Offering of shares in Ahlstrom to commence on February, 27 2006

The Board of Directors of Ahlstrom Corporation ("Ahlstrom" or the "Company") has today decided to arrange an offering of up to 8,000,000 new shares in Ahlstrom Corporation to Finnish and international institutional investors (the "Institutional Offering"), and to retail investors in Finland (the "Retail Offering", and together with the Institutional Offering, the "Offering"). On February 14, 2006, the Annual General Meeting adopted a decision to increase the Company's share capital through a new issues of shares.

 

The Institutional Offering will commence on February 27,2006 at 9:00 a.m. Finnish time, and will end on or about March 13, 2006 at 12:00 p.m. Finnish time. The Retail Offering will commence on March 1, 2006 at 9:30 a.m. Finnish time and will end on or about March 9, 2006 at 4:30 p.m. Finnish time.

 

Application will be made the shares to be listed on the main list of the Helsinki Stock Exchange. Trading of the shares on the pre-list of the Helsinki Stock Exchange is expected to commence on or about March 14, 2006, and on the main list of the Helsinki Stock Exchange on or about March 17, 2006.

 

The initial offer price range is EUR 20.00 - 24.00 per share. Ahlstrom will make the final decision on the number of shares to be offered for subscription and the offer price after the marketing period in the Institutional Offering has ended, which is expected to be on March 13, 2006.

 

Ahlstrom intends to use the proceeds of the Offering to expand and further improve its operations through (i) investments in new capacity, new technologies and productivity improvements in existing operations, (ii) investment in expansion in Asia, Russia/Eastern Europe and the Americas to grow with its global customer base, and (iii) possible acquisitions to expand its geographic presence and enhance its product offering, and for general corporate purposes. The Company has not decided how it will allocate the proceeds that it receives from the Offering among these purposes.

 

Ahlstrom Corporation's share capital consists of 36,436,737 shares. The Offering will comprise of up to 8,000,000 new shares. The Institutional Offering will initially comprise of 7,300,000 shares and the Retail Offering initially of 700,000 shares. This allocation, however, may be changed depending, among other things, on differences in demand between retail and institutional investors. In addition, the Company has granted SEB Enskilda, acting on behalf of the managers, an option exercisable at any time within 30 days from the date of pre-listing of the shares on the Helsinki Stock Exchange to purchase up to an aggregate of 1,150,000 Additional shares, solely to cover over-allotments, if any.

 

SEB Enskilda is acting as Global Coordinator and Bookrunner of the Offering. CALYON and Opstock Ltd. are acting as co-lead managers of the Institutional Offering and Opstock Ltd. is the lead manager of the Retail Offering.

 

Ahlstrom is a leader in the development, manufacture and marketing of high performance fiber-based materials. Nonwovens and specialty papers, made by Ahlstrom, are used in a large variety of everyday products, including in filters, wipes, flooring, labels, and tapes. The Company has a strong market position in several business areas in which it operates, built upon the Company's unique fiber expertise and innovative approach. Ahlstrom's 5,525 employees serve customers via sales offices and production facilities in 22 countries on six continents. In 2005, Ahlstrom's net sales amounted to EUR 1.55 billion. The Company website is www.ahlstrom.com.

 

Appendix A contains a short description of Ahlstrom and Appendix B a description of the Company's financial situation and the result of its business operations.

 

Ahlstrom Corporation
Jukka Moisio
President and CEO
 
For further information please contact:
Ahlstrom Corporation

Jukka Moisio, President and CEO, tel. +358 (0)10 888 4700

 

In addition, for further information about the Offering please contact:

SEB Enskilda

Mika Laukia, Director, tel. +358 (0)9 616 28126

 

This document is not a prospectus and as such does not constitute an offer to sell securities. Investors should not subscribe for any securities referred to in this document, except on the basis of the information contained in a prospectus. Offers will not be made directly or indirectly in any jurisdiction where prohibited by applicable law or where any registration or prospectus or other requirements would apply in addition to those undertaken in Finland.

 

These materials are not an offer for sale of securities in the United States or in any jurisdiction of the European Economic Area. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended. Ahlstrom Corporation has not registered, and does not intend to register, any portion of any offering of its securities in the United States, and does not intend to conduct a public offering of its securities in the United States.

 

This press release may not be distributed or sent into the United States, Australia, Canada or Japan. This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). The offer shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such offer shares will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this press release or any of its contents.

 

This press release is an advertisement for the purposes of applicable measures implementing Directive 2003/71/EC (such Directive, together with any applicable implementing measures in the relevant home Member State under such Directive, the "Prospectus Directive"). A prospectus prepared pursuant to the Prospectus Directive will be published in Finland and will be available to the public at the subscription places for the Offering in Finland.

