Proposals

  • Creation date: 24 November 2010
  • Last update: 24 November 2010

Translation only!

Resolution proposals of the management board and the supervisory board to the agenda items of the extraordinary shareholders' meeting of Lenzing AG on 10 December 2010

Item 1
Adoption of a resolution on a re-division of the nominal capital by a seven-for-one share split and on the corresponding amendment of article 4 of the company's articles of association

The Lenzing share, at a current price of about EUR 400 (11 November 2010), is traded at one of the highest prices at the Vienna Stock Exchange. In order to make the share more attractive to retail investors and to increase the share's tradeability a seven-for-one share split is to be implemented.

For many years retail investors have been requesting the company to split the share. As the bond issue of September had been much in demand by retail investors as well, a share split is now to provide retail investors with easier access to the Lenzing share. As the share split will increase the number of shares by the factor seven, trading volume is expected to increase. The share split will make the share easier to trade as the new price will be determined by the 1:7 split ratio.

The management board and the supervisory board correspondingly propose to the shareholders' meeting to adopt the following resolution:

The nominal capital of the company of currently EUR 26,717,250 shall be re-divided. The current individual share certificate with a calculated share of EUR 7.27 in the nominal capital shall be replaced by seven individual share certificates, representing a calculated share in the nominal capital of approximately EUR 1.0385 each.
Accordingly, each of the 3,675,000 individual share certificates with a calculated share in the nominal capital of EUR 7.27 each shall be split into seven new individual share certificates with a calculated share of approximately EUR 1.0385 in the nominal capital with effect from registration at the company register. To this purpose the nominal capital of the company shall be re-divided into 25,725,000 individual share certificates.

Article 4 clause 2 of the company's articles of association shall be amended as follows:

"The nominal capital is divided into 25.725.000 individual share certificates. Each individual share certificate represents an equal share in the nominal capital."

Item 2
Adoption of a resolution on authorized capital and on the corresponding amendment of article 4 of the company's articles of association.

Lenzing AG perceives sustainable and high growth potential for the markets of its core business man made cellulose fibers over the next years, based on fundamental megatrends (global population growth, rising prosperity in the emerging markets, ecological advantages of Lenzing fibers over cotton and polyester). Lenzing intends to make use of the resulting opportunities and to enhance its leading market position by means of investment and acquisition. For financing future expansion, the management board is to be provided with an additional option, pending the approval of the supervisory board, for raising equity.

The management board and the supervisory board correspondingly propose to the shareholders' meeting to amend article 4 of the company's articles of association as follows:

  • (3) The management board is authorized, pending the approval of the supervisory board, to raise the nominal capital of the company – if need be in several tranches – by up to EUR 13,358,625.00 by way of issuing up to 12,862,500 new no-par share certificates in bearer or registered form against cash and/or payment in kind. The management is authorized to determine the share type type, the issue price and the terms and conditions of the issue. The authorization will come into effect with registration of the amendment at the company register and shall be valid for five years.
  • The shareholders' legal subscription rights may be acknowledged by the right of indirect subscription. In this case a credit institute or a consortium of credit institutes will be obligated to offer the convertible bonds to shareholders in proportion to their subscription rights. However, the management board, pending the approval of the supervisory board, is authorized to exclude fractional amounts from the subscription right, should these arise as a result of the subscription ratio.
  • Moreover, the management board is authorized, pending the approval of the supervisory board, to exclude the right to subscription arising from an increase in nominal capital from authorized capital against payment in kind for granting shares for acquiring companies, parts of companies or shares in companies.
  • The supervisory board is authorized to resolve on amendments to the company's articles of association resulting from the issue of shares from authorized capital."
Item 3
Adoption of a resolution on:

(a) authorizing the management board to issue, upon approval by the supervisory board, convertible bonds and on authorizing the management board, upon approval by the supervisory board, to exclude shareholders' subscription rights, either fully or in part, also in order to exclude fractional amounts from the subscription right.
(b) contingent capital
(c) the corresponding amendment of article 4 of the company's articles of association.

Convertible bond issues are an alternative to simple cash capital increase. They provide the company with additional flexibility in financing.

