Catalyst Paper announces details of Rights Offering



    VANCOUVER, Feb. 29 /CNW/ - Catalyst Paper Corporation (TSX:CTL) announced
today that it has filed a final short form prospectus in each of the provinces
of Canada and a registration statement on Form F-10 with the Securities and
Exchange Commission in the United States (which has been declared effective)
relating to its previously announced Rights Offering for gross proceeds of
approximately C$125.3 million. Under the Rights Offering, each holder of
record of Catalyst common shares as of the close of business on the record
date of March 11, 2008 will receive one Right for each common share held.
    Each 1.285 Rights will entitle the holder to purchase one Subscription
Receipt of Catalyst for an exercise price of $0.75 per Subscription Receipt
(the Basic Subscription Privilege) prior to 5:00 p.m. (Eastern) on April 7,
2008. Holders who have exercised their Basic Subscription Privilege in full
will be entitled to subscribe for additional Subscription Receipts at the same
exercise price (the Additional Subscription Privilege). To the extent the
Rights Offering is over-subscribed, additional Subscription Receipts will be
allocated among exercising holders in the manner described in the Prospectus.
    Each Subscription Receipt will be exchanged for one common share of
Catalyst, without additional consideration, upon completion of the Snowflake
Acquisition. The gross proceeds from the Rights Offering will be held by CIBC
Mellon Trust Company pending completion of the Snowflake Acquisition. If the
Snowflake Acquisition is not completed on or before June 16, 2008 or, in
certain other events, the Subscription Receipts will be cancelled and the
gross proceeds returned to holders of the Subscription Receipts. The
Subscription Receipts have been conditionally approved for listing on the
Toronto Stock Exchange (TSX).
    The Rights will be listed on the TSX and the common shares will begin
trading ex-Rights on the TSX on March 7, 2008. A copy of the Prospectus and,
in the case of eligible holders, Rights Certificates representing the Rights
to which they are entitled will be mailed to Catalyst shareholders following
the Record Date. The Rights will be exercisable prior to 5:00 p.m. (Eastern)
on April 7, 2008. If not exercised prior to such time, the Rights will have no
value.
    BMO Nesbitt Burns Inc. and Genuity Capital Markets will act as joint
Dealer Managers in connection with the Rights Offering.
    The Rights Offering is supported by Third Avenue International Value Fund
(TAVIX), the Company's largest shareholder, pursuant to an Oversubscription
Agreement and by the backstop obligations of BMO Nesbitt Burns Inc. and
Genuity Capital Markets (jointly, the "Standby Purchasers") pursuant to a
Standby Purchase Agreement. TAVIX has agreed in the Oversubscription Agreement
to exercise its Basic Subscription Privilege in full and, if the Rights
Offering is undersubscribed, to exercise its Additional Subscription Privilege
to subscribe for Subscription Receipts, including any such Subscription
Receipts to be acquired under its Basic Subscription Privilege, having an
aggregate subscription price of up to $62.5 million. To the extent that doing
so will not result in the Company deriving less than the full $125 million in
the Rights Offering, the obligation of TAVIX to subscribe for additional
Subscription Receipts (above its commitment to exercise in full its Basic
Subscription Privilege) may be reduced under limited circumstances as set
forth in the Oversubscription Agreement. Under the Standby Purchase Agreement,
the Standby Purchasers have agreed to purchase any Subscription Receipts which
have not been subscribed for under the Rights Offering (including any
Subscription Receipts subscribed for by TAVIX under the Oversubscription
Agreement), up to a maximum aggregate amount of $62.5 million. The obligations
of the Standby Purchasers under the Standby Purchase Agreement are subject to
the satisfaction of certain conditions on or before April 21, 2008.
    The proceeds of the Rights Offering will be used to fund a portion of the
purchase price of the Snowflake Acquisition. As previously announced, Catalyst
has entered into an Asset and Stock Purchase Agreement dated February 10, 2008
with Abitibi Consolidated Sales Corporation, a subsidiary of Abitibi Bowater
Inc., in connection with the purchase by Catalyst of certain newsprint assets
located in Snowflake, Arizona and the issued and outstanding common shares of
capital stock of The Apache Railway Company (together, the Snowflake
Acquisition) for a cash purchase price of US$161 million, subject to certain
closing adjustments. The completion of the Snowflake Acquisition is subject to
certain terms and conditions including the receipt of all required regulatory
approvals. It is anticipated that the Snowflake Acquisition will be completed
in the second quarter of 2008.
    As noted in the Prospectus, the Rights Offering is being made to holders
of Catalyst common shares in all of the provinces of Canada and in certain
states of the United States (the Eligible Jurisdictions). Holders resident in
jurisdictions other than the Eligible Jurisdictions will not be mailed Rights
Certificates unless they are able to establish to the Company on or before
March 28, 2008 that they are Exempt US Institutions or Approved Eligible
Holders, as more particularly described in the Prospectus. Rights of holders
resident in jurisdictions other than the Eligible Jurisdictions who do not so
satisfy the Company prior to March 28, 2008 will be sold by CIBC Mellon Trust
Company over the facilities of the TSX and the net proceeds distributed to
such holders.
    Further details concerning the Rights Offering and the procedures to be
followed by holders are contained in the Prospectus. Copies of the Prospectus
may be obtained from the Dealer Managers or are available under the Company's
name at www.sedar.com or www.sec.gov.

    A United States registration statement relating to the rights,
subscription receipts, standby subscription receipts and the common stock
issuable upon the deemed exercise of the subscription receipts and standby
subscription receipts has become effective with the United States Securities
and Exchange Commission. This press release shall not constitute an offer to
sell or the solicitation of an offer to purchase any of these securities of
Catalyst. No offer to sell, solicitation of an offer to purchase, or sale of
these securities of Catalyst will be made in any jurisdiction in which such
offer, solicitation or sale would be unlawful.

    %SEDAR: 00000638E




For further information:

For further information: Investors: David Smales, Vice President,
Finance & Chief Financial Officer, (604) 247-4011; Media: Lyn Brown, Vice
President, Corporate Relations & Social Responsibility, (604) 247-4713

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Catalyst Paper Corporation

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