TSX: WEF
DUNCAN, BC, May 1 /CNW/ - Western Forest Products (TSX: WEF) today
announced that it has completed its previously announced acquisition of
Cascadia Forest Products Ltd. ("Cascadia") from a subsidiary of
Brookfield Asset Management Inc. (NYSE/TSX:BAM), for consideration of
approximately $220 million, subject to a post-closing reduction for forestry
liabilities which Western expects to be approximately $13 million. Western
received a notice to proceed with the transfer of Cascadia's Forest Act
tenures to a Western subsidiary from the British Columbia Minister of Forests
and Range on April 29, 2006.
Following the acquisition, Western, Cascadia, and certain subsidiaries
will amalgamate under the Canada Business Corporations Act. The amalgamated
company will continue to be known as Western Forest Products Inc.
Reynold Hert, President and CEO of Western stated "Closing the
acquisition of Cascadia is a significant milestone in executing our strategic
plan of creating a coastal lumber producer capable of competing in the global
softwood markets. We will now concentrate on achieving the estimated
$65 million in annual synergies identified as part of the transaction".
Financing for the acquisition was largely obtained by way of an offering
of rights to acquire subscription receipts exchangeable for common shares upon
the completion of the acquisition of Cascadia.
Pursuant to the rights offering, approximately 127.5 million subscription
receipts were issued to rightholders for total proceeds of approximately
$210 million. Pursuant to a standby agreement, Tricap Management Limited
("Tricap") purchased the approximately 51.3 million subscription receipts not
purchased by other rightholders for consideration of approximately
$85 million. As such, a total of approximately 178.8 million subscription
receipts were issued for aggregate proceeds of $295 million.
Since the exchange of subscription receipts would have resulted in Tricap
owning or controlling 50% or more of Western's common shares, Western has
exercised its option under the Subscription Receipts Agreement and the
Standby Agreement with Tricap to permit the exchange of only that portion of
the subscription receipts held by Tricap that would result in Tricap
controlling 49% of the common shares. The balance of the subscription receipts
held by Tricap will remain outstanding until Western has amended its articles
to create a new class of non-voting shares.
As the acquisition of Cascadia has now closed, a total of
94,210,564 Subscription Receipts will be exchanged for Common Shares. These
Common Shares will be issued and recorded on the register of Western's Common
Shares effective today. Share certificates representing such Common Shares may
be obtained by surrendering the applicable Subscription Receipt Certificate to
Computershare Trust Company of Canada at its offices in Vancouver, Calgary, or
Toronto, Canada, together with a duly completed and executed Surrender Form.
An additional 84,571,206 Subscription Receipts held by Tricap Management
Limited will remain outstanding until Western has amended its articles to
create a new class of non-voting shares. Provided this amendment is approved
by Western's common shareholders, these Subscription Receipts will be
exchanged for 84,571,206 non-voting shares.
Effective today, Western will have 119,842,359 Common Shares outstanding.
Western Forest Products
Western is an integrated Canadian forest products company. Principal
activities conducted by Western and its subsidiaries include timber
harvesting, reforestation, sawmilling logs into lumber and wood chips, and
value-added remanufacturing. Substantially all of Western's logging is
conducted on government owned timberlands in British Columbia. All of
Western's operations, employees and corporate facilities are located in the
coastal region of British Columbia and its products are sold in over
20 countries worldwide. With the closing of the Cascadia acquisition, Western
is the largest Coastal British Columbia woodland operator and lumber producer
with an Annual Allowable Cut of approximately 7.7 million cubic meters of
timber and lumber capacity in excess of 1.5 billion board feet from its nine
sawmills.
Forward Looking Statements and Information
This press release contains forward-looking statements and
forward-looking information within the meaning of applicable securities law.
Those statements and information include statements or information regarding
the intent, belief or current expectations of Western, primarily with respect
to the acquisition of Cascadia Forest Products ("Cascadia") and its subsequent
amalgamation with Western and achieving the estimated $65 million of
identified synergies following the acquisition. Such statements or information
may be indicated by words such as "approximately", "achieving", "estimated",
"expect", "anticipate", "plan", "intend", "believe", "will", "should", "may"
and similar words and phrases. Readers are cautioned that any such
forward-looking statements or information are not guarantees and may involve
known and unknown risks and uncertainties, and that the actual results of the
acquisition transaction may differ from those expressed or implied in the
forward-looking statements or information as a result of various factors
including, changes in government regulation, the ability of Western to execute
its business plan following the acquisition of Cascadia and misjudgments in
the course of preparing forward-looking statements or information. The
information contained under the "Risk Factors" section of Western's Annual
Information Form and under the "Risks and Uncertainties" section of Western's
Management's Discussion and Analysis identifies important factors that could
cause such differences. All written and oral forward-looking statements or
information attributable to Western or persons acting on behalf of Western are
expressly qualified in their entirety by the foregoing cautionary statements.
Western does not expect to update forward-looking statements or information as
conditions change.
