EACOM Timber Corporation Acquires Domtar's Forest Products Business and
Raises $145 Million in Equity Financing

VANCOUVER, and MONTREAL, March 29 /CNW Telbec/ - EACOM Timber Corporation (TSX VENTURE: ETR; "EACOM") is pleased to announce that it has entered into a definitive purchase agreement to acquire the Forest Products business of Domtar Corporation. The purchase will be funded out of a $145 million private placement which has closed in escrow pending completion of the acquisition.

The Acquisition

Under the definitive purchase agreement EACOM will acquire seven sawmills and an equity interest in an eighth sawmill, all located in Eastern Canada. The mills are Timmins, Nairn Centre, Gogama and Ear Falls in Ontario and Val-d'Or, Ste-Marie and Matagami in Quebec. The equity interest is in the Elk Lake sawmill located in Ontario. The assets will include the transfer or grant of tenures to enable production at the mills. The sawmills in Ear Falls, Ontario, and Ste-Marie, Quebec, are currently idled. The acquisition price is set at $80 million plus the value of working capital acquired, estimated to be between $30 million to $40 million. 19% of the purchase price will be paid to Domtar as shares of EACOM. The acquisition is expected to be finalized at the end of June 2010, at which time Domtar will appoint a director to EACOM's board. The transfer is subject to obtaining certain consents, including the transfer of timber allocations and other standard conditions.

The sawmills transferred as part of the transaction represent approximately 3.5 million cubic metres of annual logging rights and a production capacity of close to 900 million board feet. Also included in the transaction are the Sullivan remanufacturing facility in Quebec and Domtar's investment in Anthony-Domtar Inc..

"With this acquisition, we are pursuing our vision to become a leading producer of softwood lumber for global markets," stated Rick Doman, President and Chief Executive Officer of EACOM Timber Corporation. "We are aware that customers in the wood products sector have many producers to choose from, and we will work very hard to ensure they do business with us, particularly given our ongoing commitment to our FSC certification," he continued.

"We can also confirm that all of the employees in Domtar's Forest Products division, as well as the members of the management team led by Jean-François Mérette, will be transitioning to EACOM" added Mr. Doman. "We are extremely pleased to be acquiring the extensive expertise of the Forest Products division. Upon completion of the acquisition, EACOM is expected to become one of the largest softwood producers in Eastern Canada. EACOM will work to quickly establish its head office in Montreal. The company will be a focused, well capitalized, standalone operation dedicated to the manufacturing of solid wood and value-added products", he concluded.

"Our forest products employees have demonstrated tremendous resilience throughout the years. Their sustained efforts to reduce costs and pursue the continuous improvement of operations have positioned the business well for the recovery as a standalone company," said John D. Williams, President and Chief Executive Officer of Domtar Corporation.

The Financing

EACOM has raised $145 million in a private placement subscription receipt financing. Genuity Capital Markets G.P. and Canaccord Financial Ltd. acted as co-lead agents (the "Agents") on the financing. The financing was completed at $0.50 per subscription receipt. The subscription receipts will convert into common shares of EACOM on a one for one basis upon completion of the transaction. The subscription receipt proceeds are held in escrow pending the completion of the transaction and will be used to fund the acquisition price and for working capital purposes. On closing of the acquisition, the Agents will receive a cash commission of 6% of the proceeds and agent's warrants to acquire common shares equal to 6% of the common shares issued under the subscription receipts at a price of $0.50 per share. The agent's warrants expire in two years.

About EACOM Timber Corporation

EACOM Timber Corporation is a TSX-V listed company. It is a new entry into the forestry sector. EACOM currently owns one idle mill in Big River Saskatchewan, which it acquired at the beginning of 2010.

About Domtar

Domtar Corporation (NYSE/TSX:UFS) is the largest integrated manufacturer and marketer of uncoated freesheet paper in North America and the second largest in the world based on production capacity, and is also a manufacturer of papergrade, fluff and specialty pulp. The Company designs, manufactures, markets and distributes a wide range of business, commercial printing and publishing as well as converting and specialty papers including recognized brands such as Cougar(R), Lynx(R) Opaque Ultra, Husky(R) Opaque Offset, First Choice(R) and Domtar EarthChoice(R) Office Paper, part of a family of environmentally and socially responsible papers. Domtar owns and operates Domtar Distribution Group, an extensive network of strategically located paper distribution facilities. Domtar also produces lumber and other specialty and industrial wood products. The Company employs over 10,000 people. To learn more, visit www.domtar.com.

Forward-Looking Statements

All statements in this news release that are not based on historical fact are "forward-looking statements." While management has based any forward-looking statements contained herein on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside of our control that could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth under the captions "Risk Factors" of the Filing Statement dated January 8, 2010 and the current MD&A for EACOM Timber Corporation on file with the Canadian Securities Commissions.

The TSX Venture Exchange has neither approved nor disapproved the contents of this press release.


For further information: For further information: Katherine Vanda, HKDP Communications and public affairs, (514) 395-0375, ext. 232, Mobile: (514) 212-3503

Organization Profile


More on this organization

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890