Fibrek Files Directors' Circular Recommending Acceptance of the Mercer Offer

TSX: FBK
fibrek.com

MONTREAL, Feb. 29, 2012 /CNW Telbec/ - Fibrek Inc. ("Fibrek" or the "Company") announced today that it has filed its Directors' Circular reaffirming its previous recommendation that Fibrek shareholders TENDER to the offer to acquire all of the outstanding common shares of Fibrek (the "Mercer Offer") made by Mercer International Inc. ("Mercer"). Mercer also filed the take-over bid circular in connection with the Mercer Offer to Fibrek shareholders today.

The consideration to be offered for each common share of Fibrek under the Mercer Offer will be, at each shareholder's option, (i) $1.30 in cash; (ii) 0.1540 of a share of Mercer common stock ("Mercer Shares"); or (iii) $0.54 in cash plus 0.0903 of a Mercer Share, subject to proration on the basis of a maximum of $70 million in cash and approximately 11.7 million Mercer Shares.

The Directors' Circular describes in detail the reasons for the recommendation, which in summary, include the following:

• The Mercer Offer provides improved value to Fibrek shareholders and represents a significant premium over the consideration offered in the unsolicited insider bid made by AbitibiBowater Inc. (doing business as Resolute Forest Products) ("Abitibi") (the "Abitibi Unsolicited Insider Bid"). The Mercer Offer represents a premium of approximately 70% over the volume weighted average price of the Common Shares on the Toronto Stock Exchange ("TSX") for the 20 trading days ended prior to the announcement of the Abitibi Unsolicited Insider Bid, and a premium of approximately 81% over the closing price the day before the announcement of the Abitibi Unsolicited Insider Bid. The consideration also represents, as at February 9, 2012, a premium of approximately 30% over the consideration offered under the Abitibi Unsolicited Insider Bid.
  
  
• Fibrek's financial advisor, TD Securities Inc., has delivered a written opinion dated February 9, 2012, stating that, subject to the scope of review, assumptions, limitations and qualifications discussed therein, the consideration offered to shareholders of Fibrek (other than those who have entered into lock-up agreements with Abitibi) pursuant to the Mercer Offer is fair, from a financial point of view, to such shareholders.
  
  
• A formal valuation of the Fibrek common shares has been prepared by Canaccord Genuity Corp. and, based upon and subject to the analyses and assumptions set out in therein, Canaccord Genuity Corp. is of the opinion that, as at February 3, 2012, the fair market value of a common share of Fibrek was in the range of $1.25 to $1.45.
  
  
• Mercer has agreed to extend the Mercer Offer until the expiry of the lock-up agreements entered into by certain Fibrek shareholders in favour of Abitibi so that such locked-up shareholders may tender their Fibrek common shares to the Mercer Offer.
  
  
• The Board of Directors has been actively pursuing a variety of strategic alternatives and has determined that supporting the Mercer Offer on these terms is in the best interests of Fibrek.
  
  
• The Board of Directors has preserved the ability to respond to unsolicited superior proposals and has negotiated other protective measures in the Support Agreement dated February 9, 2012 between Mercer and Fibrek.
  
  
• Shareholders of Fibrek will have the opportunity to continue to participate in Mercer's future and in the assets of Fibrek.
  
  
• Each of the directors and officers of Fibrek have agreed to tender under the Mercer Offer all common shares held by them.

The Mercer Offer will be open for acceptance until 5:00 p.m. (Montreal Time) on April 6, 2012, unless extended or withdrawn, and is conditional upon, among other things, Mercer acquiring such number of common shares that represent at least 50.1% of the outstanding Fibrek common shares calculated on a fully-diluted basis, receipt of customary regulatory consents and approvals and the approval of a simple majority of Mercer's shareholders in connection with the issuance of the Mercer Shares. Mercer's two largest shareholders and Chief Executive Officer, which hold in the aggregate approximately 44% of Mercer's outstanding shares have already committed to support the Mercer Offer and have entered into support agreements to ensure that Mercer shareholder approval is received.

