Notice of EGM

RNS Number:1741N
Kvaerner ASA
15 November 2001

KVAERNER ASA
NOTICE OF EXTRAORDINARY GENERAL MEETING

Notice is hereby given that an Extraordinary General Meeting of Kvaerner ASA
will be held at 15:00 hrs (Norwegian time) on Thursday 29th November 2001 at
Oslo Kongressenter, Folkets Hus, Youngs gate 11, NO-0181 Oslo, Norway. Voting
slips will be handed out prior to the Meeting between 14:00 and 15:00 hrs.

The Agenda will be as follows:

1. Presentation of the proposed refinancing of the Kvaerner Group
A presentation of the proposed refinancing of the Kvaerner Group will be given
at the Meeting. Please also refer to the enclosed summary of the main elements
of the refinancing proposal.

2. Proposal to reduce the share capital
As part of the refinancing of the Group, the Company's existing share capital
must be reduced by way of a reduction of the par value of the shares of the
Company, and the reduction amount will be transferred to other equity. The
reason for this is that the rights issue described under item 3 below will be
made against a subscription price which is below the current par value of the
shares (NOK 12.50), and that share subscriptions at a price below par value is
prohibited according to the Public Limited Companies Act. Since it is proposed
that the subscription price in the rights issue will not be greater than NOK
10 per share, but otherwise will be determined on the basis of the future
market price of the shares, the lowest possible subscription price is not yet
fixed. Likewise, the conversion price for the convertible loan described under
item 4 below will be based on the future market price of the shares. In order
to ensure sufficient flexibility in relation to market developments, it is
proposed to reduce the par value of the shares to NOK 1. 

Against this background, the Board proposes that the following resolution be
made by the General Meeting:

(a) The share capital be reduced with NOK 1,226,290,034 from NOK 1,332,923,950
to NOK 106,633,916 by way of a reduction of the par value of the shares from
NOK 12.50 to NOK 1. The reduction amount will be transferred to other equity.

(b) Article 3 of the Articles of Association be amended to read as follows:

Art 3 Share Capital 

The Company's share capital is NOK 106,633,916, divided into 106,633,916
shares, each having a par value of NOK 1. The Company's shares shall be
registered in the Norwegian Securities Register (Verdipapirsentralen).

3.  Proposal to increase the share capital by way of a rights issue
The Board proposes a contribution of a gross amount of NOK 3,000,000,000 in
new equity to the Company through a rights issue pursuant to Section 10-1 ref
10-4 of the Public Limited Companies Act, thereby increasing the share capital
of the Company by a minimum of NOK 300,000,000 and a maximum of NOK
3,000,000,000 through the subscription of new shares. The reason for this
proposal is that this equity contribution is a necessary part of the proposed
refinancing of the Group. The rights issue and the conversion of debt
described under item 4 below are mutually dependent and therefore shall be
executed simultaneously. 

Against this background, the Board proposes that the following resolution be
passed by the General Meeting:

(a)  The share capital be increased by a minimum of NOK 300,000,000 and a
maximum of NOK 3,000,000,000 through subscription of a minimum of 300,000,000
and a maximum of 3,000,000,000 new shares, each having a par value of NOK 1.
The number of shares to be issued will be determined based on the final
subscription price.

(b) Existing shareholders as at 30th November 2001 will have a preferential
right to subscribe for the new shares. Transferable subscription rights for
the new shares will be issued. In respect of any shareholder who is not
entitled to subscribe for new shares as a result of the limitations imposed by
the laws of the country where such shareholder is resident, the Company (or an
agent appointed by the Company) will have the right to sell such shareholders'
subscription rights against the payment of net sales proceeds to such
shareholders.

(c) The subscription price will be determined by the Board within a range of
NOK 10 and NOK 1 per share. Within this price range, the subscription price
will equal the lower of (i) NOK 10 per share and (ii) the volume weighted
average trading price of the shares quoted on the Oslo Exchanges during the
first 5 trading days following the date on which a preliminary prospectus for
the rights issue has been made public, less a discount of 20% and rounded
downwards to the closest NOK 0.10.

