BURNABY, BC, March 23 /CNW/ - Taiga Building Products Ltd. (TSX: TBL), ("Taiga" or the "Corporation") today announced that:
Rights Offering:
The Corporation has received limited support in connection with its previously-announced Rights Offering (the "Offering"). Under the Offering, shareholders were offered one right (a "Right") for each common share held to purchase 2.218 common shares of the Corporation at a price of $0.14 per share. Based upon: (i) the fact that the Rights exercise price of $0.14 per share no longer represents a meaningful discount to the current trading price of the common shares; (ii) indications received from non-supporting shareholders; and (iii) the exercise of less than 1% of the Rights to date, Taiga expects that the Offering will result in receipt of insufficient funds to address its working capital and liquidity requirements. As a result of the low levels of anticipated participation by other Shareholders, the Corporation's two principal Shareholders have advised the Corporation that they will not exercise their Rights under the Offering.
Note Interest Deferral:
Based upon its internal, unaudited forecasts, Taiga anticipates that it will be in a position to defer monthly interest payments on its Subordinated Notes effective early April, 2009. Taiga intends to elect to defer interest payable on the Subordinated Notes commencing on April 15, 2009 with respect to interest accruing to March 31, 2009. Taiga's ability to defer such interest is subject to meeting certain parameters under its Interest Coverage Ratio test, as set out in the Note Indenture. The Subordinated Note interest deferral will result in an approximate $1.3 Million net cash savings per month. Taiga anticipates continuing to defer interest on the Subordinated Notes for the foreseeable future, provided it remains able to do so under the terms of the Indenture. The unpaid interest will accrue to the benefit of Noteholders and attract a further 14% interest on interest charge.
Cost Management:
The Corporation is undertaking major cost reduction initiatives in order to re-size its business model to the current environment of declining product demand. Taiga is planning for and has begun to realize significant savings in inventory, selling expenses, incentive compensation and general overhead. It expects to achieve approximately $22 Million in cost savings in the next fiscal year. Taiga remains committed to leadership in building products supply, and maintaining mutually beneficial purchase and supply partnerships.
Restructuring Review:
The Corporation is actively reviewing options and working with its financial advisors to develop and review potential strategic alternatives to address its leveraged capital structure.
Forward-Looking Statements:
This press release contains certain forward-looking information and statements relating, but not limited, to future events or performance and strategies and expectations of Taiga. Forward-looking information typically contains statements with words such as "consider", "anticipate", "believe", "expect", "plan", "intend", "likely", "may", "will", "should", "predict", "potential", "continue" or similar words suggesting future outcomes or statements regarding expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. Readers should be aware that these statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements.
These forward-looking statements reflect management's current expectations or beliefs and are based on information currently available to Taiga and although Taiga believes it has a reasonable basis for making the forward-looking statements included in this document, readers are cautioned not to place undue reliance on such forward-looking information. By its nature, the forward-looking information of Taiga involves numerous assumptions and inherent risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts and other forward-looking statements will not occur. These factors include, but are not limited to, changes in business strategies; the effects of litigation, competition and pricing pressures; changes in operational costs; changes in laws and regulations, including tax, environmental, employment, competition, anti-terrorism and trade laws; and Taiga's anticipation of and success in managing the risks associated with the foregoing. A further description of these additional factors can be found in the periodic and other reports filed by Taiga with Canadian securities commissions and available on Sedar (http://www.sedar.com). These forward-looking statements speak only as of the date of this press release. Taiga does not undertake, and specifically disclaims, any obligation to update or revise any forward looking information, whether as a result of new information, future developments or otherwise, except as required by applicable law.
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