Tag Archives: AbitibiBowater

AbitibiBowater Inc., doing business as Resolute Forest Products, has taken up and accepted for payment 1,633,800 additional shares of Fibrek Inc. deposited to its offer as of the close of business today.

Together with the shares the company acquired up to and including April 23, Resolute now has majority control of Fibrek, with approximately 50.1% of the currently outstanding shares.

As aggregate consideration for the shares taken up today, Resolute will distribute approximately 46,000 newly-issued shares of its common stock and CAD$900,000 in cash through RFP Acquisition Inc., a wholly-owned subsidiary.

Source: Resolute Forest Products

AbitibiBowater, doing business as Resolute Forest Products, is reporting a net income of $23 million in its first quarter of 2012, on sales of $1.1 billion.

These results can be compared to net income of $30 million on sales of $1.2 billion in the first quarter of 2011.

“Our balance sheet continued to strengthen despite seasonal softness and market headwinds,” said Richard Garneau, president and chief executive officer. “We demonstrated the discipline that sets us apart by taking market-related downtime to control finished goods inventory and by advancing annual pulp mill major maintenance to the first quarter from the second.”

Excluding $16 million of special items described below, net income for the quarter was $7 million. Net income excluding special items for the first quarter of 2011 was $10 million.

Special Items in first quarter, 2012

Special items incurred in the first quarter of 2012, net of tax, included:

• $15 million non-cash gain on translation of Canadian dollar net monetary assets
• $12 million gain on disposition of assets
• $4 million charge related to closure costs, impairment and other related charges
• $4 million of transaction costs related to the acquisition of Fibrek
• $3 million non-cash charge related to reorganization tax adjustments
• Income from other items, offset by a severance charge and post-emergence costs

Segment Details

Newsprint

The newsprint segment generated operating income of $21 million, a $5 million decrease from the fourth quarter of 2011. The decrease reflects a 9% seasonal reduction in shipments and the stronger Canadian dollar, largely offset by lower input costs, mainly recovered paper and power. The average transaction price remained unchanged and inventories were stable as the company took 85,000 metric tons of production downtime.

Coated Papers

Operating income in the coated papers segment was $14 million lower in the first quarter than in the previous quarter, resulting in an operating loss of $1 million. Shipments were stable but the average transaction price declined approximately $30 per short ton on weaker market conditions. Costs increased by $56 per short ton, primarily as a result of the annual maintenance outage in Catawba, South Carolina.

Specialty Papers

The specialty papers segment generated operating income of $15 million, down from $24 million in the previous quarter. Shipments were down 13% from the seasonally stronger fourth quarter and operating costs were higher due to a stronger Canadian dollar, offset in part by lower maintenance costs. The average transaction price remained stable, notwithstanding a decline in market demand to which the company responded with approximately 36,000 metric tons of production downtime.

Market Pulp

Operating loss in the market pulp segment was $21 million, compared to operating income of $12 million in the previous quarter. The average transaction price continued its downward trend, falling another $38 per metric ton in the first quarter. Results also included an $11 million charge for annual maintenance outages at two mills, including one advanced from a later quarter in light of softer demand. Shipments were essentially unchanged from the fourth quarter as the company took production downtime of over 77,000 metric tons.

Wood Products

The wood products segment reported an operating loss of $6 million in the first quarter, compared to a loss of $5 million in the fourth quarter. Shipments decreased by 8% over the same period, offsetting the $24 increase in average transaction price.

Outlook

“Our outlook for newsprint remains the same: despite modest secular decline in North America, we expect stable pricing, with continued weakness in Asian and European markets as long as the combination of lower ONP prices, a strong U.S. dollar and weaker euro continues,” said Richard Garneau. “We remain somewhat cautious in our outlook for pulp over the balance of the year, and we plan to complete the bulk of annual pulp mill maintenance in the second quarter. Pricing pressure in the specialty grades is building as a result of weak demand, especially in high gloss grades, but we expect the coated segment to recover as a result of recent price increase announcements by us and a number of our competitors. For their part, lumber markets are starting to reflect the gradual improvement in U.S. housing starts.”

AbitibiBowater, doing business as Resolute Forest Products, has yet to secure a majority of Fibrek‘s shares.

Resolute Forest Products currently holds about 48.8% of Fibrek’s shares.

Fibrek criticized its rival’s lack of success in convincing those other than large shareholders to tender their shares.
“After extending its bid for the eighth time now, Abitibi has once again made little to no progress convincing Fibrek minority shareholders…to tender to their inferior bid.”

For Resolute to successfully privatize Fibrek at $1.00 per share, an affirmative vote of a minimum of 66 2/3% of all Fibrek shareholders is required.

