Telenor to become principal shareholder of Utfors: Strengthens Nordic Position

The transaction is dependent upon the agreement of the company's principal creditors and court approval of the proposed debt settlement of 25 per cent.

"Through the planned acquisition of Utfors and the integration with Telenor Business Solutions AB, we are creating a powerful player in the Swedish market, while at the same time strengthening our overall Nordic position. Utforshas a modern and powerful network infrastructure within data communications, which, combined with Telenor Business Solutions', services within telephony and data communications positions us as Telias' main contender in the Swedish market," said Morten Lundal, CEO of Telenor Business Solutions AS.

"The Utfors board and management have endeavoured to find the best possible solution for Utfors' clients, lenders, employees and shareholders. Telenor has the financial strength, technologicalcompetence and market vision to manage and develop the customer base andservices that we havedeveloped in recentyears," said Sven-Christer Nilsson, chairman of the board at Utfors.

"I am fully convinced thatour customers and employees will be well attended to within the Telenor group. The Utforsmanagement is satisfied with this agreement, which will secure the future for the values that we havecreated atUtfors," said Jan Werne, VD in Utfors AB.

As market trends shifts towards convergence between voice and data communications, customers will be fully served by a single network solution, ensuring the simplicity and flexibility of the working day of the future. The transaction is thereby part of Telenor's long-term commitment to the Nordic market.At a time characterized by uncertainty within the IT and telecom industry, Telenor is stepping forward as a leading player in the Nordic business communications market.

"This transaction will make us a leading provider of the future workplace solutions within the Nordic region. We aremaking a commitment toUtfors' customers by maintaining the services offered today, while at the same time strengthening our complete portfolio by combining theservices of the two companies," said Morten Lundal.

Telenor Business Solutions will pay SEK 264 millionfor the acquisition of Utfors. The agreementwith the Utfors management and the company's main lenders, implies that Telenor Business Solutions will buy the lenders' debt, then converting it to shares, as well as making a cash payment to Utfors, which will be forwarded to the creditors in the ongoing accord process. The combination of the converted debt and cash payment will give Telenor Business Solutions a 90 per cent stake in Utfors, as well as 2 per cent in convertibles. Furthermore, the shares in Telenor Business Solutions AB will in its entirety be transferred to Utfors AB, in exchange for additional convertibles in Utfors.

Fact sheet on the transaction

Telenor Business Solutions acquires the majority holding in Utfors for a price of SEK 264 million. The agreement was entered into by the board of Utfors, Telenor Business Solutions, the Utfors bank consortium, Utfors reconstruction committee and shareholders, representing 34.4 per cent of shares and votes in Utfors. As part of the agreement, Telenor Business Solutions will take over part of the Utfors bank consortiums claims towards Utfors, which thereafter will be converted into liquidity through an emission of new shares and convertible bonds.

Furthermore, through the agreement Telenor Business Solutions guarantees the bondholders a debt settlement of 25 per cent, consistent with the terms of the Utfor's current restructuring. In addition, Telenor Business Solutions will hand over the stocks in its Swedish operations, Telenor Business Solutions AB, to Utfors as compensation for the convertible bonds. Utfors and Telenor Business Solutions AB will thereby be integrated.

The transaction gives Telenor a 90 per cent stake in Utfors in the form of shares and votes in Utfors, and additional convertible bonds that can be converted to a further 2 per cent. After this bond conversion, the bank consortium will own 1.2 per cent of Utfors shares and votes, with existing shareholders receiving 6.8 per cent.

Thereafter, Telenor Business Solutions will receive further shares and votes in Utfors through conversion of the bonds it receives as part of the agreement. The value of Telenor Business Solutions Swedish operations will be determined through an independent valuation by Enskilda Securities. Telenor Business Solutions stake in Utfors after full dilution is dependent upon this valuation and will be reported at an extraordinary shareholders meeting.

The transaction is dependant upon, among other things, court approval of the proposed debt settlement of 25 per cent, and that an extraordinary shareholders meeting decides upon the issue of shares and convertible bonds such that the restructuring of Utfors can be completed.

If the conditions which govern the transaction are not met, Telenor Business Solutions and the bank consortium have agreed that Telenor Business Solutions will have the right to acquire the collateral issued by Utfors in the form of shares in subsidiaries.

In order to finalise upon the transaction the Utfors board of directors of Utfors have agreed to call an extraordinary shareholders meeting for Tuesday 17 December this year. The transaction also requires approval by the Swedish Competition Authorities.

About TBS

Telenor Business Solutions innovates and simplifies IT- and communications solutions for the Norwegian, Nordic and European business markets. We serve organisations in all segments with voice- and data communications, advanced networks solutions, managed IT services and consultancy. Telenor Business Solutions employs 4300 people in 10 countries, serving customers across boarders based on international presence and infrastructure.