(d) The new shares are to be paid for in cash. Any shares that are allotted to
the lenders pursuant to the portion of the underwriting provided by these
lenders according to section (g) below, shall, however, be settled by way of
cancellation of the Company's existing indebtedness in that amount towards the
relevant lenders. If any shareholder or underwriter after 30th October 2001
has granted or is granting any loans to the Company, such loans may also be
set-off against the Company's right for payment for new shares against the
lenders in question. 

(e) Subscription for the new shares must be made on a specific subscription
form during a subscription period from 6th December 2001 to 20th December
2001, inclusive. The subscription period will be prolonged, however, if the
lenders have not entered into definitive agreements with respect to their
contribution to the refinancing no later than 5 trading days at the Oslo
Exchanges prior to the expiry of the subscription period, so that the
subscription period will not expire earlier than 5 such trading days after the
date of such agreements with the lenders. The subscription period will not in
any event expire later than 28th December 2001. Consequently the rights issue
will not be executed unless said agreement with the lenders has been entered
into prior to the opening of the Oslo Exchanges on 19 December 2001. The
payment date for the new shares allocated is 3rd January 2002, or 5 trading
days at the Oslo Exchange after the expiry of the subscription period if this
has been prolonged. Payment in cash must be made to a specific subscription
payment account with Den norske Bank ASA.

(f) The new shares shall be entitled to any dividend from, and including, the
financial year 2001 and shall otherwise rank equally to the other shares of
the Company as from the date the new shares are registered with the Companies
Registry  (Foretaksregisteret).

(g) With respect to the underwriting guarantee that was established on 30th
October 2001 for a total subscription amount of NOK 3,000,000,000, no
underwriting commission will be paid. To the extent that a portion of the
lenders' underwriting totalling NOK 1,000,000,000 is replaced by other
underwriters in order to increase the amount of debt being converted into a
convertible subordinated loan, an underwriting commission of 2% of the amount
underwritten will be paid to such underwriters.

(h) Article 3 of the Articles of Association will be amended to reflect the
new share capital, the number of shares and the nominal value of the share
capital following the issue.

An underwriting syndicate has been established for the rights issue
guaranteeing a total subscription amount of NOK 3,000,000,000. This
underwriting is conditional upon commitment from the lenders for their part of
the refinancing prior to completion of the rights issue. NOK 1,000,000,000 of
the under-writing has been guaranteed by the Company's lenders and any shares
being allocated to such lenders pursuant to this part of the underwriting will
be settled by way of a cancellation of the debt obligations of the Company in
the same amount towards such lenders.

The reason for the right of set-off for any shareholders/underwriters that may
grant the Company a loan prior to completion of the rights issue (ref. section
(d), second paragraph above) is to facilitate such loans in the event so
required. It is a condition for such set-off that this has been agreed with
the individual lender.

Alfred Berg Norge ASA, Fondsfinans ASA and ABG Sundal Collier ASA have been
appointed as managers for the rights issue.

4. Proposal to convert debt into a convertible subordinated loan
Conversion of debt into a convertible loan is also a necessary part of the
proposed refinancing of the Group. The convertible loan will be a 10 year
loan, subordinated to the Company's other indebtedness. The loan will be
interest free, provided, however, that interest is paid on the part being
prepaid by the Company, in the event the Company elects to redeem the loan
prior to its maturity date, ref. section (b) below. The convertible loan will
be issued by a conversion of up to NOK 4,500,000,000 of the Company's debt.
Any allocation to the lenders in accordance with their underwriting of NOK
1,000,000,000 described in item 3 above will be deducted from the portion of
the Company's debt being converted. Pursuant to the proposal, the convertible
loan may be converted into shares on 30th October 2004 and 30th October 2006.
Against this background, the Board proposes that the following resolution be
approved by the General Meeting:

A minimum of NOK 3,250,000,000 and a maximum of NOK 4,500,000,000 of the debt
forming part of the refinancing will be converted into a convertible
subordinated loan, in which the bondholders shall have a right to convert
their bonds into shares in the Company on 30th October 2004 and 30th October
2006, against a set-off of their receivables towards the Company (convertible
bond issue). The loan will consequently be subscribed for by the lenders which
are a party to the refinancing, and the preferential rights of the
shareholders according to Section 11-4 of the Public Companies Act are waived.

