Ordinary Capital Increase; Rights Offering
Profond proposed that UBS AG shall effect an ordinary capital increase with subscription rights allotted to existing shareholders (rights offering), resulting in proceeds in the amount of approximately CHF 10 billion. The Board of Directors agrees with Profond's proposal. The Board of Directors believes, however, that such ordinary capital increase should result in proceeds in the amount of approximately CHF 15 billion of equity. Therefore, the Board of Directors proposes an ordinary capital increase with the following parameters:
1. Increase of the share capital from currently CHF 207,354,734.401 by a maximum amount of CHF 125,000,000 to a maximum of CHF 332,354,734.40 through the issuance of a maximum of 1,250,000,000 fully paid registered shares with a par value of CHF 0.10 each at an issue price of CHF 0.10. The final number of shares to be issued will be determined by the Board of Directors shortly before the launch of the rights offering and will be set at a number that results in net proceeds to UBS AG of approximately CHF 15 billion. The Board of Directors is required to implement the capital increase in the total amount of the subscribed capital.
2. The Board of Directors is authorized to determine the subscription price. The new shares to be issued shall be entitled to dividends as of the financial year 2008.
3. The contributions for the new shares to be issued shall be effected in cash.
4. The new shares shall have no preferential rights.
5. The new shares to be issued are subject to the registration requirements set out in Article 5 of the Articles of Association.
6. The subscription rights of the current shareholders shall be granted directly or indirectly. The Board of Directors shall be authorized to determine the particulars of the exercise of the subscription rights. Unexercised subscription rights or shares for which subscription rights have been granted but not exercised are to be sold at market conditions.
The Board of Directors proposes an ordinary capital increase sufficient to raise approximately CHF 15 billion to UBS AG. For this purpose and taking into consideration the current UBS share price, the market environment and customary terms for a rights offering, the Board of Directors should have the flexibility to issue up to 1,250,000,000 new shares, corresponding to a maximum of approximately 57% of the share capital of UBS AG (after issuance of new shares for the stock dividend). The proceeds from the rights offering will enable UBS AG to meet its internal capital ratio targets as well as its regulatory requirements as to its own funds and market expectations concerning its capitalization. For an explanation of the impact of the planned capital increase on the 9% mandatory convertible notes due 2010 (MCN), please refer to the explanatory note at the end of this invitation.
1 This number does not reflect the increase in share capital as a result of the stock dividend. It will, therefore, be increased by the number of shares to be issued in connection with the stock dividend.