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VANCOUVER, BC, Aug. 30, 2021 /CNW/ - GreenFirst Forest
Products Inc. (TSXV: GFP) ("GreenFirst" or the
"Purchaser") is pleased to announce that on August 28, 2021 it closed the previously
announced purchase of a portfolio of forest and paper product
assets (the "Purchased Assets") from Rayonier A.M. Canada
G.P. ("RYAM GP"), Rayonier A.M. Canada Industries Inc.
("RYAM Industries") and Rayonier A.M. Canada Enterprises
Inc. (collectively with RYAM GP and RYAM Industries,
"RYAM"), each a subsidiary of Rayonier Advanced Materials
Inc. (NYSE: RYAM).
GreenFirst acquired the Purchased Assets for an aggregate
purchase price of approximately US$235
million (the "Purchase Price") which was comprised of
a base amount of US$140 million plus
approximately US$87.5 million which
reflected the value of the inventory on-hand at the time of closing
(the "Closing") and other adjustments. Approximately
US$193 million of the Purchase Price
was paid in cash (the "Cash Purchase Price"), approximately
US$34 million was paid in common
shares in the capital of GreenFirst (each a "Common Share")
and C$7.9 million was paid through
the issuance of a chip offset credit note (the "Set-off
Note").
Strategic Benefits to GreenFirst
The acquisition of the Purchased Assets establishes GreenFirst
as a significant player in the Canadian forest products industry.
The Purchased Assets include six lumber mills which are located in
Chapleau, Cochrane, Hearst and Kapuskasing in Ontario and in Béarn and La Sarre in Québec as well as one newsprint
mill located in Kapuskasing,
Ontario. The Purchased Assets have an annual production
capacity of 755 MMFbm and are capable of producing a wide range of
forest products used in residential and commercial construction,
including SPF lumber, wood chips and by-products. The newsprint
mill has an annual production capacity of 205,000 MT/year.
Collectively, the Purchased Assets rank as a top ten producer of
lumber in Canada, based on recent
publicly available industry rankings.
GreenFirst believes that there are significant operational
efficiencies to be gained by optimizing operations and making
capital investments, in the future, in the Purchased Assets. The
Purchased Assets also include the rights to access approximately
3.29 million m3 of guaranteed fiber supply in
Ontario and Québec and include a
twenty year chip supply agreement with RYAM (the "Chip Purchase
Agreement") and established chip supply agreements which will
provide steady support and demand for the chips produced by the
lumber operations.
Management Commentary
"We are excited to announce the closing of this transaction and
to begin working to invest in and optimize the lumber mills," said
Rick Doman, Chief Executive Officer
of GreenFirst. "Our experienced management team has developed a
plan which we believe will allow us to significantly reduce cash
operating costs and potentially increase lumber capacity. We also
intend to make improvements to the mills' management structure,
sales processes and supply chains which we expect will generate
meaningful operational improvements."
Paul Rivett, Chairman of
GreenFirst, commented that "The closing of this transaction is a
significant milestone for GreenFirst representing the culmination
of a year of hard work and tremendous effort by all those involved.
GreenFirst is now well capitalized to begin the first chapter of
its plan to become a premier lumber producer in North America. We would also like to thank our
financial partners, Senvest and Blue Torch, and our external
advisors, KPMG, Norton Rose
Fulbright, NordStar Capital and RBC, for supporting us in
this transformative acquisition."
Sustainability Commitment
Environmental, Social, and Governance (ESG) is central to
everything GreenFirst does.
GreenFirst makes environmental stewardship a priority through
leading sustainable forest management practices, while promoting
energy efficiency and carbon reduction through the production of
lumber. GreenFirst is also committed to sustainable forest
management and to maximizing biodiversity and forest health as part
of its operations. GreenFirst's operations are certified by the
Forest Stewardship Council® (FSC®)
(FSC-C167905).
Mr. Doman added, "GreenFirst is focused on being a responsible
steward of forests and on playing a positive role in the
communities that we operate in, through our commitments to
sustainability."
Asset Purchase Agreement
The Common Shares issued to RYAM GP pursuant to the transaction
are subject to a four month hold period in accordance with
applicable Canadian securities laws. RYAM GP has agreed not to sell
its Common Shares for a period of six months following the
Closing.
The Set-off Note issued pursuant to the transaction is
non-interest bearing and has a principal amount of C$7.9 million. The principal amount is payable in
five equal annual installments on the anniversary of the Closing
and GreenFirst may elect to set-off the principal amount of the
Set-off Note against amounts owing by RYAM under the Chip Purchase
Agreement.
Conversion of Subscription Receipts
On July 30, 2021, the Company
completed its offering of rights and issued 111,665,880
subscription receipts (the "Subscription Receipts") at an
exercise price of C$1.50 per right
for gross proceeds of C$167,498,820.
In connection with the Closing, the Company delivered the release
notice to Computershare Trust Company of Canada constituting confirmation of the
satisfaction or waiver of all of the conditions to the completion
of the transactions. As a result, each Subscription Receipt was
automatically exchanged, without payment of additional
consideration or further action by the holders thereof, for one
Common Share on the Closing. The gross proceeds of the offering of
rights less the expenses and costs relating to the offering of
rights, and all interest thereon, was released to the Company with
a portion directed to RYAM to pay a portion of the Purchase
Price.
