TimberWest Forest Corp. completes oversubscribed rights offering together with private placement and bank refinancing


    VANCOUVER, Feb. 11 /CNW/ - TimberWest Forest Corp. (TSX: TWF.UN)
("TimberWest" or the "Company") announced today that it has completed its
previously announced rights offering (the "Rights Offering") pursuant to which
the Company distributed rights ("Rights") entitling existing holders of its
Stapled Units ("Unitholders") to purchase up to $50 million aggregate
principal amount of 9% extendible convertible debentures of the Company
    TimberWest has issued the maximum amount of $50 million aggregate
principal amount of Debentures under the Rights Offering, which was
oversubscribed by 53.2%. A total of approximately $76.5 million aggregate
principal amount of Debentures was subscribed for under the Rights Offering,
comprising approximately $41.5 million aggregate principal amount of
Debentures subscribed for under the basic subscription right and an additional
$35.0 million aggregate principal amount of Debentures subscribed for under
the additional subscription privilege available to holders of Rights who
exercised their basic subscription privilege in full. Because only $50 million
aggregate principal amount of Debentures was available for distribution under
the Rights Offering, subscriptions by holders of Rights under the additional
subscription privilege were pro-rated to a total of approximately $8.5 million
aggregate principal amount of Debentures.
    The Company also announced the completion of its previously announced
private placement (the "Private Placement") of convertible debentures of the
Company ("Private Debentures") having economic terms similar to those of the
Debentures to two wholly-owned subsidiaries of British Columbia Investment
Management Corporation (the "bcIMC Investors"). Under the terms of its
investment agreement with the Company, the bcIMC Investors agreed to purchase
$100 million aggregate principal amount of Private Debentures plus an
additional amount of Private Debentures equal to the aggregate principal
amount of the Debentures not subscribed for under the Rights Offering. Because
the Rights Offering was oversubscribed, no additional Private Debentures were
purchased by the bcIMC Investors, leaving their total subscription for Private
Debentures at $100 million.
    As a result of the Private Placement, the bcIMC Investors hold Private
Debentures convertible into approximately 23.7% of the currently issued and
outstanding Stapled Units, assuming the conversion in full of all Debentures
and Private Debentures.
    TimberWest also announced that the previously announced proposed
amendments (the "Credit Amendments") to the loan agreement governing its
existing credit facilities have become effective. As a result, the Company's
existing $325 million credit facility has been replaced with a $250 million
three-year revolving credit facility which matures in February 2012. The new
facility is secured, and contains financial covenants including a minimum
EBITDA test as well as a tangible net worth test and a loan to book and market
value test.
    With the coming into effect of the Credit Amendments, the maturity date
of the Debentures has automatically been extended from February 27, 2009 to
February 11, 2014 in accordance with the terms of the Debentures.
    The net proceeds of the Rights Offering and Private Placement are being
used by the Company to permanently repay $75 million of indebtedness under its
existing bank credit facilities, with the remainder being used to reduce
indebtedness under the Company's revolving credit facilities.
    Together, these refinancing transactions are expected to provide the
Company with what it believes is sufficient flexibility to operate through the
current market downturn.
    Genuity Capital Markets acted as financial advisor to the Company.
    TimberWest's amended and restated loan agreement and certain other
agreements relating to the refinancing transactions will be filed on SEDAR and
available at www.sedar.com.

    Tax Information for Unitholders

    TimberWest has determined that the fair market value of each Right
distributed as part of the Rights Offering was $0.09. Accordingly, a
Unitholder who received Rights and was not resident in Canada on January 7,
2009 for Canadian income tax purposes was deemed to receive a dividend on
January 7, 2009 equal to $0.09 for each Right received by the Unitholder. A
portion of the Rights received by non-resident Unitholders has been sold to
fund the withholding tax arising as a result of the issuance of the Rights to
non-resident Unitholders. Unitholders who received Rights and were resident in
Canada on January 7, 2009 for Canadian income tax purposes should include in
their income for Canadian tax purposes for their taxation year that includes
January 7, 2009 an amount equal to the aggregate fair market value of the
Rights received.
    The tax consequences of the receipt of Rights are explained in greater
detail in the Final Short Form Prospectus of TimberWest relating to the Rights
Offering dated December 23, 2008, which is available at www.sedar.com.

    Notice to Reader

    This news release does not constitute an offer to sell or a solicitation
of an offer to purchase any securities of TimberWest. The Debentures have been
registered in the United States on Form F-7 under the United States Securities
Act of 1933, as amended (the "U.S. Securities Act"). This news release is not
an offer of securities for sale in the United States and the securities
described above may not be offered or sold in the United States absent
registration under the U.S. Securities Act, or an exemption from registration.

    Forward Looking Statements

    The statements contained in this press release which are not historical
facts are forward-looking statements that involve risks and uncertainties.
TimberWest's actual results could differ materially from those expressed or
implied by such forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, general
economic conditions, variations in TimberWest's product prices and changes in
commodity prices generally, changes in market conditions, variations in
harvest levels, changes in log transportation costs, actions of competitors,
interest rate and foreign currency fluctuations, regulatory, harvesting fee
and trade policy changes and other actions by governmental authorities
including real estate zoning approvals, the ability to implement business
strategies and pursue business opportunities, labour relations, weather
conditions, forest fires, insect infestation, disease and other natural
phenomena and other risks and uncertainties described in TimberWest's public
filings with securities regulatory authorities.

    %SEDAR: 00009326E

For further information:

For further information: Bev Park, Executive Vice President and Chief
Financial Officer, Telephone: (604) 654-4600, Facsimile: (604) 654-4662,
Email: invest@timberwest.com

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