Temiscaming, Quebec, Canada, 17 August 2010 – Tembec Inc. announced today that its wholly-owned subsidiary, Tembec Industries Inc., completed its previously announced private offering of USD 255 million in aggregate principal amount of 11.25% senior secured notes due 2018. 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. BofA Merrill Lynch and Credit Suisse Securities (USA) LLC acted as the joint book-running managers for the offering.
“Tembec established an objective to refinance the outstanding term debt in 2010. As such, the successful secured note offering marks the achievement of our goal” said Jim Lopez, president and CEO of Tembec. “In addition, given improved financial performance, we reduced long-term debt by USD 50 million which demonstrates our commitment to deleverage the balance sheet. Finally, while economic challenges continue to exist, the refinancing affords the company greater financial flexibility to pursue our long-term strategic initiatives to transform our operating facilities to better compete in global markets while maintaining focused financial discipline."
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 proceeds from the offering, together with cash on hand, were used to permanently repay all outstanding indebtedness under Tembec’s and the company’s existing USD 300 million term loan facility, to pay prepayment premiums in connection therewith and to pay fees and expenses related to the offering.
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 may be offered or sold 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.
Tembec is a large, diversified and integrated forest products company and a global leader in sustainable forest management practices. The company’s principal operations are located in Canada and France. Tembec’s common shares are listed on the Toronto Stock Exchange under the symbol TMB and warrants under TMB.WT. Additional information is available at www.tembec.com.