TORONTO--(BUSINESS WIRE)--Oct. 31, 2024--
GreenFirst Forest Products Inc. (TSX: GFP) (“GreenFirst” or the “Company”) is pleased to announce that further to the press releases dated September 19, 2024 and October 2, 2024, the Company anticipates that closing of the proposed plan of arrangement that will result in the distribution of the outstanding shares of Kap Corporation to the GreenFirst shareholders on the basis of one common share of Kap Corporation for each ten common shares of GreenFirst (after taking into account the 10 for one consolidation completed on October 17, 2024) held (the “Spin-out”) will occur on November 4, 2024.
The Company is also announcing a rights offering to raise gross proceeds of up to $96.9M (the “Rights Offering”) by issuing up to 17,722,410 common shares in the capital of the Company (the “GF Shares”) at a price of $5.47 per share representing a 25% discount to the Company’s five day VWAP ending on October 30, 2024. The Company has entered into a Standby Purchase Agreement pursuant to which Ravenswood Investments III, L.P. and The Ravenswood Investment Company L.P., two funds managed by Robotti & Company Advisors, LLC (together the “Standby Purchasers”). Under the Standby Purchase Agreement, the Standby Purchasers have agreed to purchase up to an aggregate of 3,656,307 GF Shares not otherwise purchased under the Rights Offering for a commitment of up to $20,000,000. Proceeds from the Rights Offering will be used to support an off-cycle capital expenditure program that will drive great operational productivity and future earnings.
“Over the last eighteen months we have executed on our stated goals of eliminating the Rayonier sawmill acquisition debt, selling excess land, disposing of under-performing Quebec sawmills, removing pension liability, decentralizing the newsprint business and reducing corporate overhead,” said Paul Rivett, Chair of GreenFirst. “We are now a pure-play lumber business in the best wood fibre basket and business-friendly jurisdiction, Ontario, with an excellent off-cycle opportunity to re-position our production in the top quartile.”
“The backstopped rights offering will provide us with the capital necessary to quickly purchase and install equipment that will drive our operations to top quartile productivity at the low end of the lumber commodity cycle when the equipment is cheapest, and installation is the fastest. These initiatives will strengthen GreenFirst’s competitiveness in the long term. We aim to be ready before the market’s recovery,” said Joel Fournier, GreenFirst’s CEO.
“Upon the completion of the rights offering and the execution on our off-cycle capital expenditure program, GreenFirst will have a much stronger balance sheet than many of our competitors and, importantly, greater future earnings throughout much of any expected lumber cycle,” said Peter Ferrante, GreenFirst’s CFO.
Bob Robotti, Chief Investment Officer of Robotti & Company Advisors, LLC, the investment adviser for the Standby Purchasers stated, “GreenFirst Common Shares represent an investment in a cyclical industry at a countercyclical time. We believe that GreenFirst’s assets are now in capable hands and that management is opportunistically taking thoughtful steps to realize their latent earnings power. We are happy to be a catalyst to help capture that opportunity.” Robotti & Company Advisors, LLC is a U.S. Securities and Exchange Commission registered investment adviser. Robotti & Company Advisors, LLC and its predecessor have repeatedly and successfully invested in different cyclical industries during the offcycle.
Details of the Rights Offering
Pursuant to the Rights Offering, the Company will be offering 17,722,410 rights (the “Rights”)to holders (the “Shareholders”)of GF Shares as at the close of business on November 7, 2024 (the “Record Date”)on the basis of one (1) Right for each one GF Share held. Each one (1) Right will entitle the holder to subscribe for one GF Share at the subscription price of $5.47 per GF Share (the “Exercise Price”). Holders of Rights will not be eligible to participate in the Spin-out in respect of GF Shares acquired on the exercise of Rights.
Upon completion of the Rights Offering and assuming all Rights are exercised, the Company will have 35,444,820 GF Shares outstanding, of which GF Shares issued under the Rights Offering represent 50% of the outstanding shares.
