Mercer superior offer at $1.30 stands
MONTREAL, Feb. 24, 2012 /CNW Telbec/ - Fibrek Inc. ("Fibrek" or the "Corporation") announced today that the Bureau de décision et de révision (Québec) (the "BDR"), the administrative tribunal with statutory jurisdiction in securities law and regulatory matters in the Province of Québec, has dismissed AbitibiBowater Inc.'s (doing business as Resolute Forest Products) ("Abitibi") request to cease trade the proposed offer by Mercer International Inc. ("Mercer") to acquire all of the issued and outstanding common shares of Fibrek (the "Mercer Offer"). The BDR has however granted an order to cease trade the proposed private placement of 32,320,000 special warrants to purchase common shares of Fibrek to Mercer further to the application filed by Abitibi. As previously announced, the Mercer Offer was not conditional on the success of the private placement.
Fibrek intends to appeal the decision to cease trade the proposed private placement rendered by the BDR as it is grossly unreasonable, ignores the evidence presented before the BDR and contravenes fundamental corporate law principles.
The Board of Directors continues to unanimously recommend that shareholders ACCEPT and TENDER their common shares to Mercer's $1.30 offer and to REJECT and NOT TENDER their common shares to Abitibi's unsolicited $1.00 insider bid. If shareholders have tendered their shares to the Abitibi insider bid, the Board recommends that they WITHDRAW them immediately.
Commenting on the BDR's decision, President and Chief Executive Officer Pierre-Gabriel Côté stated: "Our goal remains to ensure that our shareholders are not deprived of the intrinsic value of Fibrek shares that rightfully belongs to them. No matter which roadblocks Abitibi and its locked-up shareholders put in our way, this is what we intend to keep doing. While the BDR has dismissed Abitibi's unfounded attempt to block a legitimate and superior offer by Mercer, we are disappointed that they have cease traded the special warrants, which served to reestablish a level playing field between Abitibi and Mercer, and provided Fibrek with needed liquidity.
"The decision of the BDR could deprive our shareholders of their right to benefit from an aggregate of approximately $40 million in additional value," continued Mr. Côté. "We intend to appeal this decision, which overrides the business judgment of the Fibrek Board and is wrong in both facts and law, and to vigorously pursue any and all recourses available to us to ensure that our shareholders are treated fairly."
Hubert T. Lacroix, Chairman of the Board of Directors of Fibrek added: "We were surprised to learn during the hearing that in mid-November 2011, only two weeks before signing a hard lock-up agreement with Abitibi for a $1.00 offer, Fairfax Financial Holdings Limited refused to sell its common shares of Fibrek to Mercer for a superior value than that of the Abitibi bid, after having been approached by Mercer.
"We also realized that Steelhead Partners, LLC, who has indicated in writing having tendered its common shares of Fibrek to Abitibi, has accumulated 96% of its 6,479,000 common shares of Fibrek after the Abitibi bid was announced. It appears that the majority of those purchases were made at a price above the $1.00 Abitibi bid. One could ask 'what is the business purpose of entering into such a trade?' This is a troubling question. It seems strange that any investor would buy shares at prices above $1.00, only to tender them to a lower bid, and this when there is a superior offer by Mercer on the table, at $1.30. It is important to note that Steelhead owns 13% of the outstanding common shares of Abitibi valued at approximately $200 million, with Abitibi representing approximately 15% of the Steelhead portfolio," concluded Mr. Lacroix.
To Fibrek's knowledge, Abitibi has not obtained all regulatory approvals required to satisfy the conditions of its offer and has not waived its minimum tender condition of 66 2/3%. Consequently, Abitibi is not currently in a position to take up and pay for any Fibrek common shares tendered under its bid which are subject to the right of withdrawal.
The Support Agreement in respect of the Mercer Offer has been filed and is available at www.sedar.com under the company's profile. Full details of the Mercer Offer will be included in the take-over bid circular which is expected to be mailed to holders of common shares of Fibrek by February 29, 2012.
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 protected].
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.
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:
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