Merger Project Between Gaz de France and SUEZ



    GDF SUEZ: Operational and Financial Objectives, Corporate Governance of
the New Group and Timetable

    
    -   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
    

    PARIS, Oct. 15 /CNW/ - 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.

    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 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 www.amf-france.org or
directly from Gaz de France or Suez at www.gazdefrance.com or 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
    





For further information:

For further information: 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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SUEZ

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GAZ DE FRANCE

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