Mar 27, 2013 ... 2. Tele2's Share Redemption Program. • Through the sale of Tele2 Russia, if the
deal is completed, Tele2 will receive capital that will be partly.
Tele2’s Share Redemption Program March 27, 2013
Tele2’s Share Redemption Program
• Through the sale of Tele2 Russia, if the deal is completed, Tele2 will receive capital that will be partly distributed directly to the shareholders through a planned share redemption program. • The share redemption program involves a share split, meaning that one ordinary share is split into two shares, one of which is a redemption share. The redemption share is automatically redeemed for cash. • The proposed share redemption program is mandatory, meaning that shareholders do not need to take any action in order to receive redemption shares and subsequent redemption. All this will be done automatically without the involvement of shareholders. • For more information regarding taxes, please see page 5.
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Share split Before
After
Time frame 5-6 weeks
1 Ordinary share
1 Ordinary share
1 Ordinary share 1 Redemption share Can be traded* Cash
Each share is split into two shares, one of which is a redemption share
Possibility to trade* redemption shares
Each redemption share is redeemed for SEK 28**
As a shareholder, you do not need to take any action in order to receive redemption shares and subsequent redemption. All this will be handled automatically. * might be beneficial to foreign shareholders 3
** provided that the deal is completed and that the Board’s proposal regarding the share redemption program is approved at the shareholders’ meeting
Time plan Shareholders’ meeting
Share split
Expected date for payment of redemption amount
Time frame 5-6 weeks
Last day of trading in shares before share split and right to receive redemption shares
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Trading in redemption shares
Taxes and income tax return • When stating the sale of or redemption of redemption shares, an acquisition cost is needed. The Swedish Tax Agency will determine a percentage split of the original acquisition cost. This split entails that the ordinary share is assigned a part of the acquisition cost, and the redemption share is assigned the remaining part of the acquisition cost. In this way it is possible to calculate the acquisition cost for the redemption share in SEK (see example). When doing your taxes, this transaction should be stated just as if you were selling ordinary shares. • The difference between redemption shares and an ordinary dividend is that in this process shareholders receive the entire redemption amount and are then taxed on the capital gain, which should be stated when doing one’s taxes. • For more information from the Swedish Tax Agency: www.skatteverket.se •
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The tax effects on you as a shareholder depend on your specific situation. All shareholders are accordingly referred to the tax authorities to research their respective responsibility to pay taxes.
Example A couple of years ago you purchased a share in a company. Acquisition cost was SEK 70 The share price is now SEK 110 (before split)
The company conducts a share split with redemption shares. Redemption amount is SEK 30 The taxing authority determines the split allocation Ordinary share: 73%
Redemption share: 27% Acquisition cost for the ordinary share is SEK 70 x 73% = SEK 51
• Foreign shareholders normally have to pay withholding tax in Sweden on the amount disbursed on the redemption of shares. However, for foreign shareholders no withholding tax is payable when selling redemption shares.
Acquisition cost for the redemption share is
•
The capital gain from the redemption share is then
In general, the share split does not entail any extra taxation. However, selling of redemption shares or redemption of these entail taxation, like when selling ordinary shares.
SEK 70 x 27% = SEK 19
30 – 19 = SEK 11
Q&A Why is Tele2 planning to conduct a share redemption program? Through the sale of Tele2 Russia, if the deal is completed, Tele2 will receive capital that will be partly distributed to the shareholders. This is done through a share redemption program. The share redemption program is a beneficial way of carrying out the “special dividend” and disbursing capital to shareholders. Why is Tele2 using a share redemption program instead of a one-time dividend? The share redemption program includes a trading period during which shareholders may sell their redemption shares. From a tax perspective, it might be advantageous to foreign shareholders to sell the redemption shares instead of having them redeemed for cash. As a shareholder, do I need to do anything? No. Your redemption shares will automatically be redeemed for the redemption amount of SEK 28 per share*. For foreign shareholders it might be beneficial to sell the redemption shares during the trading period. How many shares will I have when the share split and redemption procedure are completed? When the share split and redemption are completed, you will have the same number of shares as you had before the share split and redemption.
When will I receive the redemption amount? Redemption shares are planned to be redeemed for cash approximately 5 to 6 weeks after the shareholders’ meeting that is deciding on the matter of the share redemption program. Is the ordinary dividend affected by the share split and redemption procedure? No, the ordinary dividend is a separate issue and will, provided that the Annual General Meeting decides in accordance with the proposal of the Board, be disbursed with SEK 7.10 per share shortly after the Annual General Meeting. For questions, please contact
[email protected] 6
* provided that the deal is completed and that the Board’s proposal regarding the share redemption program is approved at the shareholders’ meeting.
