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Mandatory redemption 2007

During July-August 2007, Teleca carried out a mandatory redemption with the objective of distributing in total approximately SEK 570 million (SEK 9 per share) to the shareholders. Last day for trading in the Teleca share including the right to redemption share was July 9, 2007 and on July 10, 2007 the share price was adjusted by the corresponding SEK 9. The redemption shares were listed between July 13 and August 3, 2007. The class B shares in Teleca are listed, whereas the class A shares are not. When allocating the acquisition value, for both the class A and class B shares, the change in share price for the class B shares form the basis for the calculations.

An information leaflet regarding the redemption programme was sent to the shareholders and is also possible to download» (pdf)

Share class	Share price prior to split (lowest price on July 9, 2007)	Redemption share's value (lowest price on July 13, 2007)	Share of acquisition value to be allocated to the redemption share
Teleca class A	N.A.	N.A.	N.A.
Teleca class B	SEK 28	SEK 8,95	8,95 / 28 = 32%

As acquisition value on the redemption shares of class A and B, 32% of the original acquisition price for the Teleca share of class A and B, should be allocated according to the Swedish Tax Agency's recommendation, SKV A 2007:27.

In the event that the acquisition value is unknown, the acquisition value may be determined as 20 per cent of the redemption amount or the sales proceeds in accordance with the so-called standard method (Sw. schablonmetoden).

See examples below:

You acquired your Teleca share for SEK 25. The acquisition value of the redemption share is computed in such way that 32 per cent of the acquisition value of SEK 25 is allocated to the redemption share, i.e. SEK 8. The redemption share is redeemed at SEK 9 and the difference between SEK 9 and the acquisition value of the redemption share, SEK 8, i.e. SEK 1 (9-8 = 1) is taxed as capital gain.

You are unfamiliar with the acquisition value for your shares in Teleca and consequently use the standard method. The acquisition value of the redemption share is computed as 20 per cent of SEK 9, i.e. SEK 1.80. The difference between the SEK 9 and the redemption share's acquisition value, i.e. SEK 7.20 (9-1.80=7.20) is taxed as capital gain.

The acquisition value of the remaining Teleca shares (to be used when calculating the capital gain when these are divested) is reduced with the acquisition value allocated to the redemption share.

The Swedish Tax Agency has due to this redemption issued a recommendation. The recommendation (only available in Swedish) could be downloaded here.