Full details of the Mercer Offer are contained in the take-over bid circular of Mercer and the Directors' Circular of the Fibrek Board of Directors, which have been filed and are available at www.sedar.com under the Company's profile.

Important Shareholder Information

The Board of Directors unanimously recommends that shareholders ACCEPT and TENDER their common shares to Mercer's $1.30 offer.

Given the inadequacy of the Abitibi Unsolicited Insider Bid, the Board of Directors also reaffirms its recommendation that shareholders REJECT and NOT TENDER their common shares to Abitibi's unsolicited $1.00 insider bid. If shareholders have tendered their shares to the Abitibi Unsolicited Insider Bid, the Board recommends that they WITHDRAW them immediately.

For more information on how to tender Fibrek common shares to the Mercer Offer or for any other inquiries regarding the Mercer Offer, please contact Fibrek's information agent, Phoenix Advisory Partners, at 1-800-398-1129 (North American Toll Free) or via email at [e-mail].

About Fibrek
Fibrek (TSX: FBK) is a leading producer and marketer of high-quality virgin and recycled kraft pulp. The company operates three mills located in Saint-Félicien, Québec, Fairmont, West Virginia, and in Menominee, Michigan with a combined annual production capacity of 760,000 tonnes. Fibrek has approximately 500 employees. The Saint-Félicien mill provides northern bleached softwood kraft pulp (product known as NBSK pulp) to various sectors of the paper industry mainly in Canada, the United States and Europe, for use in the production of specialized products. The Fairmont and Menominee mills manufacture air-dried recycled bleached kraft pulp (product known as RBK pulp) and primarily supply manufacturers of fine uncoated paper, tissue paper for commercial and industrial uses, and coated paper in the United States.

Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of applicable securities laws. These statements can be identified by expressions of belief, expectation or intention, as well as those statements that are not historical facts and include statements concerning Fibrek's future outlook, business strategy, plans, expectations, results or actions, or the assumptions underlying any of the foregoing. Forward-looking statements can generally be identified by words such as "may", "should", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", "outlook" and similar expressions. These statements are based on information currently available to Fibrek's management and on the current assumptions, intentions, plans, expectations and estimates of Management regarding Fibrek's future growth, results of operations, performance, business prospects and opportunities and ability to attract and retain customers as well as the economic environment in which it operates. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors which could cause actual results of Fibrek to differ materially from the conclusion, forecast or projection stated in such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to: actions taken by Abitibi or Mercer, actions taken by shareholders of Fibrek in respect of Abitibi's unsolicited offer and the Mercer Offer, the possible effect of Abitibi's unsolicited offer and the Mercer Offer on Fibrek's business, the award of a power purchase agreement to Fibrek under the new Québec Government cogeneration program, general economic conditions, pulp prices and sales volume, exchange rate fluctuations, cost and supply of wood fibre, wastepaper and other raw materials, pension contributions, competitive markets, dependence upon key customers, increased production capacity, equipment failure, disruptions of production, capital requirements and other factors referenced in Fibrek's continuous disclosure filings which are available on SEDAR at www.sedar.com. The completion of the Mercer Offer is subject to a number of terms and conditions. The conditions to the Mercer Offer may not be satisfied in accordance with their terms, and/or Mercer may exercise its termination rights under the support agreement, in which case the Mercer Offer could be terminated. The outcome of the appeal of the BDR decision may also have an impact on the completion of the Mercer Offer. Failure to complete the Mercer Offer could have a material adverse impact on the market price of Fibrek's shares. Readers should not place undue reliance on these forward-looking statements. These forward-looking statements are made as of the date of this press release and, except as required by applicable securities laws, Fibrek assumes no obligation to update or revise them to reflect new events or circumstances.

 

For further information:

Investor Relations:

Patsie Ducharme   514 871-0550
Vice President and Chief Financial Officer

Media Relations:

Roch Landriault   514 843-2345
NATIONAL Public Relations

Dany Paradis  514 871-0550
Vice President, Change Management and Supply Chain