Pulp & Paper Canada
January 31, 1999
By Pulp & Paper Canada
MONTREAL, QC -- Tembec Inc. has made a $270-million bid for British Columbia's Crestbrook Forest Industries Ltd., which includes a 325 000-tonne-per-year pulp mill in Skookumchuck, BC, and three nearby saw mills. The total value consists of $70.5 million in cash or Tembec A shares and taking on $200 million of Crestbrook debt. The cash and share offer can jump to about $94 million if world softwood prices rise above $550 (US) per tonne this year from $500 (US) per tonne.

Mitsubishi Corp. and Oji Paper Co., the two Japanese shareholders which own 51% of the outstanding common shares of Crestbrook, have entered into lockup agreements with Tembec. They can accept another bid only if it is above $5.

Tembec is offering 0.51298 of a class A share or $4.50 cash for each Crestbrook share, with a cap of $23.5 million on total cash. Any shortfall in cash will be made up in Tembec shares. Tembec has 15.65 million shares outstanding. Crestbrook shareholders stand to gain a one-time payment of up to $1.50 per share, contingent on the amount pulp exceeds $550 (US) on March 31, 1999. The deal has to gain the usual regulatory approvals, including assent from the minister of forests under the British Columbia Forest Act.

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