Incap Oyj: Notice to Extraordinary General Meeting

Incap Corporation  
Stock Exchange Release   31 July 2013 at 8.35 a.m.

NOTICE TO EXTRAORDINARY GENERAL MEETING

The Board of Directors of Incap Corporation summon the shareholders of Incap Corporation to the Extraordinary General Meeting to be held on Wednesday, 21 August 2013 at 3 p.m. at BANK at the address Unioninkatu 20, 00130 Helsinki. The reception of persons who have registered for the meeting and the distribution of voting tickets will commence at 2.30 p.m.

A. Matters on the agenda of the General Meeting

At the Extraordinary General Meeting, the following matters will be considered:

1. Opening of the meeting

2. Calling the meeting to order

3. Election of persons to scrutinise the minutes and to supervise the counting of votes

4. Recording the legality of the meeting

5. Recording the attendance at the meeting and adoption of the list of votes

6. Election of members of the Board of Directors
Shareholders who represent more than 50% of the shares and votes in the company have informed to propose to the Extraordinary General Meeting that due to the changes in the company’s ownership the composition of the Board be changed so that Fredrik Berghel and Olle Hulteberg be elected as new members to the Board of Directors, and of the present members of the Board of Directors Raimo Helasmäki, Susanna Miekk-oja and Lassi Noponen be re-elected to the Board of Directors. The persons have given their consent to the election. The members of the Board of Directors will be elected for a period beginning in the Extraordinary General Meeting and ending in the first Annual General Meeting following the General Meeting, in which they were elected.

Personal data of the persons proposed to the Board of Directors are available in Annex 1.

7. Approval of transaction
The Board of Directors of Incap Corporation will propose to the Extraordinary General Meeting that it would resolve on its part to approve the herein described conditional transaction between the company and Inission AB, in which the uniting of Incap and Inission will be carried out by Incap Corporation acquiring Inission AB’s subsidiaries’ shares and business operations.

As published on 22 July 2013, the comprehensive arrangement agreed between Inission AB and Incap Corporation on 21 July 2013 includes an option for Inission AB to combine and unite Inission AB’s business operations with Incap Corporation. Inission AB has right but no obligation to use the option. The use of the option shall be, however, notified by Inission AB by the end of the year 2013. In addition to notification on the use of the option and an approval of the Extraordinary General Meeting, the consummation of the transaction is conditional to the granting of the exemption by the Finnish Financial Supervisory Authority regarding an obligation to bid and to the approval from Inission AB’s financial partners.

The purchase price of Inission AB’s subsidiaries’ shares and business operations is SEK 70.1 million. The purchase price has been determined based on the actual result of Inission AB for the years 2011 and 2012 and for January-June 2013. In connection with the evaluation of the value of Inission AB’s subsidiaries’ shares and business operations the Board of Directors of Incap Corporation has requested and received an opinion from an independent Swedish firm, Hjalmarsson & Partners Corporate Finance AB, specialised in corporate finance and value related financial assignments. Pursuant to Hjalmarsson & Partners Corporate Finance AB’s opinion, the purchase price for Inission AB’s subsidiaries’ shares and business operations may be considered to be fair from Incap Corporation’s point of view.

If the transaction is consummated in accordance with the agreement conditions, Incap Corporation will pay the purchase price by directing a new share issue to Inission AB in two phases.

In the first phase Inission AB shall be entitled to subscribe for new shares issued by Incap Corporation corresponding to 70% of the purchase price calculated for business operations and the shares in the subsidiaries of Inission AB. The issue price of the payment shares will be the volume-weighted average closing market price in NASDAQ OMX Helsinki for the two weeks’ period ending one day prior to the date when Inission AB gives to Incap Corporation the notice on the use of the option, however a minimum of 0.07 euro and a maximum of 0.135 euro per share. The number of payment shares to be subscribed by Inission AB shall be determined by dividing the relevant part of the purchase price with the issue price of the payment shares.

Inission AB undertakes for a period ending eight months after the first date of listing of the payment shares in NASDAQ OMX Helsinki issued to Inission AB in the above-mentioned first phase, without the consent of Incap Corporation, not to offer, sell, short sell, pledge or otherwise transfer or convey directly or indirectly any of shares in Incap Corporation or any options or warrants entitling to such shares, with exception for a possible intervention by the Finnish Financial Supervisory Authority, except to the extent reasonably required in order to be able to pay indemnities in relation to the transaction.