The period during which the Rights may be exercised under the Rights Offering will begin on the Record Date and will end at 5:00 p.m. (Toronto time) (the “Expiry Time”)on December 11, 2024 (the “Expiry Date”), after which time unexercised Rights will be void and of no value.
Commencing on November 7, 2024, the Rights will be listed on the TSX under the symbol “GFP.RT” and will continue to be posted for trading on the TSX until noon (Toronto time) on the Expiry Date, at which time they will cease trading.
Shareholders who fully exercise their Rights under the basic subscription privilege will be entitled to subscribe for additional GF Shares, if available, as a result of unexercised Rights prior to the Expiry Time on the Expiry Date, subject to certain limitations as set out in the Company’s Rights Offering circular dated October 31, 2024 (the “Circular”), which will be filed on SEDAR+ under the Company’s profile at www.sedarplus.com, along with the Notice of Rights Offering on form 45-106F14 (the “Notice”).The Notice and the Circular will be mailed to Shareholders in the Eligible Jurisdictions (as defined below) as of the Record Date on or about November 7, 2024. The Company expects to close the Rights Offering on or before December 13, 2024.
The Rights will be offered to Shareholders resident in all provinces and territories of Canada (the “Eligible Jurisdictions”). Registered Shareholders in the Eligible Jurisdictions who wish to exercise their Rights must forward the completed subscription form, together with the applicable funds, to the rights agent, Computershare Investor Services Inc. (the “Rights Agent”),on or before the Expiry Time on the Expiry Date. Shareholders who own their GF Shares through an intermediary, such as a bank, trust company, securities dealer, or broker, will receive materials and instructions from their intermediary.
Subject to the detailed provisions of the Circular, Rights certificates or DRS advises and subscription forms will not be mailed to Shareholders resident outside of the Eligible Jurisdictions, unless such Shareholders are able to establish to the satisfaction of the Company that they are eligible to participate in the Rights Offering and provide such evidence to the Company and the Rights Agent of the same.
In connection with the Rights Offering, GreenFirst has entered into a standby purchase agreement with the Standby Purchasers pursuant to which the Standby Purchasers have agreed to collectively purchase, at the Exercise Price, up to 3,656,307 GF Shares that are not otherwise subscribed for under the Rights Offering such that at least $20,000,000 of GF Shares are issued. In consideration for providing the backstop commitment, the Standby Purchaser will be paid a cash fee of $1,000,000 and will be issued 161,454 GF Shares at a price of $6.1937 per GF Share. The Standby Purchasers will also be granted customary nomination rights in respect of one independent director so long as they collectively hold at least 5% of the issued and outstanding GF Shares and customary registration rights for so long as they collectively hold at least 10% of the issued and outstanding GF Shares.
About GreenFirst
GreenFirst Forest Products is a forest-first business, focused on sustainable forest management and lumber production. The Company owns four sawmills located in rich wood baskets proudly operating over six million hectares of FSC® certified public Ontario forest lands (FSC®-C167905). The Company believes that responsible forest practices, coupled with the long-term green advantage of lumber, provide GreenFirst with significant cyclical and secular advantages in building products.
Forward Looking Information
Certain information in this news release constitutes forward-looking statements under applicable securities laws. Any statements that are contained in this news release that are not statements of historical fact are forward-looking statements. Forward looking statements are often identified by terms such as “may”, “should”, “anticipate”, “expect”, “potential”, “believe”, “intend”, “estimate” or the negative of these terms and similar expressions. Forward-looking statements are based on certain assumptions and, while GreenFirst considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. In addition, forward-looking statements necessarily involve known and unknown risks, including those set out in GreenFirst’s public disclosure record filed under its profile on www.sedarplus.com. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and thus are subject to change thereafter. GreenFirst disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
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For more information, please visit:
www.greenfirst.ca
or contact Investor Relations (416) 775 2821
Source: GreenFirst Forest Products Inc.