Read more:
Resolute Announces Take-Up of Additional Fibrek Shares and Extension of Offer to May 4 (Resolute Forest Products)
Abitibi still unable to convince Fibrek minority shareholders to tender to their inferior bid (Fibrek)
Fibrek not surrendering as Resolute controls 48.8 per cent of shares (The Canadian Press)
Fibrek not surrendering as Resolute controls 48.8 per cent of shares (Canadian Business)

According to AbitibiBowater, doing business as Resolute Forest Products, the Supreme Court of Canada has refused to hear an appeal by Fibrek Inc. and Mercer International Inc. of the Québec Court of Appeal’s decision concerning Fibrek’s special warrants.

Accordingly, the order issued by the Bureau de décision et de révision (Québec) on February 23 is now final and non-appealable, and Fibrek’s dilutive private placement of 32,320,000 special warrants to Mercer is definitively cease traded.

On April 11, Resolute acquired 60,831,859 Fibrek shares, representing approximately 46.8% of those currently outstanding, and announced that it had extended the expiry time for its offer in order to allow additional Fibrek shareholders to participate. The offer currently expires at 5:00 p.m. (Eastern time) on April 23, 2012.

Source: Resolute Forest Products

Mercer International Inc. has increased its offer for Fibrek and is now offering to purchase all of the issued and outstanding common shares of Fibrek for $1.30 (up from $1.40).

The increased consideration represents a 40% premium over the unsolicited insider bid made by AbitibiBowater Inc. (doing business as Resolute Forest Products).

Fibrek also announced today that its Board of Directors has adopted a shareholder rights plan, to automatically terminate at the close of business on May 11, 2012, in order to enable shareholders to benefit from the Increased Mercer Offer.

“Mercer has once again brought a superior offer to the table – one which recognizes the intrinsic value of Fibrek shares, as confirmed by the independent valuation presented to the Board in February, and one the Board strongly recommends to shareholders,” stated Hubert T. Lacroix, Chairman of the Board of Directors of Fibrek. “Note that the full amount of the increased portion of Mercer’s improved offer at $1.40 is payable in additional cash.

“Our Board remains committed to its fiduciary duty to maximize value for our shareholders. Faced with Abitibi’s continued oppressive conduct, which has effectively prevented an unrestricted auction for the common shares of Fibrek, we are taking measures to promote shareholder democracy in the face of a highly coercive unsolicited bid by Abitibi. The adoption of the shareholder rights plan is a genuine attempt by the Board to provide our shareholders with the ability to choose Mercer’s vastly superior offer.

“The rights plan, which will expire on May 11, will provide shareholders with sufficient time to compare Mercer’s new, improved offer to Abitibi’s inferior bid and will eliminate the threat of Abitibi’s coercive offer against our minority shareholders who may feel forced into tendering their shares in fear of being left out in a controlled public company, without any hope of getting a control premium for their shares. In addition, the rights plan will give enough time to the minority shareholders to wait for the Supreme Court decision. We have fought vigorously to protect the rights of our shareholders since day one and we will continue to do so,” continued Mr. Lacroix.

In Fibrek’s news release this morning, they took the opportunity to remind their shareholders of the following developments since the Mercer offer was originally announced on February 10, 2012:

• the troubling behaviour of Abitibi and its insiders Fairfax Financial Holdings Limited and Steelhead Partners, LLC, including the significant and improper acquisitions of Fibrek shares made by Steelhead after the announcement of the Abitibi offer;
• the reduction by Abitibi of its minimum tender condition to the number of shares covered by lock-up agreements in its favour, which could allow Abitibi to become, practically speaking, the controlling shareholder of Fibrek as soon as its offer expires at 11:59 p.m. today, without having paid a fair value to our shareholders;
• Abitibi has no obligation to extend its offer following April 11 and therefore no obligation to acquire more common shares or to privatize the Company after having taken up only 59,502,822 of the 130,075,556 Fibrek shares currently outstanding;
• Abitibi’s opportunistic strategy to acquire Fibrek shares at a discount while proceedings seeking a cease trade order in respect of its offer are still pending takes advantage of the uncertainty existing in the market; and
• Abitibi’s coercive attempt to place Fibrek shareholders in front of a fait accompli and force them to accept its inadequate offer and leave $0.40 per share on the table.

Pierre Gabriel Côté, President and Chief Executive Officer of Fibrek, added: “In adopting the new shareholder rights plan, the Board is ensuring that shareholders can choose an increased offer from Mercer. We are very pleased that the new offer now recognizes further value in Fibrek to the benefit of our shareholders, including our potential 33 megawatt power purchase agreement which could generate an incremental EBITDA of up to $16 million.”

Read more from Fibrek

Fibrek Inc.  has announced that the Supreme Court of Canada has granted Fibrek’s request to expedite the application for permission to appeal the Québec Court of Appeal’s decision to maintain the cease trade order of the proposed private placement of 32,320,000 special warrants to purchase common shares of Fibrek to Mercer International Inc.

The Supreme Court has established that any responses to the application for leave shall be served and filed by 4 p.m.on April 12, 2012 and Fibrek will have until noon on April 13, 2012 to serve and file its reply.