 

Any offer of securities to the public that may be deemed to be made pursuant to this communication in any EEA Member State that has implemented Prospectus Directive is only addressed to qualified investors in that Member State within the meaning of the Prospectus Directive.

 

This press release includes forward-looking statements. These forward-looking statements include all matters that are not historical facts, statements regarding Ahlstrom's intentions, beliefs or current expectations concerning, among other things the Ahlstrom's results of operations, financial condition, liquidity, prospects, growth, strategies and the industry in which Ahlstrom operates. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future, and speak only as of the date they are made. Ahlstrom cautions you that forward-looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which Ahlstrom operates may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if Ahlstrom's results of operations, financial condition and liquidity and the development of the industry in which Ahlstrom operates are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in future periods. Ahlstrom does not undertake any obligation to review or confirm expectations or estimates or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of this press release.

 

Stabilization/FSA

 

 

Ahlstrom is a leading supplier of high performance fiber-based materials, including nonwovens and specialty papers. Products developed, produced and marketed by Ahlstrom are used around the world in a variety of everyday products, including filters, medical apparel, wipes, flooring, labels and tapes. The Company has a strong market presence in several businesses in which it operates, built upon 150 years of fiber expertise, innovation and long-term customer relationships. Ahlstrom estimates that over 50 % of its net sales in 2005 originated from products that were market leaders in their respective product markets.

 

Ahlstrom's products are sold predominantly in roll good form to manufacturers, often referred to in the industry as converters, who process the materials further and convert them into end products. These products are then delivered to retail and industrial customers in a broad range of sectors, including the transportation, health care, food and beverage, packaging and labeling and home and office sectors.

 

Ahlstrom works in close cooperation with its customers to develop new products and improved product features, such as strength, durability, absorbency and filtering, that deliver enhanced performance and cost benefits. Ahlstrom seeks to provide its customers with advanced products by using its expertise in both natural and synthetic fibers, as well as chemicals. Supported by a range of versatile manufacturing facilities, the Company is able to develop and introduce new products and features to the market in an efficient manner.

 

Ahlstrom serves its customers from 33 production facilities in Europe, North America, South America and Asia. As of December 31, 2005, Ahlstrom had 5,525 employees in 22 countries on six continents. In 2005, the Company's net sales were EUR 1,552.6 million and operating profit was EUR 117.2 million. Return on capital employed was 12.4 %. In 2005, Ahlstrom's main geographic markets in terms of net sales were Europe (64 %), North America (22 %), Asia (9 %) and the rest of the world (5 %).

 

Ahlstrom believes that its position as a leading supplier of high performance fiber-based materials is based on the following key strengths:

 

-        Understanding market needs, customer processes and applications

-        Fiber expertise

-        Leading market positions

-        Global presence

-        Competitive and versatile operations

-        Experienced management team

 

Ahlstrom aims to further strengthen its position as a global source of fiber-based materials by implementing the following business strategies:

 

-        Focusing on long-term customer relationships by expanding product offerings to key customers

-        Achieving significant growth through innovation, organic investments and acquisitions in high performance roll goods

-        Strengthening global presence by expanding the Group's sales network and investing in global production

-        Concentrating on competitive operations through capturing Group synergies and through continuous improvement

 

Ahlstrom reports its operations in two segments, FiberComposites and Specialty Papers. The FiberComposites segment is divided into three business areas, Nonwovens, Filtration and Glass Nonwovens, and the Specialty Papers segment is divided into two business areas, Label and Packaging Papers and Technical Papers. Within these five business areas, 22 product lines form the core of Ahlstrom's operations. In 2005, Ahlstrom FiberComposites represented 48% of the Group's net sales. In the same period, Specialty Papers represented 52% of the Group's net sales.

 

The FiberComposites segment supplies nonwoven roll goods, including nonwoven fabrics, filtration media, and glassfiber reinforcements to customers operating in several industrial sectors and geographic markets. In 2005, the FiberComposites segment generated net sales of EUR 742.3 million. Ahlstrom estimates that the volume of the overall product markets served by the FiberComposites segment is currently growing at an approximate annual rate of 6-7%.

 

Ahlstrom's Specialty Papers segment supplies a range of label and packaging and technical papers to customers operating in many industries and geographic areas. The segment generated net sales of EUR 814.7 million in 2005. Ahlstrom estimates that the volume of the overall product markets served by the Specialty Papers segment is currently growing at an approximate annual rate of 3-4%.

