Conifex Timber announces senior secured financing

Feb 19, 2013. /Lesprom Network/. Conifex Timber Inc. announced that its wholly-owned subsidiary, Conifex Power Limited Partnership ("CP Partnership"), has entered into a senior secured financing agreement (the "Financing") with Vertex One Asset Management Inc. under the terms of which, subject to certain conditions and regulatory approvals, CP Partnership will issue to Vertex promissory notes (the "Notes") in the aggregate principal amount of $5 million. The Notes have a term of one year and bear interest at a rate of 12% per annum. CP Partnership may redeem the Notes, in whole or in part, at any time on or after four months from the issue date of the Notes upon 15 days'' notice and payment of interest accrued on the amount redeemed to the date of redemption, but otherwise at par. As additional consideration for the Financing, the Company will issue to Vertex at the time of funding non-transferrable common share purchase warrants (the "Warrants") to purchase up to an aggregate of 160,417 common shares of the unissued capital stock of the Company at a price of $9.50 per share for a period of three years following issuance. Any common shares issuable upon exercise of the Warrants will be subject to a hold period expiring four months and one day following the closing. CP Partnership intends to use the net proceeds from the Notes primarily to partially fund CP Partnership''s power project at Mackenzie, British Columbia. On completion of further planned engineering work over the next few months, Conifex expects to enter into discussions with various potential lenders with respect to long-term financing for the project. Ken Shields, CEO of Conifex, commented: "This financing is a first step towards our objective of obtaining credit facilities to fund activity in our bioenergy segment. We are also working to secure conventional credit facilities to fund inventories and receivables in our lumber segment, following which we plan to repay our $12 million of 12% notes due at the end of 2013." Conifex and its subsidiaries' primary business currently includes timber harvesting, reforestation, forest management, sawmilling logs into lumber and wood chips, and value added lumber finishing and distribution.