In the second phase, two weeks after the publication of Incap Corporation’s annual accounts 2013, Incap Corporation pays the rest of the transaction by issuing new shares of Incap Corporation corresponding to 30% of the purchase price calculated for the Inission AB’s business operations and the shares in the subsidiaries. The issue price of the shares used for the payment of the remaining 30% of the purchase price will be the volume-weighted average closing market price in NASDAQ OMX Helsinki for the two weeks’ period starting on the next day after the release of the annual accounts of Incap Corporation, however a minimum of 0.07 euro per share and a maximum of 0.20 euro per share. The number of payment shares to be subscribed by Inission AB shall be determined by dividing the relevant part of the purchase price with the issue price of the shares.

If Inission AB uses its option and the transaction is carried out in full, Inission AB will own at least ca. 83,633,115 and at a maximum of ca. 146,315,126 Incap Corporation’s issued and outstanding shares and voting rights (estimation is based on EUR/SEK exchange rate of 8.5). After the completion of the transaction Inission AB will own at least 51% but not more than about 64% of Incap Corporation’s issued and outstanding shares and voting rights.

As a consequence of the transaction, the relative proportion of Incap Corporation’s shareholders’ holdings of shares will decrease. Based on the figures presented above the shares issued and subscribed represent approximately at least 51% and a maximum of 108% of all shares and votes in the company prior to the transaction and after the transaction approximately at least 34% and a maximum of 52%  of all shares and votes. Inission AB’s final ownership is determined by Incap Corporation’s share price when the option is used, and the last part (30%) of the purchase price is calculated in February 2014. The share of ownership is partly dependent also on the development of EUR/SEK exchange rate.

According to the estimates of the two companies, post-merger Incap-Inission will be able to achieve annual revenue in excess of EUR 100 million while earning a profit within the next two years.

Information on Inission AB:

Inission AB is a limited liability company incorporated and existing under the laws of Sweden. Inission AB owns 100% of the issued and outstanding shares in companies Inission Triab AB, Inission Göteborg AB, Inission Munkfors AB, Inission Tallinn OÜ, and Inission MikroMakarna AB.

Inission AB is a contract manufacturer that has a total revenue of approximately SEK 268 million in 2012 (approximately EUR 30.8 million) and an operating profit (EBIT) of approximately SEK 16.1 million (approximately EUR 1.9 million). The company has some 190 employees in Sweden and in Estonia. The company is located in Stockholm, Gothenburg, Munkfors, Pajala and Tallinn. Inission provides tailored manufacturing and logistics services in the field of industrial electronics, specialising in medical technology, the automotive and marine industries, and measurement and control technology. The company began operations in the 1970s and is privately held.

Inission has a solid financial position. Total assets of Inission AB at the end of 2012 amounted to SEK 131.5 million, including MikroMakarna which was acquired in December 2012. Net working capital at the end of 2012 amounted to SEK 45.8 million. At the end of 2012, the net debt was SEK 23 million, equity ratio 32% and gearing ratio 56%. Sales split between the subsidiaries was as follows:  Munkfors 41%, Göteborg 21%, MikroMakarna 21%, TRIAB 9% and Tallinn 8%. Inission AB has posted above market average EBITDA margins in 2011, 2012 and January-June 2013.

Summary of financials of Inission AB and its subsidiaries is available in Annex 2.

Inission AB has a comprehensive sales network and an effective operating model that has been applied to accomplish a return to profitability in the operations of electronics contract manufacturing companies acquired by Inission. Combining these strengths with Incap Corporation’s established customer base and global volume production capacity will create a new entity that has a strong competitive position in the global market and can be a significant player in the consolidation of the northern European EMS industry.

Incap Corporation’s Board of Directors has prior to this notice to the Extraordinary General Meeting of the company received commitments representing 2/3 of Incap Corporation’s independent shareholders that they approve the above-described transaction and will in Incap Corporation’s Extraordinary General Meeting vote for the uniting of Incap Corporation and Inission AB. Transaction costs with respect to the above-described transaction are expected to be on a customary level compared to similar transactions in general.

8. Resolution on consulting agreement arrangement
Due to the changes of ownership in the company, as informed in Stock Exchange Releases on 22 July 2013, the Board of Directors of Incap Corporation will propose to the Extraordinary General Meeting that it would resolve to approve the consulting agreement arrangement between Incap Corporation and Inission AB as described below and to authorise the Board of Directors to negotiate and decide on further details of the agreement.

According to the agreement Olle Hulteberg, Fredrik Berghel and Stig Leander would work for Incap Corporation on the assignments given by the Board of Directors and report directly to the Board of Directors. Each consultant  would be used by the company for at least three days a week at a daily fee corresponding with current market prices. For the company, the consulting agreement would mean a total cost of approx. EUR 250,000 (using exchange rate 1 SEK = 0.115 EUR). In addition, the consultants would be provided with the necessary working equipment and their travel expenses would be compensated. The agreement would be valid for a fixed period and end on 31 January 2014.