Convertible bonds are, moreover, an alternative to conventional bonds.

The resolution will authorize the management board, pending the approval of the supervisory board, to issue convertible bonds and to exclude shareholders' subscription rights as detailed in the invitation to this shareholders' meeting. The advantage to the company will exist in faster placement of convertible bonds close to the market and therefore decreased risk of price and placement risk.

The management board and the supervisory board correspondingly propose to the shareholders' meeting to adopt the following resolution:

  • The management board is authorized to issue, pending the approval of the supervisory board, convertible bonds – if need be in several tranches – which provide or allow for subscription or conversion rights to up to 12,862,500 shares of the company. The issue may be realized by means of the contingent capital to be approved and/or by means of owned shares. The management board, pending the approval of the supervisory board, shall determine the share type, the issue price and the terms and conditions of the issue. This authorization shall be valid until 9 December 2015.
  • The shareholders' legal subscription rights may be acknowledged by the right of indirect subscription. In this case a credit institute or a consortium of credit institutes will be obligated to offer the convertible bonds to shareholders in proportion to their subscription rights. However, the management board, pending the approval of the supervisory board, is authorized to exclude fractional amounts from the subscription right, should these arise as a result of the subscription ratio.
  • Moreover, the management board shall be authorized to exclude, pending the approval of the supervisory board, the right to subscription to convertible bonds if the management board, after due examination, has arrived at the conclusion that, the issue price of the convertible bond at the time of its finalization is not below the theoretical market price of the convertible bond as determined by the recognized methods of financial mathematics, that the conversion price or subscription price (issue price) of the shares offered under subscription has been determined by an approved pricing process applying the recognized methods of financial mathematics and the share price of the company's ordinary shares, and that this established price will not have been below the stock exchange quotation of the company's shares for twenty trading days before the day of the announcement of the convertible bond issue.

In conjunction with the authorization of the management board to issue convertible bonds, a resolution on raising contingent capital for issuing new shares to owners of convertible bonds is required. This increase in nominal capital may only be realized insofar as owners of convertible bonds opt for executing their subscription or conversion rights and if the management decides to serve these rights by issuing new shares, or alternatively by providing owned shares.

The management board and the supervisory board correspondingly propose to the shareholders' meeting to adopt the following resolution:

Article 4 of the company's articles of association (Nominal Capital and Shares) of the company's articles of association is to be amended as follows for the creation of contingent capital:

  • "(4) The nominal capital of the company is to be increased by the creation of contingent capital according to section 159 paragraph 2 Z 1 of the Austrian Stock Exchange Act by up to EUR 13,358,625,00. The contingent capital is to be raised by issuing up to 12,862,500 new no-par value individual share certificates to owners of convertible bonds. The management board has been authorized to this extent by the extraordinary shareholders' meeting of 10 December 2010. The increase in capital may only be implemented insofar as owners of convertible bonds exercise their right to subscription or conversion, or if those owners obligated to subscription or conversion fulfill their obligation, and if the management board decides to issue new shares to serve the owners' rights. The issue price and the conversion ratio are to be determined by applying the recognized methods of financial mathematics and the stock exchange quotation of the company's shares (basics of issue price calculation). The issue price must not be lower than the amount of the proportional share in nominal capital. The new shares to be issued of the contingent increase in capital bear full dividend entitlement for the year of issue. The management board, pending the approval of the supervisory board, is authorized to determine further details concerning the execution of the increase in capital by means of contingent capital. The supervisory board is authorized to amend the company's articles of association in accordance with the respective issue of shares under subscription. The corresponding authorization applies if the authority to issue conversion bonds has not been exercised and the authorization has expired or if contingent capital has not been employed and the time limits of the terms and conditions of the convertible bond issue have expired.
  • (5) The total number of actually or potentially issued shares under subscription under the terms and conditions of the conversion bond issue and the number of actually or potentially issued shares from contingent capital must not exceed 12,862,500 individual share certificates (limitation of authorized amount according to clause (3) and (4)). The subscription or conversion rights of owners must be maintained in any case."