TimberWest to be acquired by two Canadian pension funds

Apr 11, 2011. /Lesprom Network/. TimberWest Forest Corp. has entered into a definitive agreement under which two leading Canadian pension funds, British Columbia Investment Management Corporation ("bcIMC") and the Public Sector Pension Investment Board ("PSP Investments"), have agreed to acquire TimberWest for $1.03 billion in cash, including assumed debt, as the company said in a press release received by Lesprom Network. The purchase price is equal to $6.48 per existing stapled unit, which represents a 25% premium over the 20-day volume-weighted average price of TimberWest stapled units on the Toronto Stock Exchange for the period ended April 8, 2011, the last trading day prior to this announcement. The transaction price is based on the fully diluted stapled units outstanding as of today. On April 15, 2011, TimberWest will pay deferred distributions on its stapled units in the amount of approximately $24.5 million by issuing 4.7 million additional stapled units on a pro rata basis to all of its unitholders of record as of April 15, 2011. After taking into account this issuance of additional stapled units and the resulting adjustment to the conversion price of TimberWest's outstanding convertible debentures, unitholders will hold 1.0516 stapled units for each existing stapled unit and the purchase price will be $6.16 per stapled unit. The aggregate value of the consideration to each unitholder of record as of April 15, 2011 is not affected by the issuance of these additional stapled units. The stapled units will begin trading ex-distribution on the Toronto Stock Exchange on April 13, 2011. bcIMC currently holds approximately $107 million aggregate principal amount of convertible debentures of TimberWest convertible into approximately 31.1 million stapled units, or approximately 22% of the total fully diluted outstanding stapled units (assuming the conversion of all of TimberWest's outstanding convertible debentures). V. Edward Daughney, Chairman of the board of directors of TimberWest, said, "We believe this transaction provides significant value to TimberWest unitholders. bcIMC and PSP Investments are both leading Canadian pension plans well-positioned to support the long-term development of TimberWest's exceptional timber and real estate assets and emerging new businesses." As part of the definitive agreement, TimberWest has a 60-day "go-shop" period during which it is permitted to solicit a superior proposal. bcIMC and PSP have no right to match a superior proposal made during this period. If the Company is successful in soliciting a superior proposal during the go-shop period, there will be a break fee payable to bcIMC and PSP Investments of approximately $18 million. As a holder of TimberWest convertible debentures, bcIMC is a related party to TimberWest. Accordingly, the board of directors of TimberWest formed a special committee of independent directors in connection with the transaction. In addition, as required under applicable securities laws, the special committee engaged UBS Securities Canada Inc. to conduct an independent valuation of TimberWest's stapled units. The purchase price falls within the range of values identified in the independent valuation. Based on the recommendation of the special committee, TimberWest's board of directors has approved the transaction. BMO Capital Markets and UBS Securities Canada Inc. have each provided TimberWest's special committee and board of directors with an opinion that the transaction is fair, from a financial point of view, to unitholders (other than bcIMC). The transaction will proceed by way of a statutory plan of arrangement and will be subject to court approval and approval by 66 2/3% of the votes cast by unitholders at a special meeting convened to consider the transaction. The transaction is subject to customary closing conditions, including regulatory approvals. In the absence of a superior proposal, the transaction is expected to close by the end of June 2011. BMO Capital Markets acted as financial advisor to TimberWest and the special committee and will be managing the go-shop process on behalf of the Company. UBS Securities Canada Inc. acted as independent valuator and financial advisor to the special committee. McCarthy Tétrault LLP acted as legal counsel to TimberWest. TimberWest is uniquely positioned as western Canada's largest private timber and land management company. The Company owns in fee simple approximately 327,000 hectares or 808,000 acres of private land and is in the business of selling timber products and real estate.