Billerud announces guaranteed rights issue of MSEK 1,000

Billerud announces guaranteed rights issue of MSEK 1,000

This press release may not be announced, published or disseminated, directly or
indirectly, in the United States of America, Canada, Japan, Hong Kong or
Australia

• Rights issue of MSEK 1,000 with preferential rights for Billerud's
shareholders
• The rights issue is fully guaranteed by Billerud's largest shareholders and a
consortium of banks
• The rights issue strengthens Billerud's financial position and ensures that
the Group has sufficient financial and strategic flexibility going forward
• The terms of the rights issue, including subscription price, will be announced
on August 25, 2009
• Subject to the approval of the rights issue by the Extraordinary General
Meeting on August 27, 2009, the subscription period will be from September 4 up
to and including September 23, 2009

”The rights issue will provide Billerud with an increased level of flexibility
in the current difficult economic climate. The strengthening of the capital base
will enable Billerud to take advantage of business opportunities and further
enhance the Group's market position”, says Ingvar Petersson, chairman of the
Board of Directors in Billerud.


Background and Reasons

Lowered gearing
During 2005 and 2006, Billerud AB (“Billerud” or the “Company”) invested, in
excess of normal investments, approximately SEK 1 billion in expanded production
of own energy. These highly profitable investments were financed with bank debt,
and resulted in an increase in Billerud's debt level from approximately 0.5
times shareholders' equity to approximately 1.0 times shareholders' equity, i.e.
a higher level than Billerud's net debt/equity target of 0.6-0.9. In light of
the current weak economic climate and the prevailing uncertainty that is evident
in credit markets, Billerud believes it is prudent to return to previously lower
levels of gearing by increasing shareholders' equity while reducing debt
financing.


Development of Billerud's net debt/equity ratio, including pro forma figures for
the planned rights issue 

[Removed graphics, see PDF]
 

Better conditions for further development of Billerud
For the past few years, Billerud has been working to strengthen its market
positions in prioritised segments within packaging paper, by furthering its
knowledge and by working closer to the end customers with quality and product
development. By focusing on an improved customer- and product mix, along with
the efficiency improvements that have taken place over the years, a solid
foundation has been laid to facilitate future profitable growth within
Billerud's niche market segments. In addition, the trend of customers
increasingly demanding environmentally friendly packaging made from renewable
material is expected to increase the long-term demand for Billerud's products.

Despite significant improvements since the fourth quarter of 2008, when demand
diminished considerably, Billerud's profits are under short-term pressure due to
the current weak economic climate and financial crisis. The operating margin for
the first six-month period of 2009 amounted to 0 percent, compared to a margin
of 8 percent during the same period last year.

In a changing and highly competitive industry, lower financial gearing is
expected to be positive for Billerud's business by increasing the Company's
ability to handle uncertainty and enabling the Company to take advantage of
business opportunities. It will also make Billerud a stronger and more
attractive counterparty for customers and suppliers, as well as in the capital
market.

In light of this, the Company's Board of Directors has resolved, subject to
approval by the Extraordinary General Meeting, to undertake a rights issue of
new shares with preferential rights for the Company's shareholders.

Completion of the rights issue, in which Billerud intends to raise approximately
SEK 1.0 billion prior to issue costs, will provide the Company with significant
financial and strategic flexibility. The capital injection will also create a
sound margin in relation to the Company's financial targets as well as current
financial covenants in existing loan agreements. In combination with Billerud's
cost saving initiatives and continued focus on improving the customer- and
product mix, this is expected to ensure a continued strong position for Billerud
when the economic climate improves.

Terms of the Rights Issue
Existing shareholders will have preferential rights to subscribe for new shares
in proportion to their existing holdings. In the event that all shares are not
subscribed for with preferential rights, shareholders and others will have the
opportunity to subscribe for the remaining shares without preferential rights.
Allotment of shares subscribed for without preferential right will primarily be
allocated to those who have also subscribed for shares with preferential rights.
The record date at Euroclear Sweden AB (formerly VPC) for participation in the
rights issue is September 1, 2009. The subscription period is from September 4
up to and including September 23, 2009, or such later date as decided by the
Company's Board of Directors.

A number of Billerud's largest shareholders, collectively representing
approximately 28 percent of the number of shares and votes, have expressed their
support for the rights issue and that they intend to vote in favour of an
approval of the rights issue at the Extraordinary General Meeting. In addition,
a number of these shareholders, including Frapag Beteiligungsholding AG, have
committed, provided that certain terms are met, to subscribe for shares in the
rights issue, corresponding to approximately 27 percent of the rights issue. The
remainder of the rights issue is, subject to customary conditions, underwritten
by Danske Markets, Handelsbanken Capital Markets, Nordea and SEB. Thus, the
rights issue is fully committed and underwritten.

The increase of the share capital, the number of shares to be issued, and the
subscription price for the new shares, will be determined by the Company's Board
of Directors and announced on August 25, 2009.

