DUNCAN, BC, Oct. 13 /CNW/ - Western Forest Products Inc. (TSX: WEF) ("Western" or the "Company") today announced that it has sold certain higher-and-better-use properties in central and northern Vancouver Island (the "HBU Properties") to a joint venture established between the Company and Brookfield Properties Limited ("Brookfield"), a wholly-owned subsidiary of Brookfield Properties Corporation (TSX: BPO). The HBU Properties were formerly part of the group of properties that were included in the Company's non-core asset sales program. In connection with the establishment of the joint venture and the sale of the HBU Properties, Western will receive total cash proceeds of approximately $12 million.
As part of the joint venture arrangements, the joint venture vehicle (the "JV Entity") has a right of first offer to purchase for possible future development approximately 630 acres of additional higher-and-better-use properties in central and northern Vancouver Island. These properties also represent non-core assets of the Company.
Pursuant to the joint venture arrangements, Western holds less than 5% of the equity of the JV Entity and has a right to sell its interest in the JV Entity to Brookfield for its fair market value at any time on or after January 1, 2011. Brookfield is the manager of the JV Entity, which also holds Carma Developers LP, a limited partnership that carries on a land development business across Western Canada.
An independent committee of Western's Board of Directors unanimously recommended that the Board of Directors approve the transaction. Western's Board of Directors unanimously approved the transaction on October 8, 2009.
The transaction constitutes a related party transaction under Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101") because the transaction involves parties related to the Company. The Company is relying on the "financial hardship" exemption in subsections 5.5(g) and 5.7(1)(e) of MI 61-101 to complete the transaction without obtaining an independent valuation or minority shareholder approval that MI 61-101 would otherwise require.
The Company will file a material change report as soon as practicable after issuing this press release. The Company did not file a material change report at least 21 days prior to closing of the transaction as the Company desired to complete the transaction at the earliest possible opportunity in light of the Company's financial condition, including its need for increased liquidity to meet its financial obligations and commitments. The Company considers the shortened timeframe reasonable and necessary in these circumstances.
Forward Looking Statements and Information
This press release contains statements which constitute forward-looking statements and forward-looking information within the meaning of applicable securities laws. Those statements and information appear in a number of places in this document and include statements and information regarding our current intent, belief or expectations primarily with respect to market and general economic conditions, future costs, expenditures, available harvest levels and our future operating performance, objectives and strategies. Such statements and information may be indicated by words such as "estimate", "expect", "anticipate", "plan", "intend", "believe", "should", "may" and similar words and phrases. Readers are cautioned that it would be unreasonable to rely on any such forward-looking statements and information as creating any legal rights, and that the statements and information are not guarantees and may involve known and unknown risks and uncertainties, and that actual results and objectives and strategies may differ or change from those expressed or implied in the forward-looking statements or information as a result of various factors. Such risks and uncertainties include, among others: general economic conditions, competition and selling prices, changes in foreign currency exchange rates, labour disruptions, natural disasters, relations with First Nations groups, changes in laws, regulations or public policy, misjudgments in the course of preparing forward-looking statements or information, changes in opportunities and other factors referenced under the "Risk Factors" section in our Annual Information Form dated February 25, 2009 and under the "Risks and Uncertainties" section of our MD&A in our 2008 Annual Report of the same date. All written and oral forward-looking statements or information attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.
Except as required by law, Western does not expect to update forward-looking statements or information as conditions change.
Western Forest Products
Western is an integrated Canadian forest products company and the largest coastal British Columbia woodland operator and lumber producer with an annual available harvest of approximately 7.4 million cubic metres of timber of which approximately 7.1 million cubic metres is from Crown lands and lumber capacity in excess of 1.6 billion board feet from eight sawmills and four remanufacturing plants. Principal activities conducted by the Company include timber harvesting, reforestation, sawmilling logs into lumber and wood chips and value-added remanufacturing. Substantially all of Western's operations, employees and corporate facilities are located in the coastal region of British Columbia while its products are sold in over 30 countries worldwide.
SOURCE WESTERN FOREST PRODUCTS INC.
For further information: For further information: Gary Ley, (604) 787-5467; Brian Cairo, Sr. Vice President, Finance, (250) 715-2258