The following terms will apply to the loan:

(a) Each bond will have a par value and a subscription price of NOK 100, or
the equivalent amount in Euro or US Dollars based on the currency rates quoted
on Reuters at 12:00 hrs on the day upon which the debt is converted into the
loan pursuant to section (c) below, so that the aggregate number of bonds in
the loan equal the loan amount. The loan will be repaid on 30th October 2011.
The loan will be interest free.

(a) The Company may at any time decide to redeem (in whole or in part) any
parts of the loan which have not been subject to a request for conversion at
such time. Upon such redemption, an interest will be calculated and become
payable on the amount being repaid at 5% per annum, calculated annually on
30th October, so that the interest is added to the principal amount upon
calculation of the interest following year.

(b) Subscription for bonds in the loan will be made on a specific subscription
form and will take place no later than 31st December 2001. The latest date for
conversion of debt into the loan is 31st January 2002, provided, however, that
is no later than the date for the registration of the new shares issued
pursuant to the rights issue described in item 3.

(c) Each bondholder will have an unconditional right to request that all or a
portion of their bonds be converted into ordinary shares in the Company on
30th October 2004 and 30th October 2006, unless the loan has been redeemed
pursuant to section (b) above.

(d) Any request for conversion must be made in writing to the trustee for the
loan and must be made at the earliest 45, and at the latest 30 trading days
for the Company's shares at the Oslo Exchanges, prior to the relevant
conversion date. The trustee will, following close of trading on the Oslo
Exchanges on the 25th trading day prior to the conversion date, notify the
Company of the amount of the requests for conversion having been received. The
Company will then issue a notification to the Oslo Exchanges prior to
commencement of trading the following trading day, specifying the portion of
the loan having been made subject for conversion. Payment for the new shares
will be made against a set-off of the bonds of such bondholders. The
conversion price shall equal the volume weighted average trading price for the
Company's shares on the Oslo Exchanges during the period from and including 20
trading days for the Company's shares prior to, and 19 such trading days
after, the day on which the stock exchange notification refer-red to in the
previous paragraph was made public, less a discount of 5%. In no event will
the con-version price be lower than NOK 1 per share or higher than NOK 1,000
per share. No fractional shares will be issued and any difference upon
conversion shall be repaid in cash. Bonds denominated in Euros or US Dollars
shall be calculated into Norwegian Kroner prior to any such conversion being
made, based on the currency rates quoted on Reuters at 12:00 hrs on the
relevant conversion date.

(e) The bonds being issued, and the conversion rights attached thereto, may be
transferred to a new owner without the approval of the Company. The conversion
right may not be divided from the bonds.

(f) The loan will be a subordinated loan and shall rank behind the Company's
other indebtedness towards other ordinary creditors. 

(g) Upon conversion of bonds in the loan into shares, the Company's share
capital will be increased without any further decision by the General Meeting.
The Company will ensure that the share capital being increased as a result of
the conversion is registered with the Companies Registry without undue delay
after receipt of notice of such conversion and determination of the conversion
price. 

(h) Shares acquired as a result of conversion will carry the same rights as
the other ordinary shares of the Company and be entitled to distribution of
dividend as from the financial year prior to the year of the conversion, to
the extent dividends are decided after the date of conversion

(i) Bondholders in the loan will have no preferential rights in connection
with the Company issuing new shares, convertible bonds, subscription rights or
other financial instruments. Neither will they have any special rights in the
event of a merger or demerger of the Company, a transformation of the Company
into a private limited company or a dissolution of the Company, unless it is
decided to merge the Company into another company before 30th October 2006 and
the shares of the surviving company is not, or in connection with the merger
will not, be listed on a well recognised stock exchange. Upon such merger, the
bondholders will be entitled to convert their bonds into shares in the Company
through a written notification of conversion to the trustee for the loan. The
request for conversion must be presented at the earliest 1, and at the latest
15 trading days for the Company's shares at the Oslo Exchanges after the
merger plan in question has been made public by the Company. Prior to the
commencement of trading on the Oslo Exchanges on the following trading day,
the Company will through a notification advise the Oslo Exchanges of the total
nominal value of the bonds so being converted. The calculation of the
conversion price will be the same as for other conversions of the loan.

(j) The conversion price will be adjusted, so that the value of the conversion
right is maintained in the event of the following transactions, provided
always that they take place in the period in which the conversion price for
the relevant bonds is being determined:
1) an increase in share capital by a rights issue or bonus issue through
issuance of new shares; 
2) a consolidation or split of the Company's shares; 
3) issuance of convertible bonds, independent subscription rights (warrants)
or other financial instruments if issued with preferential rights to the
existing shareholders of the Company; and 
4) distributions to the Company's shareholders.

Similar transactions which are not being made in the said period do not give
rise to any adjustments of the conversion price. The same applies to other
changes in the share capital than described above.

(k) The Company will cover all costs incurred in connection with the issuance
of the loan, an annual fee to the trustee and any disbursements to the trustee
arising out of the loan.

5. Proposal to authorise the Board to increase the share capital by up to NOK
25,000,000
In connection with the refinancing of the Group, both employees of the Group
and certain of the Company's main shareholders have expressed that the Group's
employees should be given an opportunity to subscribe for shares in the
Company. Several employees have also participated in the under-writing
syndicate for the rights issue described in item 3 above. To enable the
Company to conduct an employee share issue independent of the timing of the
rights issue, it is considered appropriate that the Board be granted the
necessary authorisation in this respect.

Against this background, the Board proposes that the following resolution be
approved by the General Meeting:

(a) The Board be authorised to increase the share capital of the Company by up
to NOK 25,000,000 by subscription of up to 25,000,000 new shares, each having
a par value of NOK 1. The authority of the Board in this respect includes the
right to determine the subscription price and to make the necessary amendments
to the Articles of Association as a result of the share capital increase. 

(b) The share issue will be directed towards employees of the Group and the
Board may therefore decide that the existing shareholders should have no
preferential rights to subscribe for the new shares.  The authority may be
used by one or more decisions and is valid for 1 year from the date of the
General Meeting.

6.  Election of Board of Directors

A brief description of the circumstances that would need to be considered in
connection with the resolutions to change the Company's share capital and the
waivers of preferential rights is included in the enclosed summary of the
proposed refinancing of the Group. Additionally, a statement from the
Company's auditor in accordance with Section 10-2 ref. 2-6 of the Public
Limited Companies Act pertaining to the contribution in kind being made in the
event of set-off in accordance with item 3 (d) above is enclosed. The
Company's Annual Report for 2000 and the quarterly reports for the 1st, 2nd
and 3rd quarter 2001 is available at the head office of the Company, Prof.
Kohts vei 15, Lysaker, Baerum, Norway. Shareholders who so wish, may contact
Kvaerner ASA on phone no. + 47 67 51 30 00 to obtain said documentation. A
prospectus for the rights issue described in item 3 above is being prepared. A
preliminary version of this prospectus will be made available on the web-site
of Oslo Exchanges (www.ose.no) and also be distributed to the market on 26th
November 2001. The final version of the prospectus will be distributed to
shareholders with preferential rights prior to the commencement of the
subscription period for the rights issue. Furthermore, an amended version of
the separate prospectus will be prepared for the convertible loan referred to
under item 4 above. 

Pursuant to Article 7 of the Articles of Association of the Company, the
Extraordinary General Meeting will be opened and presided over by the Chairman
of the Board of Directors, Mr Harald Arnkvaern. Shareholders wishing to attend
the Extraordinary General Meeting, either in person or by proxy, must give
notice by forwarding the enclosed Notice of Attendance to Kvaerner ASA, c/o
Den norske Bank ASA,
Verdipapirservice, Stranden 21, NO-0021 Oslo, Norway (telefax no. [phone]
71/[phone]/[phone]/[phone]). The Notice of Attendance
must be received no later than by Monday 26th November at 16:00 hrs (Norwegian
time). Shareholders not having given such notice in time, may be denied
attendance at the Meeting. Shareholders may, if they wish, appoint Mr. Harald
Arnkvaern,  Chairman of the Board of Directors to act on their behalf at the
Meeting.

Lysaker, 14th November 2001
Kvaerner ASA
The Board of Directors