Citycon Oyj - Company Announcement

Citycon reports information on an agreement between Gazit-Globe Ltd. and CPP Investment Board European Holdings S.àr.l. regarding certain governance matters relating to Citycon

CITYCON OYJ    Stock Exchange Release    13 May 2014 at 9:02 hrs

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Citycon Oyj (“Citycon” or the “Company”) and CPP Investment Board European
Holdings S.àr.l (“CPPIBEH”), a wholly owned subsidiary of Canada Pension Plan
Investment Board (an investment management organization investing the funds of
the Canada Pension Plan), 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 through two successive
equity issues and CPPIBEH would become a significant strategic shareholder in
Citycon (the “Transaction”). The Transaction has been separately announced
through a stock exchange release today. 

As part of the Transaction, CPPIBEH and Citycon's largest shareholder
Gazit-Globe Ltd. (“Gazit”) have on 12 May 2014 entered into an agreement
documenting the parties' objectives in certain governance matters relating to
the Company (the “Governance Agreement”). According to information received by
Citycon from Gazit and CPPIBEH, the purpose of the Governance Agreement is to
agree on a framework for certain governance mechanisms and processes that
CPPIBEH and Gazit deem would contribute to the effective governance of Citycon
in the interest of all of its shareholders. Based on the information received
by Citycon, the main content of the Governance Agreement is as follows. 

Under the Governance Agreement, Gazit and CPPIBEH undertake to vote in
Citycon's general meetings in favour of the election of members to the Citycon
Board of Directors so that no less than three members of the Board of Directors
will be nominated by Gazit and no less than two members will be nominated by
CPPIBEH. One of the members nominated by CPPIBEH shall be independent of both
CPPIBEH and Citycon, as defined in the Finnish Corporate Governance Code. 

The parties to the Governance Agreement shall use their best efforts to ensure
that the Board members nominated by CPPIBEH will also be elected to serve on
such Board committees as Citycon may establish from time to time, including one
member on the Board's Nomination and Remuneration Committee. In the event that
a Board member nominated by CPPIBEH is not a member of the Board's Nomination
and Remuneration Committee for a period of three months during any annual
financial period of Citycon, subject to certain exceptions, Gazit shall support
and vote in favour of a proposal by CPPIBEH at a general meeting of
shareholders of Citycon to introduce a shareholders' nomination board to
replace the Board's Nomination and Remuneration Committee. 

According to the Governance Agreement, Gazit and CPPIBEH shall in all other
matters relating to Citycon act in good faith and use their best efforts to
ensure that the composition of the Citycon Board of Directors is at all times
in compliance with the recommendations set out in the Finnish Corporate
Governance Code with respect to the independence of directors, both vis-à-vis
Citycon and its significant shareholders. The parties have also agreed to
otherwise support good corporate governance in Citycon, including potential
endeavours by Citycon to follow certain established corporate governance
practices in addition to the Finnish Corporate Governance Code. 

Under the Governance Agreement, Gazit has also, subject to certain exceptions,
granted CPPIBEH a limited right to sell its shares (tag-along right) in
connection with potential transfers by Gazit of more than five (5) per cent of
Citycon's shares during any 12-month period. 

According to information received by Citycon, Gazit and CPPIBEH have received
statements from the Finnish Financial Supervisory Authority (the “FSA”) to the
effect that the Governance Agreement does not, as such, constitute acting in
concert as defined under the Finnish Securities Market Act, and thus does not
trigger an obligation for the parties to make a mandatory tender offer for the
shares in Citycon. The FSA notes in its statements that this position should be
reassessed should the parties strive to materially reduce the number of the
members of the Board of Directors of Citycon from the current ten (10) members.
According to information received by Citycon, as a result of the FSA's above
statement, the Governance Agreement includes an undertaking by Gazit and
CPPIBEH to the effect that they shall refrain from any actions to materially
reduce the number of the members of the Board of Directors from the current
number. 

The Governance Agreement shall terminate on the earliest occurrence of the
following: (i) ten (10) years from the date of the Governance Agreement; (ii)
if CPPIBEH ceases to hold at least ten (10) per cent of Citycon shares,
directly or indirectly, for more than thirty (30) consecutive days following
the completion of the directed share issue to CPPIBEH; (iii) if Gazit ceases to
hold at least twenty (20) per cent of Citycon shares, directly or indirectly,
for more than thirty (30) consecutive days; or (iv) if the directed share issue
to CPPIBEH is not completed by 30 September 2014. 

Helsinki, 13 May 2014

CITYCON OYJ


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



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