By: The Working Forest Staff
Vancouver, BC, Canada — Canfor Corporation has announced that it has filed its management information circular and related voting materials for the special meeting of Canfor shareholders to be held in connection with the proposed plan of arrangement with 1227738 B.C. Ltd. a wholly-owned subsidiary of Great Pacific Capital Corp. as previously announced on October 28, 2019.
The Arrangement At the Special Meeting being held on Wednesday, December 18, 2019, at 9:00 a.m. (Vancouver time), at the Vancouver Marriott Pinnacle Downtown Hotel, 1128 West Hastings Street, Vancouver, British Columbia, Shareholders will be asked to consider and vote upon a resolution to approve the Arrangement.
Under the terms of the Arrangement, the Purchaser will acquire all of the outstanding common shares of Canfor not already held by Great Pacific or its affiliates, for cash consideration of CDN$16.00 per Canfor Share by way of a statutory plan of arrangement under the Business Corporations Act (British Columbia).
Your vote is important regardless of the number of Canfor Shares you own. As a Shareholder, it is very important that you carefully read the Meeting Materials and then vote your Canfor Shares. You are eligible to vote your Canfor Shares if you were a Shareholder of record at the close of business on November 12, 2019. Shareholders may vote online, by telephone or other methods listed on their form of proxy or voting instruction form.
The mailing of the Meeting Materials has commenced, and Shareholders should receive them shortly. The Meeting Materials are also available on SEDAR under Canfor’s profile at www.sedar.com. To ensure that your Canfor Shares will be represented at the Special Meeting, you should carefully follow the voting instructions provided in the Meeting Materials. The deadline for the receipt of proxies is 9:00 a.m. (Vancouver time) on December 16, 2019.
Recommendation of the Board of Directors of Canfor has determined that the Arrangement is in the best interests of Canfor and fair to Shareholders (other than Great Pacific and its affiliates). The Canfor Board recommends that Shareholders vote FOR the Arrangement Resolution at the Special Meeting. Reasons for and Benefits of the Arrangement In recommending that Shareholders vote in favour of the Arrangement Resolution, the Canfor Board considered a number of factors, including those listed below:
- Significant Premium to Unaffected Market Price: The Consideration represents a premium of approximately 81.8% to the closing price of the Canfor Shares on August 9, 2019 (the last trading day prior to the announcement by Great Pacific of its indicative offer for Canfor), and a premium of approximately 55.9% to the 30-day VWAP prior to such announcement.
- Compelling Value Proposition for Minority Shareholders: Ongoing industry headwinds in the forestry sector, including high log costs due to supply constraints and significant declines in benchmark prices for both lumber and pulp, have had negative impacts on Canfor’s recent financial results. It is unknown how long the challenging industry conditions may persist and uncertain when financial results may improve as a result of capacity rationalization in British Columbia. These challenging conditions have also led to volatility in the trading price of Canfor Shares. The Arrangement provides holders of Canfor Shares, other than Great Pacific and its affiliates, with immediate and certain value upon completion of the Arrangement.
- Independent Valuation and Fairness Opinion: The Consideration is within the fair market value range determined by Greenhill & Co. Canada Ltd. (“Greenhill”), an independent financial advisor and valuator. Greenhill provided an opinion that, as of October 28, 2019, and based upon and subject to assumptions, limitations and qualifications set forth therein, the fair market value of the Canfor Shares is in the range of CDN$14.24 to CDN$19.38 per Canfor Share. Greenhill also provided an opinion that, as of October 28, 2019, and based upon and subject to assumptions, limitations and qualifications set forth therein, the Consideration to be received by Shareholders under the Arrangement is fair, from a financial point of view, to the Shareholders, other than Great Pacific and its affiliates.
- Limited Strategic Alternatives: Great Pacific and its affiliates own approximately 51% of the Canfor Shares and, as Great Pacific has indicated that it and its affiliates do not intend to sell any Canfor Shares, there are limited strategic alternatives available to Canfor.
- No Financing or Due Diligence Condition: All cash offer that is not subject to financing or due diligence conditions. Shareholder Questions and Assistance If you have any questions or require assistance voting your Canfor Shares, please contact Canfor’s proxy solicitation agent, Laurel Hill Advisory Group, at 1-877-452-7184 toll-free in North America, or call collect outside North America at +1 416-304-0211, or by email at [email protected]