GDF SUEZ: Operational and Financial Objectives, Corporate
Governance of the New Group and Timetable PARIS, October 15
/PRNewswire-FirstCall/ -- - An ambitious development strategy in
all businesses, supported by a capital expenditure program of
EUR10bn per year on average over 2008-2010 - Attractive growth
prospects: EBITDA growth of c. 10% in 2008 and targeted EBITDA of
EUR17bn in 2010 - A dynamic shareholder return policy: average
annual growth in dividend per share of 10% to 15% between the
dividend paid in 2007[1] and the dividend paid in 2010, as well as
potential for additional returns - Corporate governance in line
with best practices - Merger during the first half of 2008
Following the approval of the merger project's new outline by the
Boards of Directors of both Groups on September 2, 2007, Gaz de
France and SUEZ announce the new Group's operational and financial
objectives, corporate governance and timetable of the merger
project. The operational and financial objectives of the new Group
mirror an ambitious, shared industrial vision focused on creating
shareholder value and relying on outstanding teams. An ambitious
industrial strategy, a sustained capex program Supported by capital
expenditures of EUR10bn per year on average between 2008-2010[2],
GDF SUEZ's industrial strategy aims at developing profitable,
top-flight positions in all of the Group's businesses: - GDF SUEZ
intends to consolidate its leadership positions in its domestic
markets, France and Benelux; - its development will be based on the
complementary nature of its businesses thereby strengthening its
commercial offering (dual gas/electricity offering, innovative
energy services); - GDF SUEZ will accelerate its industrial
development, particularly in upstream gas activities (exploration
& production, LNG), infrastructures and power generation,
notably nuclear and renewable energies; - priority will be given to
growth in Europe; - outside Europe, GDF SUEZ will strengthen its
development areas, notably in fast-growing markets. This investment
program of EUR10bn per year on average between 2008-2010, of which
over EUR8bn in 2008, will be split between development capex
accounting for 75% and maintenance capex accounting for 25% of
total investment. Capex will follow strict investment criteria, in
line with the two companies' existing policies. Energy France -
average annual capex of EUR1.0 to 1.5bn over 2008-2010 The Group
intends to maintain its leadership position on the French natural
gas market. It aims at developing a multi-energy offering
leveraging upon its current retail gas customer portfolio, and
targets a 20% market share of electricity customers in France. In
order to achieve this objective, GDF SUEZ will increase its
installed capacity in France to more than 10 GW by 2013 (vs. 5.6 GW
at year-end 2006[3]) while favoring a well-diversified generation
mix. Energy Europe and International - average annual capex of
EUR4.0 to 4.5bn over 2008-2010 GDF SUEZ intends to consolidate its
strong positions in energy in Benelux, and to develop them in a
sustained manner in the rest of Europe. The Group will carry on
with its dynamic growth strategy, leveraging its existing
strongholds outside Europe (United States, Brazil, Thailand, and
the Middle East), and further developing in new growing markets
(Russia, Turkey...). GDF SUEZ also intends to continue developing
IPPs[4] in fast growing markets. This strategy will enable the
Group to increase its managed production capacity in Europe
(outside France) and internationally to approximately 90 GW by 2013
(vs. 47 GW at the end of 2006). Global Gas and LNG - average annual
capex of EUR1.0 to 1.5bn over 2008-2010 The Group's objective is to
develop its Exploration & Production activities, to achieve
reserves[5] of 1,500 millions barrels of oil equivalent (Mboe)
ultimately[6] (vs. 685 Mboe at 2006 year end). It will also
strengthen the competitiveness of its gas supply portfolio through
enhanced purchasing capacity, increased geographic diversification,
and continuing portfolio optimization. Lastly, GDF SUEZ will
strengthen its LNG leadership mainly by participating in integrated
LNG projects (production, liquefaction, transport, regasification),
benefiting from its unique positioning on the European and U.S.
markets and from the Group's downstream positions (Energy France
and Energy Europe & International). Over time, GDF SUEZ aims to
increase contracted LNG supply volumes by 30%. Infrastructures -
average annual capex of EUR1.5 to 2.0bn over 2008-2010 GDF SUEZ
will develop existing infrastructures to support growth on the
European energy market. The Group thus intends to increase its
regasification capacities in France and Belgium to 44 bcm/year by
2013 (vs. 24 bcm/year at 2006 year end). This increase will mainly
be achieved with the launch in 2008 of the Fos Cavaou terminal and
the expanded capacities at Zeebrugge and Montoir. GDF SUEZ also
intends to increase its storage capacity in Europe (France,
Germany, the United Kingdom, and Romania) by more than 35% by 2013
(vs. 117 TWh[7] in 2006). The Group also targets a 15% increase in
transmission network capacity. Energy Services - average annual
capex of EUR0.3 to 0.5bn over 2008-2010 Based on an unparalleled
European coverage, resulting from the integration of the two
group's positions, GDF SUEZ's objective is to step up profitable
growth in energy services. The Group will benefit from higher
demand for energy services (reliance on outsourcing, increasing
demand for energy efficiency services) and complementarities
between energy sales and services. Moreover, the new Group will
support the development of SUEZ Environment, and will fully
consolidate the 35% stake it will own. SUEZ Environment's capex
will approximately amount to EUR1.5bn on average per year over
2008-2010. SUEZ Environment will strengthen its unique status as
reference player with expertise in the global management of the
water and waste cycles based on its capabilities in technologies
with strong added-value and in project management. It will focus
its expansion primarily in Europe and selectively on the
international scene with the development of new business models
(management contracts, innovative financial arrangements...). It
will carry on with its historical strategy developing privileged
partnerships notably in the Middle-East, in China, Spain and Italy.
