SAPPI LTD (SAP) 6-K

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Reconciliation from profit for the period to EBITDA USD million Sappi Acquired Business Adjustments Pro forma Profit (loss) for the period 202 91 3 296 Taxation 47 18 1 66 Finance costs 134 16 25 175 Depreciation 375 96 (29) 442 EBITDA 758 221 - 979 Special Items USD million USD million Sappi Acquired Business Plantation price fair value adjustment (54) Impairment Reversal (208) Restructuring and closure provisions (7) Write – downs 54 Profit on sale of assets (26) Other 21 Fire, flood, storm and related events 17 Total (70) Total (133) The purpose of this Circular and the accompanying notice of general meeting is to provide Shareholders with information regarding the Transaction and the financing thereof and to convene the General Meeting to be held at the registered office of Sappi, 48 Ameshoff Street, Braamfontein, Johannesburg, 2001, South Africa at 15:00 on 3 November 2008, at which Shareholders will be asked to consider and, if deemed fit, pass the resolutions relating to the Transaction and the financing thereof. 2. RATIONALE FOR THE TRANSACTION The Transaction meets Sappi’s strategic and financial criteria for acquisitions as it enhances Sappi’s global presence, provides an opportunity to increase Sappi’s customer base, improves Sappi’s strategic flexibility in regards to capacity utilization, increases the range of products offered and provides anticipated growth and cost synergies. Sappi also expects benefits from increased profitability and returns and improved cash flows for the group. The Transaction allows Sappi to strengthen its competitive position in the graphic paper industry in Europe and globally. The Transaction has been identified as a good fit with the Sappi coated graphic paper business. Sappi’s European production capacity is expected to increase from 2.6 million tons per annum to 4.5 million tons per annum. The Acquired Business will enhance Sappi’s position in the market by expanding its geographical footprint in Europe to include Finland and Switzerland. Through this acquisition Sappi would significantly increase its exposure to coated magazine paper and as a result the combined group would be the largest coated fine paper company in Europe with strong positions in both coated woodfree and coated magazine grades. 21
In addition, the Transaction adds to Sappi’s product range a number of well-known brands which complement Sappi’s existing products and provide access to an enlarged customer base. Furthermore, the integration of the Acquired Business with the existing Sappi operations is expected to strengthen the profitability of Sappi's European operations through increased coated graphic paper production, benefiting from the economies of scale and the ability to optimise capacity utilisation. Other expected annual synergies coming from distribution, the integration of sales and administration, and the rationalisation of manufacturing across the Sappi Group are anticipated to further enhance the performance of Sappi’s European business. Sappi estimates total annual synergies of approximately Euro 120 million from the Transaction which should be realisable in full within three years and without material capital investments. This estimate of synergies Sappi expects to achieve following the Transaction is based on assumptions which in the view of Sappi’s management were prepared on a reasonable basis, reflect the best currently available estimates and judgments, and present, to the best of Sappi’s management’s knowledge and belief, the expected course of action and the expected future financial impact on performance of Sappi due to the Transaction. However, the assumptions about these expected synergies are inherently uncertain and, though considered reasonable by management as of the date of preparation, are subject to a wide variety of significant business, economic, and competitive risks and uncertainties that could cause actual results to differ materially from those contained in this estimate of synergies. There can be no assurance that Sappi will be able to successfully implement the strategic or operational initiatives that are intended, or realize the estimated synergies. This synergy estimate is not a profit forecast or a profit estimate and should not be treated as such nor relied on by shareholders or prospective investors to calculate the likely level of profits or losses for Sappi for the financial year ended 30 September 2008 or beyond. This synergy estimate has not been included in the pro forma financial effects referred to in Section 12 below. The reporting of the synergy estimate complies with the accounting policies of Sappi. 22
Page 1 and 2: SAPPI LTD (SAP) 6-K Current report
Page 3 and 4: INCORPORATION BY REFERENCE Sappi Li
Page 6 and 7: CERTAIN FORWARD-LOOKING STATEMENTS
Page 8 and 9: South African legal advisor to Sapp
Page 10 and 11: TABLE OF CONTENTS Page CORPORATE IN
Page 12 and 13: ACTION REQUIRED BY SAPPI SHAREHOLDE
Page 14 and 15: IMPORTANT DATES/TIMES SALIENT DATES
Page 16 and 17: “CSDP” “CWF” “Deloitte So
Page 18 and 19: “Sappi Papier Holding” “Sappi
Page 20 and 21: CURRENCY TRANSLATION This Circular
Page 22 and 23: The tables below highlight certain
Page 26 and 27: 3. PRINCIPAL TERMS AND CONDITIONS O
Page 28 and 29: • dispose of any of the Settlemen
Page 30 and 31: There is no accrued taxation, which
Page 32 and 33: (d) all of the know-how, brands, or
Page 34 and 35: The map below sets out the location
Page 36 and 37: Name Age Position Experience Martti
Page 38 and 39: 5. FINANCIAL INFORMATION ON THE ACQ
Page 40 and 41: The registered address of Metsälii
Page 42 and 43: Pro forma financial effects for the
Page 44 and 45: G. Financial information for Sappi
Page 46 and 47: 13.3. Major Shareholders prior to t
Page 48 and 49: Dr D.C Cronje was appointed in Janu
Page 50 and 51: Executive Directors RJ Boëttger (3
Page 52 and 53: 14.2.2. Changes in executive direct
Page 54 and 55: 2007 2006 Direct Interests Indirect
Page 56 and 57: Other than described above, there a
Page 58 and 59: 21. DIRECTORS’ RESPONSIBILITY STA
Page 60 and 61: 25. EXCHANGE CONTROL AUTHORITY Subj
Page 62 and 63: • Audited Annual Financial Statem
Page 64 and 65: HISTORIC FINANCIAL INFORMATION RELA
Page 66 and 67: COMBINED STATEMENTS OF CASH FLOWS F
Page 68 and 69: Note 1• Background and basis of p
Page 70 and 71: The translation of foreign currency
Page 72 and 73: Goodwill that arose prior to 1 Janu
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Revenue recognition Revenue compris
