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Management Side
TimberWest Forest Agrees to Acquisition by Two Pension Funds
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Vancouver, British Columbia, Canada, 11 April 2011 -- TimberWest Forest Corp. (TSX: TWF.UN) announced today that it has entered into a definitive agreement under which two leading Canadian pension funds, British Columbia Investment Management Corporation (bcIMC) and the Public Sector Pension Investment Board (PSP Investments), have agreed to acquire TimberWest for CAD 1.03 billion in cash, including assumed debt.

The purchase price is equal to CAD 6.48 per existing stapled unit, which represents a 25% premium over the 20-day volume-weighted average price of TimberWest stapled units on the Toronto Stock Exchange for the period ended 08 April 2011, the most recent trading day.

The transaction price is based on the fully diluted stapled units outstanding as of today. On 15 April 2011, TimberWest will pay deferred distributions on its stapled units in the amount of approximately CAD 24.5 million by issuing 4.7 million additional stapled units on a pro rata basis to all of its unitholders of record as of 15 April 2011. After taking into account this issuance of additional stapled units and the resulting adjustment to the conversion price of TimberWest’s outstanding convertible debentures, unitholders will hold 1.0516 stapled units for each existing stapled unit and the purchase price will be CAD 6.16 per stapled unit. The aggregate value of the consideration to each unitholder of record as of 15 April 2011 is not affected by the issuance of these additional stapled units. The stapled units will begin trading ex-distribution on the Toronto Stock Exchange on 13 April 2011.

bcIMC currently holds approximately CAD 107 million aggregate principal amount of convertible debentures of TimberWest convertible into approximately 31.1 million stapled units, or approximately 22% of the total fully diluted outstanding stapled units (assuming the conversion of all of TimberWest’s outstanding convertible debentures).

V. Edward Daughney, chairman of the board of directors of TimberWest, said, “We believe this transaction provides significant value to TimberWest unitholders. bcIMC and PSP Investments are both leading Canadian pension plans well-positioned to support the long-term development of TimberWest’s exceptional timber and real estate assets and emerging new businesses.”

As part of the definitive agreement, TimberWest has a 60-day “go-shop” period during which it is permitted to solicit a superior proposal. bcIMC and PSP have no right to match a superior proposal made during this period. If the company is successful in soliciting a superior proposal during the go-shop period, there will be a break fee payable to bcIMC and PSP Investments of approximately CAD $18 million.

As a holder of TimberWest convertible debentures, bcIMC is a related party to TimberWest. Accordingly, the board of directors of TimberWest formed a special committee of independent directors in connection with the transaction. In addition, as required under applicable securities laws, the special committee engaged UBS Securities Canada Inc. to conduct an independent valuation of TimberWest’s stapled units. The purchase price falls within the range of values identified in the independent valuation. Based on the recommendation of the special committee, TimberWest’s board of directors has approved the transaction.

BMO Capital Markets and UBS Securities Canada Inc. have each provided TimberWest’s special committee and board of directors with an opinion that the transaction is fair, from a financial point of view, to unitholders (other than bcIMC).

The transaction will proceed by way of a statutory plan of arrangement and will be subject to court approval and approval by 66 2/3% of the votes cast by unitholders at a special meeting convened to consider the transaction. The transaction is subject to customary closing conditions, including regulatory approvals. In the absence of a superior proposal, the transaction is expected to close by the end of June 2011.

TimberWest also announced today that it will reschedule its annual general meeting of unitholders from 26 April 2011 to a date to be determined to coincide with the special meeting to approve the transaction.

BMO Capital Markets acted as financial advisor to TimberWest and the special committee and will be managing the go-shop process on behalf of the company. UBS Securities Canada Inc. acted as independent valuator and financial advisor to the special committee. McCarthy Tétrault LLP acted as legal counsel to TimberWest.

Further details regarding the terms of the transaction are set out in an arrangement agreement which will be publicly filed by TimberWest under its profile at www.sedar.com.

Further information regarding the transaction will be contained in an information circular that TimberWest will mail to holders of stapled units in connection with the special meeting to be held to approve the transaction. In the absence of a superior proposal, TimberWest expects that these materials will be mailed in May 2011 for a meeting to be held in June 2011. Once mailed, the information circular will be available at www.sedar.com. Unitholders are urged to read the information circular once it is available.

TimberWest is uniquely positioned as western Canada’s largest private timber and land management company. The company owns in fee simple approximately 327,000 hectares or 808,000 acres of private land and is in the business of selling timber products and real estate.

 

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