Resolute Resolves to Submit Takeover Offer for Fibrek

Resolute Forest Products (formerly AbitibiBowater), has announced plans to make an unsolicited offer to acquire the Quebec-based paper company Fibrek Inc. 
 

Fibrek owns three pulp mills in North America, including deinking pulp operations in Fairmont, W.V. and Menominee, Mich.
 

In a statement following the unsolicited bid, Richard Garneau, president and CEO of Resolute, says, "The acquisition of Fibrek is consistent with our strategy. As we continue to focus on building a sustainable and profitable company, growth in expanding global pulp markets is the right move, at the right time, for Resolute Forest Products. The range of optimization opportunities that we expect from this acquisition will, over time, deliver increased value to our shareholders." 
 

Resolute expects the maximum amount to acquire Fibrek’s outstanding shares will be around C$71.5 million (US$69.4 million) and the maximum number of Resolute shares to be issued will be about 3.7 million shares. 

According to Resolute, its offer will contain a number of conditions, including a 66? percent minimum tender condition; waiver or termination of all rights under any shareholder rights plan(s); receipt of all regulatory, governmental and third-party approvals, consents and waivers; Fibrek not having implemented or approved any issuance of shares or other securities or any other transaction, acquisition, disposition, capital expenditure or distribution to its shareholders outside the ordinary course of business; and the absence of occurrence or existence of any material adverse effect or material adverse change. 
 

Prior to making the official offer, Resolute says that it has entered into lock-up agreements with several significant Fibrek shareholders, including Fairfax Financial Holdings Ltd. and Pabrai Investment Funds, which combined control about 46 percent of Fibrek’s common shares. 
 

Under the lock-up agreements, each of the locked-up shareholders has agreed to tender all of its Fibrek common shares to Resolute's offer, subject to certain conditions. The agreements provide, among other provisions, that Resolute commence a formal takeover bid on or before December 30, 2011, provided certain conditions are satisfied, including there not having occurred any material adverse change with respect to either Resolute or Fibrek. 
 

 Fibrek says its board of directors is in the process of reviewing and evaluating Resolute’s statement and will communicate a formal recommendation to shareholders as soon as possible. Fibrek adds “Resolute's unsolicited offer appears opportunistic.”