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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 Bid’) 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 them immediately. 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. "Abitibi’s 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 mill’s 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 pulp. "The insider bid deprives minority shareholders of the opportunity to participate in the upside of Fibrek’s 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 Fibrek’s 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 Abitibi’s opportunistic and inadequate insider bid," concluded Lacroix. SOURCE: Fibrek Inc. |