Ainsworth Announces Comprehensive Refinancing Plan

Transaction Significantly Improves Balance Sheet


Symbol Price Change
ANS-WT.TO 0.01 0.00

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct 22, 2012) - Ainsworth Lumber Co. Ltd. (ANS.TO)(ANS.WT) ("Ainsworth" or the "Company") today announced that its Board of Directors has approved a comprehensive refinancing plan (the "Refinancing Plan") which is expected to result in an approximately 30% reduction in total debt, lower borrowing costs and the extension of the Company''s maturity profile. As part of the Refinancing Plan, the Company intends to proceed with a fully backstopped rights offering to raise gross proceeds of $175 million through the issue of common shares (the "Rights Offering") and a debt financing for gross proceeds of approximately $350 million (the "Debt Financing"). 

The aggregate net proceeds received by Ainsworth from the Rights Offering and the Debt Financing will be used to repay in full Ainsworth''s outstanding senior secured term loan due June 2014 and 11% senior unsecured notes due July 2015 which comprise substantially all of the Company''s existing indebtedness.

Under the Rights Offering, Ainsworth plans to distribute to shareholders of record in Canada rights ("Rights") to subscribe for additional common shares of Ainsworth. The exercise price per common share under the Rights Offering will be $1.25In connection with the Rights Offering, