core sector communique

Outokumpu – Board decision on terms and conditions of the EUR 1 billion rights offering

The rights offering in brief

- Gross proceeds of approximately EUR 1 billion to fund the cash payments in connection with the acquisition of Inoxum
- Seven (7) new shares for one (1) existing share held on the record date 12 March 2012
- Subscription price of EUR 0.79 per new share
- Outokumpu shares will trade ex-rights from 8 March 2012
- Trading in subscription rights begins on 15 March 2012 and ends on 28 March 2012
- Subscription period begins on 15 March 2012 and ends on 4 April 2012
- Fully underwritten through shareholder subscription commitments and bank underwriting

Overview

Based on the authorisation granted by the Extraordinary General Meeting of shareholders on 1 March 2012, the Board of Directors of Outokumpu Oyj (“Outokumpu” or the “Company”) has resolved to raise gross proceeds of approximately EUR 1 billion in a rights offering to fund the cash payments related to the acquisition of Inoxum.

A total of 1,274,020,027 new shares (the "Offer Shares") will be offered for subscription with pre-emptive rights for existing shareholders (the “Offering”). A shareholder, who is registered in the Company's shareholders' register maintained by Euroclear Finland Ltd on the record date of the Offering on 12 March 2012 (the "Record Date"), will automatically receive one (1) freely transferable subscription right (the “Subscription Right”) in the form of a book-entry for each existing share of Outokumpu held on the Record Date. One (1) Subscription Right will entitle its holder to subscribe for seven (7) Offer Shares at the subscription price of EUR 0.79 per Offer Share (the “Subscription Price”). The Subscription Price corresponds to an implied discount to the theoretical ex-rights price of approximately 39.5 percent, based on the closing price of EUR 4.918 of Outokumpu’s share on 6 March 2012. No fractions of the Offer Shares will be allotted and a Subscription Right cannot be exercised partially.

Shares will trade ex-rights from 8 March 2012. Public trading of the Subscription Rights on the Helsinki Stock Exchange commences on 15 March 2012 and expires on 28 March 2012. The subscription period will commence on 15 March 2012 and expire on 4 April 2012 at 8 p.m. (Finnish time).

Provided that the Offering is fully subscribed for, the Offer Shares will represent approximately 87.4 percent of all shares of Outokumpu and votes attached to such shares after the completion of the Offering.

Existing shareholders of Outokumpu and other investors may subscribe for Offer Shares without Subscription Rights (the “Secondary Subscription”). Offer Shares will be allocated to subscribers in the Secondary Subscription in the event that not all the Offer Shares have been subscribed for pursuant to the exercise of Subscription Rights. The allocation of Offer Shares in the Secondary Subscription will be primarily determined per book-entry account in proportion to the number of Subscription Rights exercised for subscription of Offer Shares.

Outokumpu will publish the preliminary results of the Offering in a stock exchange release on or about 11 April 2012. Final results of the Offering will be announced in a stock exchange release on or about 16 April 2012.

Terms and conditions of the Offering are attached to this stock exchange release.

Publication of the offering circular

In relation to the Offering, Outokumpu has submitted a Finnish language offering circular for the approval of the Finnish Financial Supervisory Authority, and such offering circular is expected to be published on or about 8 March 2012. The Finnish language offering circular will be available on Outokumpu’s website www.outokumpu.com/osakeanti on or about 8 March 2012 and at Nordea’s branch offices in Finland on or about 14 March 2012.

Use of proceeds

Assuming all of the Offer Shares are subscribed for in the Offering, the gross proceeds received by Outokumpu from the Offering will be approximately EUR 1,006 million.

Proceeds from the Offering will be used to fund the cash payments in connection with the acquisition of Inoxum, the stainless steel and high performance alloys business of ThyssenKrupp AG, announced on 31 January 2012 (the “Inoxum Transaction”). The combination of Outokumpu and Inoxum will create a new global leader in stainless steel with a complementary product offering across key customer segments and geographies.

If the Inoxum Transaction is not completed, Outokumpu intends to return as much of the net proceeds from the Offering to its shareholders as is possible whilst preserving an appropriate capital structure (taking into consideration Outokumpu’s maximum gearing level target of 75 percent). The return of capital to Outokumpu’s shareholders may be made through decreases of Outokumpu’s share capital, dividend payments, other distributions of unrestricted equity, repurchases of shares or any combination of these alternatives. Any such return of capital is subject to the approval of a General Meeting of Shareholders of Outokumpu and compliance with applicable laws.

Subscription commitments and underwriting

Solidium Oy (“Solidium”) and Ilmarinen Mutual Pension Insurance Company (“Ilmarinen”), representing in aggregate 34.9 percent of all outstanding shares of Outokumpu and votes attached to such shares prior to the Offering, have each separately and irrevocably committed to subscribe in full for the Offer Shares on the basis of Subscription Rights allocated to them. In addition, the Social Insurance Institution of Finland (“Kela”) has irrevocably committed to subscribe for at least 2.0 percent of the Offer Shares on the basis of Subscription Rights allocated to it. The subscription commitments given by Solidium, Ilmarinen and Kela represent in aggregate 36.9 percent of the Offer Shares.

J.P. Morgan Securities Ltd. (“J.P. Morgan”), Nordea Bank Finland Plc. (“Nordea”), BNP Paribas (“BNP Paribas”) and Crédit Agricole Corporate and Investment Bank (“Crédit Agricole”) have entered into an underwriting agreement with Outokumpu pursuant to which they have severally agreed, subject to certain terms and conditions, to procure subscribers for any Offer Shares that may remain unsubscribed for in the Offering, excluding the Offer Shares that Solidium, Ilmarinen and Kela have committed to subscribe for, or, failing which, to subscribe for such Offer Shares themselves.

Important dates

Board of directors’ decision on the Offering and terms and conditions 7 March 2012
Ex-rights date 8 March 2012
Offering circular publication (on or about) 8 March 2012
Record date 12 March 2012
Subscription period and trading in Subscription Rights begin 15 March 2012
Trading in Subscription Rights ends 28 March 2012
Subscription period ends 4 April 2012
Trading in interim shares representing Offer Shares begins 5 April 2012
Preliminary result of the Offering announced (on or about) 11 April 2012
Final result of the Offering announced (on or about) 16 April 2012
Offer Shares registered in Trade Register (on or about) 17 April 2012
Trading in Offer Shares as shares begins (on or about) 18 April 2012

J.P. Morgan and Nordea are acting as Joint Global Coordinators, Joint Lead Managers and Joint Bookrunners for the Offering. BNP Paribas and Crédit Agricole are acting as Co-Lead Managers for the Offering. White & Case LLP acts as the legal counsel for the Company and Latham & Watkins (London) LLP and Castrén & Snellman Attorneys Ltd act as the legal counsels for the Joint Lead Managers and the Co-Lead Managers in connection with the Offering.