Offer price of $1.30 per Fibrek Inc. ("Fibrek") common share payable in
cash, Mercer International Inc. ("Mercer") common stock or a
combination of cash and Mercer common stock (subject to proration).
The offer represents an 81% premium over the closing price the day
before the announcement of the unsolicited bid of AbitibiBowater Inc.
(doing business as Resolute Forest Products) ("Abitibi") and a 30%
premium over Abitibi's unsolicited bid.
Fibrek's Board of Directors has unanimously determined that it would be
in the best interests of Fibrek and its shareholders to support the
Mercer Offer and recommends that shareholders tender their common
shares to the Mercer Offer
MONTREAL, Feb. 10, 2012 /CNW Telbec/ - Fibrek Inc. and Mercer
International Inc. announced today that they have entered into a
support agreement (the "Support Agreement") pursuant to which Mercer
will offer to acquire all of the issued and outstanding common shares
of Fibrek (the "Mercer Offer") by way of take-over bid.
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. Such consideration represents
a premium of approximately 70% over the volume weighted average price
of the common shares of Fibrek on the Toronto Stock Exchange ("TSX")
for the 20 trading days ending on November 28, 2011, and a premium of
81% over the closing price the day before the announcement of the
unsolicited bid of Abitibi. The consideration also represents a 30%
premium over Abitibi's unsolicited bid.
"This has been a challenging time for Fibrek as we have sought to
maximize value for our shareholders and advance the interests of our
other stakeholders. We are pleased to support Mercer's offer and
recommend it to our shareholders as we believe this offer meets our
goal and provides a significant premium relative to Abitibi's
unsolicited offer" stated Hubert T. Lacroix, Chairman of the Board of
Directors of Fibrek.
"We had a responsibility to our shareholders to pursue alternative
options in their best interests and that is exactly what we have done
in supporting this offer from Mercer, a leader in the industry who is
committed to market pulp," added Pierre Gabriel Côté, President and
Chief Executive Officer of Fibrek. "There are significant similarities
between Fibrek and Mercer given that we are both pulp producers with a
culture of operational excellence," concluded Mr. Côté.
The Board has received a fairness opinion from its financial advisor, TD
Securities Inc., that the consideration to be received under the Mercer
Offer is fair, from a financial point of view, to the shareholders of
Fibrek (other than those who have entered into lock-up agreements with
Abitibi). In addition, as previously disclosed, the Board of Directors has also
received a formal valuation prepared by Canaccord Genuity Corp. The
consideration to be offered to Fibrek shareholders by Mercer is in the
fair market value range of $1.25 to $1.45 per common share of Fibrek
established by Canaccord Genuity Corp.
Following receipt of such opinion and formal valuation, and in
consultation with its legal advisors, the Board of Directors has
unanimously determined that the consideration to be received by Fibrek
shareholders under the Mercer Offer is fair, from a financial point of
view, to such shareholders. The Board of Directors has further
determined that it would be in the best interests of Fibrek to support
the Mercer Offer and enter into the Support Agreement and recommend
that shareholders tender their common shares to the Mercer Offer.
Each of the directors and officers of Fibrek have agreed to tender all
common shares held by them pursuant to lock-up agreements with Mercer.
Full details of the Mercer Offer will be included in a take-over bid
circular which is expected to be mailed to holders of common shares of
Fibrek by February 29, 2012. Once mailed, the Mercer Offer will be open
for acceptance for a period of 35 days unless withdrawn or extended and
will be conditional upon, among other things, Mercer acquiring such
number of common shares that represent at least 50.1% of the
outstanding 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. Pursuant to the Support
Agreement, Fibrek has agreed to waive the application of the
shareholder rights plan to the Mercer Offer and to take no action to
waive the application of the shareholder rights plan to any other
acquisition proposal. The Support Agreement entered into by Fibrek and Mercer contains, among
other things, a termination fee of $8.5 million payable by Fibrek in
certain circumstances, including the acceptance of an unsolicited
superior proposal from a third party. Mercer has also been granted a
right to match in respect of competing proposals.
Mercer has also agreed to purchase 32,320,000 special warrants of Fibrek
on a private placement basis, at a price of $1.00 per special warrant
for total subscription proceeds of $32,320,000. The special warrants
are convertible into common shares of Fibrek on a one-for-one basis.
Conversion of the special warrants is automatic in certain events and
otherwise at the option of Mercer subject to certain conditions. The
special warrants are also redeemable by Mercer or Fibrek in certain
events at their subscription price, including in the event that Fibrek
receives and supports a superior proposal. The proceeds of the private
placement will be deposited in trust at closing and will be releasable
to Fibrek on conversion of the special warrants or to Mercer in the
event of a redemption. Proceeds from the private placement are
initially to be used by Fibrek to reduce net debt given (i) the recent
costs associated with its strategic alternatives review process in
response to Abitibi's unsolicited offer, (ii) the high level of RBK
Pulp inventories and lower than anticipated sales which have resulted
in a 5-week market shutdown of the Fairmont Mill effective February 20,
2012 and an increased need for liquidity, and (iii) capital
expenditures required in connection with Fibrek's power-generation
initiatives and other growth and diversification opportunities.
Completion of the private placement and the conversion of the special
warrants is subject to a number of conditions, including the approval
of the TSX, but is not conditional on the successful completion of the
Mercer Offer. In the event the Mercer Offer is not completed, the
private placement will provide Fibrek with necessary funding to
continue operations and the execution of its strategic plan.
For more information on how to tender Fibrek Common Shares 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 email@example.com.
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.
Mercer Inc. is a Washington corporation and whose shares of common stock
are quoted and listed for trading on the NASDAQ Global Market (MERC) and the Toronto Stock Exchange (MRI.U).The company operates in the pulp
business and is the largest publicly traded producer of market northern
bleached softwood kraft, or "NBSK", pulp in the world. The company is
the sole kraft pulp producer, and the only producer of pulp for resale,
known as "market pulp", in Germany, which is the largest pulp import
market in Europe. The company's operations are located in Eastern
Germany and Western Canada and currently employs approximately 1,039
people at its German operations, 439 people at its Celgar mill in
Western Canada and 17 people at our office in Vancouver, British
Columbia, Canada. Mercer operates three NBSK pulp mills with a
consolidated annual production capacity of approximately 1.5 million
air-dried metric tonnes.
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. 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.
SOURCE FIBREK INC.
For further information:
Patsie Ducharme 514 871-0550
Vice President and Chief Financial Officer
Roch Landriault 514 843-2345
NATIONAL Public Relations
Dany Paradis 514 871-0550
Vice President, Change Management and Supply Chain