 

 

 

Summary financial information

 

The summary income statement, balance sheet, cash flow and key figures of the Group presented below in accordance with Finnish Accounting Standards ("FAS") have been derived from the audited consolidated financial statements of the Company, prepared in accordance with FAS, for the financial years ended December 31, 2004 and December 31, 2003, unless otherwise stated below. As of January 1, 2005, the Company adopted International Financial Reporting Standards as adopted by the European Union ("IFRS") as the basis for preparing its consolidated financial statements. Audited consolidated financial statements for the year ended December 31, 2005, together with the unaudited comparative period ended December 31, 2004, have been prepared in accordance with IFRS, unless otherwise stated below. The summary IFRS financial information presented below is derived from the consolidated IFRS financial statement and is not comparable to the summary financial information presented in accordance with FAS. FAS differs from IFRS in certain material respects.

 

 

 

(1) The figures have been derived from the audited consolidated financial statements unless otherwise stated.

(2) Expenses: Expenses include the following items from the 2003 and 2004 income statements prepared in accordance with FAS: Change in inventories for finished goods, Production for own use, Materials and services, Employee benefit expenses and Other operating expenses. Expenses include the following items from the 2005 income statements prepared in accordance with IFRS: Change in inventories of finished goods and work in process, Production for own use, Materials and supplies, Employee benefit expenses and Other operating expenses.

(3) Share of the profit of associated companies: The Company has reported the share of associated companies' profit before operating profit under FAS and after operating profit under IFRS.

(4) Amortization of goodwill, FAS: Under FAS goodwill is amortized annually, whereas under IFRS goodwill is periodically tested for potential impairment. As a result, goodwill amortization under FAS is presented as a separate line item for the financial years 2003 and 2004.

(5) The change in notes receivable and short-term investments is included in net cash flow from financing under FAS and in net cash from investing activities under IFRS.

(6) The 2003 and 2004 figures (FAS) have been derived from the accounting system of the Company and are unaudited.

 

 

 

(1) Figures have been derived from the audited consolidated financial statements unless otherwise stated.

(2) Calculation of key figures; As a result of the transition to IFRS, the terminology in the formulas used to calculate the key ratios were adjusted. Although the content and the technical calculation principles of these key figures remained unchanged, the transition to IFRS reporting caused adjustments to the financial position, operating result and cash flows of the Group. The effect of the adoption of IFRS reporting and related bridge calculations are presented in the notes to the Company's financial statements for 2005. With the exception of earnings per share, these key figures are not measures of financial performance under IFRS.

(3) EBITDA is not a measure of financial performance under FAS or IFRS and is unaudited. EBITDA is equivalent to operating profit plus depreciation of tangible assets and amortization and impairment of goodwill and other intangible assets. Under FAS, the Company has reported the share of the profit of associated companies in EBITDA and the positive impact amounted to EUR 3.4 million in 2003 and EUR 2.8 million in 2004. However, under IFRS the Company has reported the share of the profit of associated companies after EBITDA. The Company presents EBITDA because it considers it an important supplemental measure of its operating performance. Management believes that EBITDA is a standard measure commonly reported and widely used by analysts, investors and other interested parties in the industry.

(4) Diluted earnings per share and average number of shares, diluted; Average number of shares, diluted, is weighted average of the number of outstanding shares adjusted to give effect to the issue of potential new ordinary shares.

(5) Average number of personnel; In the financial statements for 2004, the average number of personnel was calculated as an average of the number of personnel at the beginning of the year and at the end of the year, whereas in the financial statements for 2005 the number has been calculated as an average of the quarters of the financial year.

 

 

* Ahlstrom's Cores and Board  operations were transferred to Sonoco-Alcore Group in 2004. The figures in the table have been adjusted to (i) reflect the divestment of Ahlstrom's Cores and Board operations as if such divestment had occurred on January 1, 2003, and (ii) remove the effect of other non-recurring items.

(1) FAS Adjusted and IFRS Adjusted mean adjusted figures derived either from FAS or IFRS reporting and based on the same basic information used for the preparation of audited consolidated financial statements. The most significant adjustment is the elimination of the divested Cores and Board operations and non-recurring items, which are based on management's assessment and are not defined under FAS or IFRS.

(2) Adjustments in net sales relate to the divested Cores and Board operations, EUR 97.8 million in 2003 and EUR 77.9 million in 2004.

(3) EBITDA is not a measure of financial performance under FAS or IFRS. EBITDA is equivalent to operating profit plus depreciation of tangible assets and amortization and impairment of goodwill and other intangible assets. Under FAS the Company has reported share of profit of associated companies in EBITDA and the positive impact amounted to EUR 3.4 million in 2003 and EUR 2.8 million in 2004. However, under IFRS the Company has reported share of profit of associated companies after EBITDA. EBITDA is used in the Company's business segments to provide additional financial information. Management believes that EBITDA is a standard measure commonly reported and widely used by analysts, investors and other interested parties in the industry.

(4) The Cores and Board adjustment reduces Capital expenditures and acquisitions by EUR 3.4 million in 2003 and EUR 2.0 million in 2004.

(5) The Cores and Board adjustment reduces Capital employed by EUR 55.5 million in 2003.