Following the exchange of the Subscription Receipts for Common
Shares and the issuance of 28,684,433 Common Shares to RYAM G.P.,
GreenFirst has a total of 177,572,272 Common Shares issued and
outstanding (or 209,324,892 on a fully-diluted basis, assuming the
exercise of all outstanding warrants).
This press release is not an offer to sell or the solicitation
of an offer to buy Common Shares or other securities of GreenFirst.
Such securities may not be offered or sold in the United States absent registration under
the United States Securities Act of 1933, as amended, or an
applicable exemption from the registration requirements.
Debt Financing
Concurrently with the Closing, a wholly owned subsidiary of
GreenFirst (the "Borrower") entered into a financing
agreement among the subsidiary, as borrower, GreenFirst and its
subsidiaries as guarantors, Blue Torch Finance LLC, as
administrative agent and collateral agent and the lenders party
thereto, pursuant to which the lenders made available to the
Borrower a term loan in an aggregate principal amount of
US$100 million. On Closing, the Borrower borrowed the full
amount of the facility, and used the proceeds to pay a portion of
the Cash Purchase Price and certain transaction fees and
expenses.
The Borrower also entered into a credit agreement, among the
Borrower and Lumber Assets Holdings LP, as borrowers, GreenFirst
and its subsidiaries as guarantors, Royal Bank of Canada ("RBC"), as administrative agent
and collateral agent, and the lenders from time to time party
thereto, pursuant to which the lenders have made available to the
borrowers a senior secured asset-based revolving credit facility in
the aggregate principal amount of C$65 million. The credit
facility is expected to be used to provide working capital, for
capital expenditures and permitted investments and acquisitions
from time to time and for other general corporate purposes
(including the payment of fees and expenses related to the
acquisition).
About GreenFirst
GreenFirst is a forest-first business, focused on
environmentally sustainable forest management and lumber
production. We believe that sustainable forest planting and
harvesting, coupled with the long-term green advantage of lumber,
provide GreenFirst with significant cyclical and secular advantages
in building products. GreenFirst's long-term pursuit is to be a
global leader in environmentally sustainable lumber. For more
information, please visit: www.gffp.ca.
Advisors
Norton Rose Fulbright Canada LLP acted as legal counsel to
GreenFirst, RBC Capital Markets acted as financial advisor to
GreenFirst, NordStar Capital acted as transaction advisor to
GreenFirst and KPMG Transaction Services provided due diligence
assistance to GreenFirst.
Forward Looking Information
Certain statements in this press release may constitute
forward-looking statements that reflect management's expectations
regarding GreenFirst's future growth, financial performance and
business prospects and opportunities. Generally, these
forward-looking statements can be identified by the use of
forward-looking terminology such as "anticipate", "believe",
"plan", "forecast", "expect", "estimate", "predict", "intend",
"would", "could", "if", "may" and similar expressions.
This press release includes, among others, forward-looking
statements regarding GreenFirst's expectations regarding: the
anticipated benefits of and strategic rationale for the transaction
(including the industry ranking and features of the Purchased
Assets); the impact of the transaction on GreenFirst and its
business; the expected operational efficiencies to be gained from
GreenFirst making capital expenditures, if made, in the Purchased
Assets; and the intended uses of the funds from the debt financing.
All such statements are made pursuant to the "safe harbour"
provisions of applicable Canadian securities legislation. These
statements reflect current expectations of management regarding
future events and operating performance, and speak only as of the
date of this press release. In addition, forward-looking statements
are provided for the purpose of providing information about
management's current expectations and plans relating to the future.
Readers are cautioned that reliance on such information may not be
appropriate for other purposes.
By their nature, forward-looking statements require management
to make assumptions and are subject to inherent risks and
uncertainties. There is a significant risk that predictions,
forecasts, conclusions or projections will not prove to be
accurate, that management's assumptions may not be accurate and
that actual results, performance or achievements may differ
significantly from such predictions, forecasts, conclusions or
projections expressed or implied by such forward-looking
statements. We caution readers not to place undue reliance on the
forward-looking statements in this press release as a number of
factors could cause actual future results, conditions, actions or
events to differ materially from the targets, outlooks,
expectations, goals, estimates or intentions expressed in the
forward-looking statements. These factors include, but are not
limited to: general global economic, market and business
conditions; governmental and regulatory requirements and actions by
governmental authorities; and relationships with employees,
customers, business partners and competitors.
GreenFirst cautions that the foregoing list is not exhaustive of
all possible factors, as other factors could adversely affect our
results. When relying on our forward-looking statements to make
decisions with respect to GreenFirst and its securities, investors
and others should carefully consider the foregoing factors and
other uncertainties and potential events. GreenFirst does not
intend, and disclaims any obligation, to update any forward-looking
statements, whether written or oral, or whether as a result of new
information or otherwise, except as may be required by law.
Neither TSXV nor its Regulation Services Provider (as that
term is defined in policies of the TSXV) accepts responsibility for
the adequacy or accuracy of this news release.
SOURCE GreenFirst Forest Products Inc.