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Application of new and amended IFRS
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Liquidity risk is defined as the ri
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Other operating expenses include al
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Note 7•Personnel data The Company
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Note 9•Financial income and expen
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The Company has offset deferred tax
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Note 12•Property, plant and equip
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Property, plant and equipment inclu
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Note 16•Cash and cash equivalents
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The Company expects to contribute E
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Note 20•Maturity of repayment and
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Maturity of repayment and interest
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Note 22•Other non-current liabili
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2. Interim Condensed Combined Finan
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INTERIM CONDENSED COMBINED CASH FLO
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NOTES TO THE INTERIM CONDENSED COMB
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A reconciliation of income tax expe
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Sales of goods to related parties d
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3. Interim condensed combined finan
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INTERIM CONDENSED COMBINED CASH FLO
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NOTES TO THE INTERIM CONDENSED COMB
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Depreciation of buildings and machi
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As of 31 December 2007 and 2006, cu
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ANNEXURE 2 INDEPENDENT REPORTING AC
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Opinion In our opinion, the combine
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Yours sincerely PRICEWATERHOUSECOOP
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The pro forma adjustments reflect t
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• anticipated synergies and effic
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(A) (B) Financial information for t
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(2) Adjustments to the equity balan
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ASSETS EUR’000 US$’000 Acquired
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UNAUDITED PRO FORMA INCOME STATEMEN
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Pro forma notes (1) Reflects the el
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* The number of shares in issue at
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Notes to the unaudited pro forma co
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(2) (EUR54,970) has been reallocate
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We do not accept any responsibility
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ANNEXURE 5 MATERIAL LOANS RELATING
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(4) The financial covenant relates
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The fair value of non-current borro
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ADDITIONAL MATERIAL LOANS OF THE GR
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Directorships in the last five year
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David Charles Brink Age 69 Business
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Directorships in last five years Cu
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Directorships in last five years Fo
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Directorships in last five years Cu
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Experience Jan joined Sappi in 1992
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Experience Berry Wiersum joined Sap
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ANNEXURE 7 DETAILS ON THE SAPPI SHA
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SPECIAL RESOLUTION NUMBER 1 Increas
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Explanatory Note to Ordinary Resolu
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This Page Printed On Pink Paper Sap
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FORM OF DIRECTION FOR HOLDERS OF DE
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(Incorporated in the Republic of So
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TABLE OF CONTENTS Page REVISED LIST
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2.2 Background Sappi Limited was fo
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Where shareholders are required to
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6. INFORMATION RELATING TO THE DIRE
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6.4 Additional information pertaini
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No commissions are payable or have
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15. MATERIAL VENDORS There have not
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ANNEXURE A TRADING HISTORY OF SAPPI
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ANNEXURE B PRINCIPAL IMMOVABLE PROP
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ANNEXURE C APPOINTMENT, QUALIFICATI
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If any question arises at any meeti
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As at the termination of each annua
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At every annual general meeting of
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Human Resources committee The respo
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Risk management The Sappi Board rec
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Interest in contracts The Sappi Gro
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ANNEXURE E CAPITAL COMMITMENTS AND
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Westbrook Cogeneration Agreement: I
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SIGNATURE Pursuant to the requireme
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