Duncan, British Columbia, Canada, 13 October 2009 -- /CNW/ -- Western Forest Products Inc. (TSX: WEF
) today announced that it has sold certain higher-and-better-use properties in central and northern Vancouver Island (the HBU properties) to a joint venture established between the company and Brookfield Properties Limited, a wholly-owned subsidiary of Brookfield Properties Corporation (TSX: BPO
). The HBU properties were formerly part of the group of properties that were included in the company's noncore asset sales program. In connection with the establishment of the joint venture and the sale of the HBU properties, Western will receive total cash proceeds of approximately CAD 12 million.
As part of the joint venture arrangements, the joint venture vehicle (the JV entity) has a right of first offer to purchase for possible future development approximately 630 acres of additional higher-and-better-use properties in central and northern Vancouver Island. These properties also represent noncore assets of the company.
Pursuant to the joint venture arrangements, Western holds less than 5% of the equity of the JV entity and has a right to sell its interest in the JV entity to Brookfield for its fair market value at any time on or after 01 January 2011. Brookfield is the manager of the JV entity, which also holds Carma Developers LP, a limited partnership that carries on a land development business across western Canada.
An independent committee of Western's board of directors unanimously recommended that the board approve the transaction. Western's board of directors unanimously approved the transaction on 08 October 2009.
The transaction constitutes a related party transaction under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions (MI 61-101) because the transaction involves parties related to the company. The company is relying on the "financial hardship" exemption in subsections 5.5(g) and 5.7(1)(e) of MI 61-101 to complete the transaction without obtaining an independent valuation or minority shareholder approval that MI 61-101 otherwise would require.
The company will file a material change report as soon as practicable. The company did not file a material change report at least 21 days before closing of the transaction because the company wanted to complete the transaction at the earliest possible opportunity in light of the company's financial condition, including its need for increased liquidity to meet its financial obligations and commitments. The company considers the shortened timeframe reasonable and necessary in these circumstances.
Western is an integrated Canadian forest products company and the largest coastal British Columbia woodland operator and lumber producer with an annual available harvest of approximately 7.4 million cubic meters of timber of which approximately 7.1 million cubic meters is from Crown lands and lumber capacity in excess of 1.6 billion board feet from eight sawmills and four remanufacturing plants. Principal activities conducted by the company include timber harvesting, reforestation, sawmilling logs into lumber and wood chips, and value-added remanufacturing. Substantially all of Western's operations, employees, and corporate facilities are located in the coastal region of British Columbia and its products are sold in more than 30 countries worldwide.