In the event permission to appeal is granted, the decision to expedite the appeal will be decided by the panel of judges on the application for leave to appeal.

Source: Fibrek

The latest update regarding the battle for Fibrek Inc. is a motion Fibrek has filed with the Supreme Court of Canada seeking permission for an expedited process to hear both an application for leave to appeal and the appeal itself, if leave is granted, of the Québec Court of Appeal‘s decision to maintain the cease trade order of the proposed private placement of 32,320,000 special warrants to purchase common shares of Fibrek to Mercer International Inc.

The Financial Post continues to follow the battle for Fibrek Inc. and seems to be in awe at how regulators are seemingly inventing new ways to go about their business.

Of most interest is the behind-closed-doors session that was held last week by a panel of Quebec’s Bureau de décision et de révision (BDR).

The Financial Post is reporting that Steelhead was there, and so was AbitibiBowater, and the Autorité des marchés financiers. No other parties involved in the Fibrek matter were invited, nor have they been informed as to what transpired.

At a hearing on Monday before Quebec’s BDR, the session went “in camera”. Only the three-person panel who met last week were allowed to stay for the private hearing and the other interested parties were asked to leave. It was at this time the news about last week’s secret session emerged.

The Financial Post has quoted one of their sources as saying, “The big story is secret hearings in the marketplace in the middle of a takeover bid and you won’t tell the bidders, you won’t tell the public and you won’t stop the [Fibrek] shares from trading.”

Read more from the Financial Post at Fibrek battle takes regulatory turn

AbitibiBowater Inc., doing business as Resolute Forest Products, has announced that it has reduced to 59,502,822 shares the minimum tender condition of its offer to acquire all of the issued and outstanding shares of Fibrek Inc.

Presently, 59,502,822 Fibrek shares are committed to Resolute’s offer pursuant to the previously disclosed lock-up agreements, representing approximately 45.7% of shares currently outstanding. The Company also announced that it has extended the expiry time of its offer to 11:59 p.m. on April 11.

As of the close of business on March 30, approximately 60.3 million common shares of Fibrek had been deposited to Resolute’s offer, representing approximately 46.4% of the currently outstanding shares.

In the event that the cease trade order imposed by the Bureau de décision et de révision (Québec) relating to the special warrants is not in full force and effect at the expiry time, the minimum tender condition will instead be 81,197,780 Fibrek shares. “Special warrants” refers to the Fibrek securities issuable to Mercer International Inc., as disclosed by Fibrek and Mercer on February 10.

The company also announced that on Friday, March 30, the Ontario Securities Commission dismissed Mercer’s application for a hearing to cease trade the company’s offer for Fibrek. Resolute intends to vigorously contest Mercer’s parallel application before the Bureau de décision et de révision (Québec) during a hearing scheduled for April 2.

Source: Resolute Forest Products

Following the announcement made on March 31, 2012 by Steelhead Partners, LLC and its affiliates, Fibrek Inc. understands that Steelhead intends not to tender any of its Fibrek shares to the unsolicited insider bid made by AbitibiBowater Inc. (doing business as Resolute Forest Products) until the minimum tender condition contained in the Abitibi bid has been met.

Steelhead is the second largest shareholder of AbitibiBowater.

As at March 31, 2012, Steelhead represented that it held a total of 6,479,000 Fibrek shares, representing approximately 4.98% of the outstanding Fibrek shares.

Fibrek has issued its press release to remind its shareholders that 46.4% of Fibrek shares are subject to lock-up agreements in favour of AbitibiBowater, which expire on April 13, 2012. As of March 20, 2012, the only Fibrek shares tendered to the AbitibiBowater unsolicited insider bid were the 46.4% of shares subject to the lock-up agreements, which do not represent a sufficient number of shares for AbitibiBowater to meet its minimum tender condition. Accordingly, shareholders are urged to continue to not take any action with respect to their Fibrek shares in order to benefit from the superior $1.30 Mercer offer.

Source: Fibrek

Fibrek Inc. has announced that, together with Mercer International Inc., it will seek permission from the Supreme Court of Canada to appeal the Québec Court of Appeal‘s decision to maintain the cease trade order of the proposed private placement of 32,320,000 special warrants to purchase common shares of Fibrek to Mercer.

As previously announced, 46.4% of Fibrek shares are subject to lock-up agreements in favour of AbitibiBowater Inc. (doing business as Resolute Forest Products).

On March 20, 2012, Abitibi announced that approximately 46.4% of the outstanding Fibrek shares had been deposited to the Abitibi unsolicited insider bid. Fibrek reminds shareholders that the Abitbi unsolicited insider bid is subject to a 50.01% minimum tender condition. Accordingly, Fibrek is reminding shareholders not to take any action with respect to their Fibrek shares until all available proceedings before the courts have been exhausted in order to benefit from the superior $1.30 Mercer offer.

Source: Fibrek