An anonymous director reports
WEST FRASER ANNOUNCES US$1.25 BILLION SUBSTANTIAL ISSUER BID
West Fraser Timber Co. Ltd.'s board of directors has approved the commencement of a substantial issuer bid, pursuant to which the company will offer to purchase from shareholders for cancellation up to $1.25-billion (U.S.) of its outstanding common shares. The offer will proceed by way of a modified Dutch auction procedure with a tender price range from $80 (U.S.) to $95 (U.S.) per share, representing a 1-per-cent discount to a 17-per-cent premium over the company's volume-weighted average price on the New York Stock Exchange over the past 20 trading days.
Term of the offer
The board has authorized the offer, which will commence on April 26, 2022, and expire on June 2, 2022, unless extended or withdrawn. The company plans to finance repurchases of shares through available cash on hand. The offer is denominated in U.S. dollars and shareholders will receive payment in U.S. dollars, while Canadian shareholders may, at their option, elect to receive payment in Canadian dollars.
Tender offer alternatives
The offer will be conducted through a modified Dutch auction procedure. Shareholders who wish to participate in the offer will be able to do so through: (i) auction tenders in which they will specify the number of shares being tendered at a price of not less than $80 (U.S.) and not more than $95 (U.S.) per share in increments of 25 U.S. cents per share, or (ii) purchase price tenders in which they will not specify a price per share, but rather will agree to have a specified number of shares purchased at the purchase price to be determined by auction tenders. Shareholders who validly deposit shares without specifying the method in which they are tendering their shares will be deemed to have made a purchase price tender. West Fraser directors and officers do not have a present intention to tender any shares pursuant to the offer.
Upon expiry of the offer, the company will determine the lowest purchase price (which will be not less than $80 (U.S.) per share and not more than $95 (U.S.) per share) that will allow it to purchase the maximum number of shares properly tendered to the offer, and not properly withdrawn, having an aggregate purchase price not exceeding $1.25-billion (U.S.).
If shares with an aggregate purchase price of more than $1.25-billion (U.S.) are properly tendered and not properly withdrawn, the company will purchase the shares on a pro rata basis after giving effect to odd lot tenders (of holders beneficially owning fewer than 100 shares), which will not be subject to pro ration. In that case, all shares tendered at or below the finally determined purchase price will be purchased, subject to pro ration, at the same purchase price determined pursuant to the terms of the offer. Shares that are tendered but not purchased, including shares tendered pursuant to auction tenders at prices above the purchase price, will be returned to shareholders.
The offer will be for up to approximately 15 per cent of the total number of issued and outstanding shares on a non-diluted basis (based on a purchase price equal to the minimum purchase price per share and 101,589,808 shares issued and outstanding as of April 19, 2022).
The offer is optional for all shareholders, who are free to choose whether to participate, how many shares to tender and, in the case of auction tenders, at what price to tender within the specified range. Any shareholders who do not deposit their shares (or whose shares are not repurchased under the offer) will realize a proportionate increase in their equity interest in the company, to the extent that shares are purchased under the offer.
West Fraser has suspended share repurchases under its normal course issuer bid (NCIB), and no NCIB purchases will be made until after the expiration of the offer, if and when West Fraser determines to recommence repurchases under the NCIB.
The offer is not conditional upon any minimum number of shares being tendered but is subject to various conditions that are typical for a transaction of this type. West Fraser reserves the right, subject to applicable laws, to withdraw, extend or amend the offer, if certain events occur at any time prior to the payment for tendered shares. The offer is expected to remain open for acceptance until 5 p.m. (Vancouver time) on June 2, 2022, unless extended or withdrawn.
Details of the offer, including instructions for tendering shares, will be included in the formal offer to purchase and issuer bid circular, letter of transmittal, notice of guaranteed delivery and other related documents. The offer documents will be mailed to shareholders, filed with applicable Canadian securities regulatory authorities and made available without charge on SEDAR, filed on a Schedule 13E-4F with the U.S. Securities and Exchange Commission, and made available without charge on EDGAR and posted on the company's website.
Computershare Investor Services Inc. has been engaged by West Fraser to act as depository for the offer. Shareholders who have questions regarding the offer or require any assistance tendering shares may contact Computershare Investor Services by telephone at 1-800-564-6253 (North America) or 514-982-7555 (international), or by e-mail at email@example.com.
West Fraser has not engaged a dealer manager for the offer in Canada or for the United States, but reserves the right to do so before the offer expires.
About West Fraser Timber Co. Ltd.
West Fraser is a diversified wood products company with more than 60 facilities in Canada, the United States, the United Kingdom and Europe. From responsibly sourced and sustainably managed forest resources, the company produces lumber, engineered wood products (oriented strand board, laminated veneer lumber, medium-density fibreboard, plywood and particleboard), pulp, newsprint, wood chips, other residuals and renewable energy. West Fraser's products are used in home construction, repair and remodelling, industrial applications, papers, tissue, and box materials.
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