Fibrek Files Directors' Circular Rejecting the Abitibibowater Insider Bid
Jan. 3, 2012 - Fibrek Inc. announced today that its Board of
Directors filed its Directors' Circular on December 30, 2011 recommending that Fibrek
shareholders REJECT the AbitibiBowater Inc. (doing business as Resolute Forest Products) ("Abitibi")
unsolicited insider bid (the Insider Bidí) made for all issued and outstanding common shares of the Company.
The Board also recommended that any shareholders who have tendered their common shares WITHDRAW
The Board has thoroughly reviewed Abitibi's Insider Bid to determine the course of action that it believes is in
the best interests of Fibrek's shareholders and other stakeholders. Its formal recommendation and the
reasons supporting such recommendation are outlined in its Directors' Circular filed on December 30, 2011,
as contemplated by securities laws.
"Abitibiís insider bid conveniently ignores probable and material new streams of operating income. It deprives
shareholders of significant intrinsic long-term value associated with our growth prospects," stated Pierre
Gabriel Cote, President and Chief Executive Officer of Fibrek.
"In addition to the 9.5-megawatt increase in capacity already announced, Management is fully engaged in
securing a power purchase agreement (PPA.) under the Government of Quebec's new cogeneration program
announced on December 20, 2011 for up to the currently installed 33-megawatt capacity at the St-Felicien
Mill. If the application is successful, the PPA is expected to generate incremental EBITDA of approximately
$16 million in the event that we secure a power purchase agreement for all the millís available megawatts. In
addition, Fibrek expects to generate an average of approximately $7 million per year of additional EBITDA
through a new long-term take-or-pay cost-plus agreement with a major tissue producer for the supply of RBK
"The insider bid deprives minority shareholders of the opportunity to participate in the upside of Fibrekís pulp
business and other earnings streams. It is also timed to take advantage of turbulence affecting the capital
markets. The price of our common shares as well as pricing in the pulp and paper markets were near their
lowest level of the year at the time the intention to make the insider bid was announced by Abitibi. Therefore,
the so-called 39% premium is illusory. Based on the six-month weighted-average trading price of our common
shares, the premium being offered to shareholders is 0%," concluded Cote.
Hubert T. Lacroix, Chairman of the Board of Directors of Fibrek, said, "We have a responsibility to our shareholders and that is exactly why we recommend that they REJECT this
insider bid. We are committed to protecting our shareholders and are doing everything in our power to ensure
that Fibrek shareholders are not pressured into selling their common shares at a price that is inadequate.
"We have already received an opinion from our financial advisors, TD Securities, concluding that the offer is
inadequate from a financial point of view and we have retained the services of Canaccord Genuity Corp. to
prepare a formal valuation of Fibrekís common shares. We are confident that the results of that valuation will
confirm that the intrinsic value of Fibrek's common shares is not reflected in Abitibiís opportunistic and
inadequate insider bid," concluded Lacroix.
SOURCE: Fibrek Inc.