TimberWest Completes $50M Rights Offering, $100M Private Placement and Bank Credit Amendments

TimberWest Forest Corp. completed a rights offering on February 11, 2009, pursuant to which TimberWest distributed rights entitling existing holders of its Stapled Units to purchase up to $50 million aggregate principal amount of 9 per cent convertible debentures (debentures) of TimberWest. TimberWest issued the maximum amount of $50 million aggregate principal amount of debentures under the rights offering, which was oversubscribed by 53.2 per cent. Genuity Capital Markets acted as lead dealer manager in connection with the rights offering and BMO Nesbitt Burns Inc. and Raymond James Ltd. acted as co-dealer managers (collectively, the “dealer managers”).

On February 11, 2009 TimberWest also completed a private placement (the private placement) of convertible debentures of TimberWest (private debentures) having economic terms similar to those of the debentures.

The private debentures were issued to two wholly owned subsidiaries of an institutional investor (the private placement investors).

Under the terms of the investment agreement between TimberWest and the private placement investors, the private placement investors agreed to purchase $100 million aggregate principal amount of private debentures plus an additional amount of private debentures equal to the aggregate principal amount of the debentures not subscribed for under the rights offering. Because the rights offering was oversubscribed, no additional private debentures were purchased by the private placement investors, leaving their total subscription for private debentures at $100 million. RBC Capital Markets acted as financial advisors to the private placement investors.

Concurrent with the completion of the rights offering and private placement, TimberWest announced that previously announced amendments to the loan agreement governing its existing credit facilities became effective. As a result of the amendments, TimberWest's existing $325 million credit facility was replaced with a $250 million three-year revolving credit facility that matures in February 2012. The banking syndicate under the replacement facility (the “senior lenders”) is led by BMO Capital Markets and Rabobank Nederland, Canadian Branch.

TimberWest was represented by McCarthy Tétrault LLP, with a team including Richard Balfour, Sven Milelli, David Frost, Robin Mahood, Genevieve Pinto, Catherine Anderson and Alice Chen in connection with the rights offering and private placement and a team including Byran Gibson, QC, Jill Pereira, Craig Shirreff and Conrad Rego in connection with the bank credit amendments. Bruce Sinclair and Kirsten Kjellander of Blake, Cassels & Graydon LLP provided tax advice to TimberWest in connection with the rights offering and private placement.

The dealer managers were represented by Borden Ladner Gervais LLP, with a team including Paul Mingay, Manoj Pundit, Dyana McLellan and Andrew Bunston (corporate/securities); Larissa Tkachenko (tax); and Robert Owen (forest industry).

The private placement investors were represented by McCullough O'Connor Irwin LLP, with a team including Jonathan McCullough, Gillian Case, Mia Bacic and Kera Rees, and Lawson Lundell LLP, with a team including Irv Laskin, Heather Ferris, Reinhold Krahn and Valerie Mann.

The senior lenders were represented by Blake, Cassels & Graydon LLP, with a team including David Zacks, QC, Jyotika Reddy, Preetpal Bhamra and Chris Jackson.