Montreal, Quebec, Canada, 23 February 2012 – Tembec Inc. announced today that its wholly-owned subsidiary, Tembec Industries Inc. (the company), completed its previously announced add-on offering of USD 50 million in aggregate principal amount of 11.25% senior secured notes due 2018 at an issue price of 105.5% plus accrued interest from 15 December 2011.
The notes were sold in a private offering to “qualified institutional buyers,” as defined in Rule 144A under the U.S. Securities Act of 1933, as amended, and outside the United States in reliance on Regulation S under the Securities Act.
The notes were offered as additional notes under the indenture dated as of 17 August 2010, pursuant to which the company has issued USD 255,000,000 aggregate principal amount of 11.25% senior secured notes due 2018 (the existing notes). The notes will be treated as a single series with and have the same terms as the existing notes, except that the notes have registration rights and are subject to restrictions on transfer.
The gross proceeds from the offering in the amount of USD 52.75 million (excluding accrued interest) are expected to be used for general corporate purposes, as additional liquidity to support Tembec's capital expenditure initiatives, and to pay fees and expenses related to the offering.
The notes are senior secured obligations of the company, secured by a first priority lien on certain of the property and assets of the company and the guarantors of the notes, other than receivables, inventory and certain intangibles upon which the note holders have a second priority lien. The notes are guaranteed by Tembec and certain of the company’s subsidiaries.
The notes have not been registered under the Securities Act or the securities laws of any other jurisdiction. In connection with the offering, the company has agreed to file an exchange offer registration statement with the U.S. Securities and Exchange Commission with respect to an offer to exchange the notes and, under certain circumstances, a shelf registration statement with respect to resale of the notes. Until registered, the notes (i) may be offered only in transactions that are exempt from registration under the Securities Act or the securities laws of any other jurisdiction and will therefore be subject to substantial restrictions on transfer and (ii) will trade separately from the existing notes. After registration, the notes are expected to trade fungibly with the existing notes.
Tembec is a manufacturer of forest products – lumber, pulp, paper, and specialty cellulose – and a global leader in sustainable forest management practices. Principal operations are in Canada and France. Tembec has some 4000 employees and annual sales of approximately CAD 2 billion.