop our business in the Nordic countries while looking
for growth opportunities in line with our strategy."

Fortum's purpose is to create energy that improves life for present and future
generations. The company provides sustainable solutions for society and
delivers excellent value to its shareholders. The company's strategy is based
on building strong Nordic core, creating solid earnings growth in Russia, and
building a platform for future growth. At the core of Fortum's strategy is its
strong competence in CO2-free hydro and nuclear power, efficient combined heat
and power (CHP) production and in operating in the energy markets. 

Electricity distribution business in Sweden

Fortum's electricity distribution business in Sweden owns and operates
approximately 71,000 km of electricity distribution and regional networks and
distributes electricity to some 906,000 customers. The transaction as such has
no immediate effect on the customers. The volume of distributed electricity in
distribution network was 13.7 TWh in 2014. Fortum's market share of the local
electricity distribution in Sweden is approximately 17%. 

Key figures in 2014 for Fortum's Distribution business in Sweden:
- Sales EUR 634 million
- Comparable operating profit EUR 235 million
- Comparable EBITDA EUR 365 million
- Net assets (at period-end) EUR 2,615 million
- Capital expenditure EUR 134 million

The consortium: Over 20 years of experience and strong presence in Sweden

The consortium members have over 20 years of combined experience in the
acquisition and management of infrastructure assets. The Consortium has a
strong Swedish presence with AP 1, AP 3 and Folksam owning 50% of the shares.
The Consortium is committed to a long-term, stable and supportive ownership of
the Distribution business. 


Fortum Corporation
Helena Aatinen Senior Vice President, Corporate Communications

Distribution:
Nasdaq Helsinki
Media
www.fortum.com

Further information:
Timo Karttinen, Interim President and CEO, tel. +358 10 45 36555
Analysts and investors:
Sophie Jolly, Vice President, Investor Relations, tel. +358 10 45 32552

Communications contacts:
Helena Aatinen, Senior Vice President, Corporate Communications,
+358 10 45 20480,
Fortum Media Desk +358 40 1982 843


Press conference on Saturday, 14 March, 2015
A press conference in English will be held on Saturday, 14 March 2015 at 12.00
CET in Nordic Light Hotel, Vasaplan 7, Stockholm. The press conference will be
webcasted on Fortum's Corporate website (www.fortum.com). In the press
conference in Stockholm, please show your press card and photo ID. 

Teleconference for investors and analysts on Monday, 16 March, 2015
An international teleconference in English for analysts and investors will be
held on Monday, 16 March 2015 at 16.00 CET. The dial-in numbers are: European
callers: +44(0)20 3427 1907, US callers: +1212 444 0896, Swedish callers:
+46(0)8 5352 6408, Finnish callers: +358(0)9 6937 9543. Confirmation code:
3608999. 

There will be a replay facility available for one week after the
teleconference: European callers: +44(0)20 3427 0598, US callers: +1 347 366
9565, Swedish callers: +46(0)8 5051 3897, Finnish callers: +358(0)9 2310 1650. 
Confirmation code: 3608999. A live audio webcast of the call will be available
together with the slide presentation on Fortum's website at
www.fortum.com/investors. 


Further information on the consortium members:

AP1 is one of five buffer funds in the Swedish national income pension system.
The capital reserves in the AP funds are used to cover the deficit when
disbursements from the pension system exceed contributions to the system. The
AP Funds strive to manage the fund capital so as to deliver attractive
long-term investment returns while maintaining an appropriate level of risk for
current and future pensioners. 

AP1 has assets under management of SEK284 billion (at 31 December 2014) in a
global portfolio consisting of equities, fixed income securities and
alternative investments that include real estate, private equity funds and
hedge funds. AP1's strategic allocation focus is around 50% of the fund capital
invested in equities, 30% in fixed income securities and around 20% in
alternative investments. The allocation to alternatives, and in particular
infrastructure, is targeted to grow further as AP1 seeks to further enhance its
risk factor diversification. 

AP3 is one of the five buffer funds in the national income pension system in
Sweden and manages a diversified global portfolio of listed equities, fixed
income assets and alternative investments. Alternative investments consist of
real estate, private equity, timberland and infrastructure assets. The value of
the portfolio stood at approximately SEK288 billion on 31 December 2014. 

Folksam is a Swedish mutual insurance and pension savings company and has
approximately SEK350 billion of assets under management (as at 31 December
2014) and with a strong market position in both life and non-life insurance.
Folksam has today more than 4 million customers, or almost every second person
in Sweden. www.folksam.se 

Borealis Infrastructure has 16 years of experience originating, structuring and
actively managing infrastructure investments on behalf of the Ontario Municipal
Employees Retirement System (“OMERS”),  a large defined benefit Canadian
pension plan with over 450,000 members, with C$72.0 billion (SEK487 billion) of
net assets (as at 31 December 2014) and a AAA credit rating from Standard &
Poor's. OMERS was one of the first large Canadian pension plans to invest in
private markets, including infrastructure and has earmarked more than 20% of
its portfolio to be allocated to infrastructure investments. Borealis has
sourced and currently manages over 20 infrastructure investments in Canada,
Europe and the United States, representing over C$12.7 billion (SEK86 billion)
of OMERS's invested equity. www.borealis.ca 

Further information on Fortum:
Fortum's purpose is to create energy that improves life for present and future
generations. Catering to the versatile needs of our customers, we generate,
distribute and sell electricity and heat, and offer related expert services.
Our operations focus on the Nordic and Baltic countries, Russia and Poland. In
2014, Fortum's sales totalled EUR 4.75 billion and comparable operating profit
was EUR 1.35 billion. We employ approximately 8,800 people. Fortum's shares are
traded on the Nasdaq Helsinki. www.fortum.com