The rights issue is subject to approval by the Extraordinary General Meeting to
be held at 16:00 CET August 27, 2009, at Nalen in Stockholm. As a consequence of
the rights issue, the Company's Board of Directors has decided to put forward
additional proposals at the Extraordinary General Meeting including amendments
to the articles of association and adjustments to the share capital. Notice for
the Extraordinary General Meeting will be published through a press release on
July 28, 2009 and in Svenska Dagbladet and the Official Swedish Gazette (Post-
och Inrikes Tidningar, PoIT) on July 30, 2009 as well as being available at
www.billerud.com.

 
Pro forma financial effects of the rights issue


Balance sheet                                          Pro forma June 30
MSEK                   June 30 2009     Rights issue*               2009
                                                                        
Fixed assets                  5,712                                5,712
Current assets                2,731                                2,731
Cash and cash
equivalents                     397            +1,000              1,397
Total assets                  8,840                                9,840
                                                                        
Shareholders'
equity                        2,794            +1,000              3,794
Interest-bearing
liabilities                   3,105                                3,105
Other non-
interest-bearing
liabilities                   2,941                                2,941
Total equity and
liabilities                   8,840                                9,840
                                                                        
Interest-bearing
net debt                      2,708            -1,000              1,708
Net debt/equity
ratio, times                   0.97                                 0.45
Billerud's
financial targets         0.60-0.90                            0.60-0.90

* Before issue costs


 
Indicative timetable for the rights issue

August 25, 2009                  Subscription price and terms are
                                 decided and announced through a press
                                 release
August 27, 2009                  Extraordinary General Meeting decides
                                 on the rights issue resolved by the
                                 Board of Directors
August 28, 2009                  First day of trading in the shares,
                                 excluding right to participate in the
                                 rights issue
September 1, 2009                Record date for participation in the
                                 rights issue, i.e. shareholders who are
                                 registered in the Company's share
                                 register of Billerud as of this day
                                 will receive subscription rights for
                                 participation in the rights issue
September 1, 2009                Estimated day for the publication of
                                 the prospectus
September 4 - September 18, 2009 Trading in subscription rights
September 4 - September 23, 2009 Subscription period


Financial and legal advisors
Danske Markets, Handelsbanken Capital Markets and Nordea Corporate Finance and
SEB Enskilda are acting as financial advisors and joint lead managers for the
rights issue and Cederquist as legal advisor to Billerud.

 
Press conference
Billerud will hold a press conference at Spårvagnshallarna, Birger Jarlsgatan 57
A, in Stockholm at 10:00 CET on the 23 July. The press conference will also be
broadcasted live via the Internet at www.billerud.com, where also a PowerPoint
presentation will be available. It is also possible to participate by telephone,
please dial the following number:

From Sweden: +46 8 850 520 270
From UK: +44 208 817 9301


For further information please contact
Per Lindberg, president and CEO, +46 8 553 335 01 or +46 70 248 15 17
Bertil Carlsén, CFO, +46 8 553 335 07 or +46 73 021 10 92

The information above includes that which Billerud AB (publ) is required to
publish under the Swedish Securities Exchange and clearing Operations Act. The
information was submitted for publication on July 23, 2009 at 07:30 CET.

IMPORTANT NOTICE
In certain jurisdictions, the publication or distribution of this press release
may be subject to legal restrictions and persons in those jurisdictions where
this press release has been published or distributed should inform themselves
about and abide by such legal restrictions.

This press release is not directed at persons located in the United States,
Canada, Australia, Hong Kong, Japan or in any other country where the offer or
sale of the subscription rights, interim shares or new shares is not permitted.
This press release may not be published or distributed, directly or indirectly,
in or into the United States, Canada, Australia, Hong Kong, Japan or any other
country where such action is wholly or partially subject to legal restrictions
or where such action would require additional prospectuses, other offer
documentation, registrations or other actions in addition to what follows from
Swedish law. Nor may the information in this press release be forwarded,
reproduced or disclosed in such a manner that contravenes such restrictions or
would require such additional prospectuses, other offer documentation,
registrations or other actions. Failure to comply with this instruction may
result in a violation of the United States Securities Act of 1933, as amended
("Securities Act") or laws applicable in other jurisdictions.

This press release does not contain or constitute an invitation or an offer to
acquire, sell, subscribe for or otherwise trade in shares, subscription rights
or other securities in Billerud AB (publ). Any invitation to the persons
concerned to subscribe for shares in Billerud AB (publ) will only be made
through the prospectus that Billerud AB (publ) intends to publish in the
beginning of September 2009, which prospectus will contain, among other things,
financial statements as well as detailed information regarding Billerud AB's
(publ) Board of Directors and Management.

No subscription rights, BTAs (interim shares) or new shares will be registered
under the Securities Act or any provincial act in Canada and may not be
transferred or offered for sale in the United States or Canada or to persons
resident in Canada or on account of such persons other than pursuant to an
exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act or in such exempt cases that do not require
registration in accordance with any provincial act in Canada, respectively.

Billerud is a packaging company with a business concept to supply customers with
innovative and high quality packaging paper. A consistent concentration on
attractive market segments and a strong customer focus are cornerstones of
Billerud's strategy. Billerud focuses on kraft paper and containerboard and has
a world-leading position within several product segments. The company's
production units are among the most cost-efficient in Europe for these products
www.billerud.com