Mr. Ray Ferris reports
WEST FRASER ANNOUNCES SUCCESSFUL COMPLETION OF SUBSTANTIAL ISSUER BID, EXTENDING RECORD OF CAPITAL RETURNS
West Fraser Timber Co. Ltd. has taken up and purchased for cancellation a total of 11,898,205 common shares at a price of $95.00 (U.S.) per share under its substantial issuer bid (SIB) for an aggregate purchase price of approximately $1.13-billion (U.S.).
The shares purchased represent approximately 11.7 per cent of the total number of West Fraser's issued and outstanding shares and Class B shares at the time the SIB was announced in late April, 2022. After giving effect to the SIB, West Fraser will have 87,473,547 shares and 2,281,478 Class B shares issued and outstanding. No Class B shares were purchased under the SIB.
"We are pleased to have successfully completed our second substantial issuer bid, furthering our track record of returning significant capital to our shareholders. While we were able to return more than $1.1-billion (U.S.) to participating shareholders, the fact that the tender offer was not oversubscribed suggests that many of our shareholders still see considerable upside value in our shares," said Ray Ferris, president and chief executive officer, West Fraser. "West Fraser's capital allocation priorities aim to balance disciplined investing with returning capital to shareholders, all while maintaining our financial flexibility. By executing strategic share repurchases at a price below our estimate of intrinsic value, we are confident that we will be able to create significant, long-term value for our shareholders. Given our strong balance sheet, we will continue to look for additional opportunities to effectively deploy our capital as we execute on our strategic objectives, benefit from the resilience of our product and geographic diversity, and provide our customers with the type of wood-based building products that we expect will be important contributors to a low-carbon economy."
Since the completion of the Norbord acquisition in February, 2021, the company has repurchased 33,542,183 shares through the completion of two SIBs as well as normal course issuer bids, representing approximately 27.2 per cent of the total shares and Class B shares outstanding at the time of the acquisition of Norbord for an aggregate total of approximately $2,812,000,000 (U.S.). Over the same period, West Fraser has returned approximately $112-million (U.S.) to shareholders through dividends, for a total of approximately $2,924,000,000 (U.S.) in capital returned to shareholders through buybacks and dividends.
All shareholders who made auction tenders and purchase price tenders will have 100 per cent of their successfully tendered shares purchased by West Fraser at the purchase price.
Payment for the shares accepted for purchase under the SIB will be effected by Computershare by June 9, 2022, in accordance with the SIB and applicable law. The company expects to be eligible to recommence purchases under its normal course issuer bid (NCIB) after all shares accepted for purchase under the SIB have been taken up. In connection with the recommenced NCIB and subject to Toronto Stock Exchange (TSX) approval, West Fraser will enter into an automatic share purchase plan with its broker, which will enable West Fraser to provide standard instructions and purchase shares on the open market during self-imposed blackout periods. Outside of these blackout periods, shares may be purchased in accordance with management's discretion.
For Canadian federal income tax purposes, a deemed dividend arises on the repurchase of shares under the SIB. To assist shareholders in determining the Canadian tax consequences of the SIB, West Fraser has determined that for the purposes of the Income Tax Act (Canada), the paid-up capital per share is $17.49. West Fraser designates the entire amount of the deemed dividend arising from its repurchase of the Shares under the SIB as an eligible dividend for purposes of the Income Tax Act (Canada) and any corresponding provincial and territorial tax legislation.
For the purposes of subsection 191 (4) of the Income Tax Act (Canada), the specified amount in respect of each share is $79.95 (U.S.).
The full details of the SIB are described in the offer to purchase and issuer bid circular dated April 26, 2022, as well as the related letter of transmittal and notice of guaranteed delivery, copies of which were filed and are available on SEDAR and EDGAR.
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 (OSB, LVL, MDF, 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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