9. Closing of the meeting

B. Documents of the General Meeting

The personal data on the persons who have been proposed as members of the Board of Directors as well as the summary of financials of Inission AB and its subsidiaries are attached to this notice. Proposals to the General Meeting are also available on Incap Corporation’s website at www.incap.fi/Investors and at the meeting. Copies of them and this notice will be sent to shareholders upon request. The minutes of the Extraordinary General Meeting will be available on the above-mentioned website as from 3 September 2013.

C. Instructions for the participants in the General Meeting

1. The right to participate and registration
Each shareholder, who is registered on 9 August 2013 in the shareholders’ register of the company held by Euroclear Finland Ltd., has the right to participate in the Extraordinary General Meeting. A shareholder, whose shares are registered on his/her personal book-entry account in Finland, is registered in the shareholders’ register of the company.

A shareholder, who wants to participate in the General Meeting, shall register for the meeting no later than on Friday, 16 August 2013 at 4 p.m. by giving a prior notice of participation.

Such notice can be given:
a) by e-mail (hannele.polla@incap.fi);
b) by telephone +358 40 5048 296;
c) by fax +358 9 224 4095; or
d) by mail to Incap Corporation/EGM, Valuraudankuja 7, 00700 Helsinki.

In connection with the registration, a shareholder shall notify his/her name, personal identification number, telephone number and the name and personal identification number of a possible assistant or proxy representative. The personal data given to Incap Corporation is used only in connection with the General Meeting and with the processing of related registrations. The shareholder, his/her authorised representative or proxy representative shall, where necessary, be able to prove his/her identity and/or right of representation in the meeting.

2. Holders of nominee registered shares
A holder of nominee registered shares has the right to participate in the Extraordinary General Meeting by virtue of such shares, based on which he/she on the record date of the General Meeting would be entitled to be registered in the shareholders’ register of the company held by Euroclear Finland Ltd. The right to participate in the General Meeting requires, in addition, that the shareholder on the basis of such shares has been registered into the temporary shareholders’ register held by Euroclear Finland Ltd. by 16 August 2013 by 10 a.m. at the latest. As to the nominee registered shares, this constitutes a due registration for the Extraordinary General Meeting.

A holder of nominee registered shares is advised to request necessary instructions regarding the registration in the shareholder’s register of the company, the issuing of proxy documents and registration for the Extraordinary General Meeting from his/her custodian bank.

3. Proxy representative and powers of attorney
A shareholder may participate in the Extraordinary General Meeting and exercise his/her rights at the meeting by way of proxy representation. A proxy representative shall produce a dated proxy document or otherwise in a reliable manner demonstrate his/her right to represent the shareholder at the General Meeting.

Eventual proxy documents should be delivered in originals to Incap Corporation/Extraordinary General Meeting, Valuraudankuja 7, 00700 Helsinki before the last date for registration.

4. Other instructions and information
Pursuant to chapter 5, section 25 of the Company’s Act, a shareholder who is present at the
General Meeting has the right to request information with respect to the matters to be considered at the meeting.

On the date of this notice to the Extraordinary General Meeting, the total number of shares and votes in Incap Corporation is 109.114.035.

In Helsinki, 31 July 2013

INCAP CORPORATION
Board of Directors

Further information:
Sami Mykkänen, President and CEO, tel. +358 40 559 9047 or +372 555 379 05
Kirsti Parvi, CFO, tel. +358 50 517 4569 or +372 555 620 35
Hannele Pöllä, Director, Communications and IR, tel. +358 40 504 8296

ANNEXES
Personal data of the persons proposed to the Board of Directors
Summary of financials of Inission AB and its subsidiaries

DISTRIBUTION
NASDAQ OMX Helsinki Ltd
Principal media
www.incap.fi

INCAP IN BRIEF
Incap Corporation is an internationally operating contract manufacturer whose comprehensive services cover the entire life-cycle of electromechanical products from design and manufacture to maintenance services. Incap’s customers include leading equipment suppliers in energy efficiency and well-being technologies, for which the company produces competitiveness as a strategic partner. Incap has operations in Finland, Estonia, India and China. The Group’s revenue in 2012 amounted to EUR 64.1 million and the company currently employs approximately 600 people. Incap’s share is listed on the NASDAQ OMX Helsinki since 1997. Additional information: www.incap.fi.