Business
Western Forest Products completes acquisition of Cascadia Forest Products
Western Forest Products completes acquisition of Cascadia Forest Products.
About this update from Western Forest Products Inc.
[{"type":"text","content":"\n\n\n\n\nTSX: WEF \n\nDUNCAN, BC, May 1 /CNW/ - Western Forest Products (TSX: WEF) today\nannounced that it has completed its previously announced acquisition of\nCascadia Forest Products Ltd. (\"Cascadia\") from a subsidiary of\nBrookfield Asset Management Inc. (NYSE/TSX:BAM), for consideration of\napproximately $220 million, subject to a post-closing reduction for forestry\nliabilities which Western expects to be approximately $13 million. Western\nreceived a notice to proceed with the transfer of Cascadia's Forest Act\ntenures to a Western subsidiary from the British Columbia Minister of Forests\nand Range on April 29, 2006.\nFollowing the acquisition, Western, Cascadia, and certain subsidiaries\nwill amalgamate under the Canada Business Corporations Act. The amalgamated\ncompany will continue to be known as Western Forest Products Inc.\nReynold Hert, President and CEO of Western stated \"Closing the\nacquisition of Cascadia is a significant milestone in executing our strategic\nplan of creating a coastal lumber producer capable of competing in the global\nsoftwood markets. We will now concentrate on achieving the estimated\n$65 million in annual synergies identified as part of the transaction\".\nFinancing for the acquisition was largely obtained by way of an offering\nof rights to acquire subscription receipts exchangeable for common shares upon\nthe completion of the acquisition of Cascadia.\nPursuant to the rights offering, approximately 127.5 million subscription\nreceipts were issued to rightholders for total proceeds of approximately\n$210 million. Pursuant to a standby agreement, Tricap Management Limited\n(\"Tricap\") purchased the approximately 51.3 million subscription receipts not\npurchased by other rightholders for consideration of approximately\n$85 million. As such, a total of approximately 178.8 million subscription\nreceipts were issued for aggregate proceeds of $295 million.\nSince the exchange of subscription receipts would have resulted in Tricap\nowning or controlling 50% or more of Western's common shares, Western has\nexercised its option under the Subscription Receipts Agreement and the\nStandby Agreement with Tricap to permit the exchange of only that portion of\nthe subscription receipts held by Tricap that would result in Tricap\ncontrolling 49% of the common shares. The balance of the subscriptio...