Attractive financial objectives, a Group focused on creating value
On the strength of the attractive development prospects enjoyed by
all its businesses, GDF SUEZ will benefit from sustained profitable
growth, reflected in EBITDA growth of approximately 10% in 2008 and
a target EBITDA of EUR17bn by 2010. This growth in profitability
will also be made possible by the significant synergies generated
by the merger of the two Groups (target of EUR1bn per year in
operational synergies with full impact from 2013[8]). In addition,
the merger will allow generating c. EUR1bn of synergies from
financial optimization (non-recurring). Moreover, the new Group
targets a growth in dividend per share of 10% to 15% per year on
average between the dividend paid in 2007[9] and the dividend paid
in 2010. It will thus offer attractive returns to its shareholders,
along with the potential for additional returns through exceptional
dividends and share buy-backs. Furthermore, GDF SUEZ will continue
to adhere to a strict financial policy with the goal of maintaining
a strong A credit rating. Finally, GDF SUEZ shareholders will
benefit from further potential for value creation thanks to the new
Group's enhanced market standing. GDF SUEZ will be a reference
listed utility with increased stock market index weighting (one of
the 20 largest companies in the Eurostoxx 50 index by size of free
float). Corporate governance in line with best practices The new
Group's corporate governance will be submitted for shareholder
approval to the Gaz de France and SUEZ Extraordinary General
Meetings. The Board of Directors of GDF SUEZ will be composed of 24
members: - 10 directors nominated by SUEZ, including the Chairman
and Chief Executive Officer, Gerard Mestrallet; - 10 directors
nominated by Gaz de France, including the Vice Chairman and
President, Jean-Francois Cirelli, and 7 representatives of the
French State - 4 directors representing employees, including one
representing employee shareholders. The new Group's corporate
governance will adhere to best practices: - The Board of Directors
will include at least 1/3 of independent directors (in accordance
with the Bouton report); - There will be five Board committees,
each chaired by an independent director (Audit, Nominating,
Compensation, Ethics, Environment and Sustainable Development, and
Business Strategy and Investments). Timetable for merger
completion: first-half 2008 The next steps prior to the
Extraordinary General Meetings are the following: - opinion of the
employee representative bodies of Gaz de France, SUEZ and SUEZ
Environment; - receipt of administrative authorizations (stock
market authorities, Commission des Participations et des
Transferts, regulatory approvals); - merger agreement approval by
the Boards of Directors of both groups and convocation of
Extraordinary General Meetings to vote on the merger. Against this
background, and based on information in their possession, SUEZ and
Gaz de France have set as their objective the merger's conclusion
during the first half of 2008. The detailed work accomplished by
both groups' teams, reflected in the new Group's organization plan
announced October 30, 2006, will enable GDF SUEZ to be operational
as soon as the merger is completed. Concurrently, preparations have
been proceeding to coordinate the integration of the two groups.
Integration of the teams of the two Groups in a manner respectful
of their cultures will result in the creation of a world leader in
energy with first-rate positions in gas and electricity and an
energy supply portfolio that is secure, diversified, and flexible.
This ambitious, job-creating project fully addresses the challenges
of energy supply security and sustainable development, and brings
genuine benefit to the new Group's customers, employees and
shareholders. Press contacts: SUEZ France: +33(0)1-4006-6651
Belgium: +32-2-510-76-70 Gaz de France Press Service:
+33(0)1-4754-2435 Financial analyst contacts: SUEZ Investor
Relations: +33(0)1 4006 6489 Gaz de France Investor Relations:
+33(0)1 4754-7904 Important Information This communication does not
constitute an offer or the solicitation of an offer to purchase,
sell, or exchange any securities of Suez, Suez Environment
securities (or securities of any company holding the Suez
Environment Shares) or Gaz de France, nor shall there be any offer,
solicitation, purchase, sale or exchange of securities in any
jurisdiction (including the U.S., Germany, Italy and Japan) in
which it would be unlawful prior to registration or qualification
under the laws of such jurisdiction. The distribution of this
communication may, in some countries, be restricted by law or
regulation. Accordingly, persons who come into possession of this
document should inform themselves of and observe these
restrictions. To the fullest extent permitted by applicable law,
Gaz de France and Suez disclaim any responsibility or liability for
the violation of such restrictions by any person. The Gaz de France
ordinary shares which would be issued in connection with the
proposed merger to holders of Suez ordinary shares (including Suez
American Depositary Shares (ADRs)) may not be offered or sold in
the U.S. except pursuant to an effective registration statement
under the U.S. Securities Act of 1933, as amended, or pursuant to a
valid exemption from registration. The Suez Environment Shares (or
the shares of any company holding the Suez Environment Shares) have
not been and will not be registered under the US Securities Act of
1933, as amended, and may not be offered or sold in the United
States absent registration or an exemption from registration. In
connection with the proposed transactions, the required information
document will be filed with the Autorite des marches financiers
(AMF) and, to the extent Gaz de France is required or otherwise
decides to register the Gaz de France ordinary shares to be issued
in connection with the business combination in the U.S., Gaz de
France may file with the U.S. Securities and Exchange Commission
(SEC), a registration statement on Form F-4, which will include a
prospectus. Investors are strongly advised to read the information
document filed with the AMF, the registration statement and the
prospectus, if and when available, and any other relevant documents
filed with the SEC and/or the AMF, as well as any related
amendments and supplements, because they will contain important
information. If and when filed, investors may obtain free copies of
the registration statement, the prospectus and other relevant
documents filed with the SEC at http://www.sec.gov/ and will
receive information at an appropriate time on how to obtain these
documents for free from Gaz de France or its duly designated agent.
Investors and holders of Suez securities may obtain free copies of
documents filed with the AMF at http://www.amf-france.org/ or
directly from Gaz de France or Suez at http://www.gazdefrance.com/
or http://www.suez.com/, as the case may be. Forward-Looking
Statements This communication contains forward-looking information
and statements about Gaz de France, Suez, Suez Environment and
their combined businesses after completion of the proposed
transactions. Forward-looking statements are statements that are
not historical facts. These statements include financial
projections, synergies, cost-savings and estimates and their
underlying assumptions, statements regarding plans, objectives,
savings, expectations and benefits from the transaction and
expectations with respect to future operations, products and
services, and statements regarding future performance.
Forward-looking statements are generally identified by the words
"expects," "anticipates," "believes," "intends," "estimates" and
similar expressions. Although the managements of Gaz de France and
Suez believe that the expectations reflected in such
forward-looking statements are reasonable, investors and holders of
Gaz de France and Suez ordinary shares and Suez ADRs are cautioned
that forward-looking information and statements are not guarantees
of future performances and are subject to various risks and
uncertainties, many of which are difficult to predict and generally
beyond the control of Gaz de France and Suez, that could cause
actual results, developments, synergies, savings and benefits from
the proposed transactions to differ materially from those expressed
in, or implied or projected by, the forward-looking information and
statements. These risks and uncertainties include those discussed
or identified in the public filings with the Autorite des marches
financiers ("AMF") made by Gaz de France and Suez, including under
"Facteurs de Risques" in the Document de Reference filed by Gaz de
France with the AMF on April 27, 2007 (under no: R.07-046) and in
the Document de Reference and its update filed by Suez on April 4,
2007 (under no: D.07-0272), as well as documents filed with the
SEC, including under "Risk Factors" in the Annual Report on Form
20-F for 2006 filed by Suez on June 29, 2007. Except as required by
applicable law, neither Gaz de France nor Suez undertakes any
obligation to update any forward-looking information or statements.
--------------------------------- [1] Based on the Gaz de France
dividend paid in 2007 and related to fiscal year 2006 (EUR1.1 per
share); SUEZ shareholders will also receive the dividend
distributed by SUEZ Environment [2] Mainly organic growth capex [3]
Excluding cogeneration [4] Independent Power Producer [5] Proven
and probable reserves [6] Mainly through external growth [7]
Excluding Fluxys [8] After taking into account the impact of the
remedies and the IPO of SUEZ Environment [9] Based on the Gaz de
France dividend paid in 2007 and related to fiscal year 2006
(EUR1.1 per share); SUEZ shareholders will also receive the
dividend distributed by SUEZ Environment DATASOURCE: SUEZ and Gaz
de France CONTACT: Press contacts: SUEZ, France: +33(0)1-4006-6651,
Belgium: +32-2-510-76-70. Gaz de France, Press Service:
+33(0)1-4754-2435. Financial analyst contacts: SUEZ: Investor
Relations: +33(0)1 4006 6489. Gaz de France, Investor Relations:
+33(0)1 4754-7904
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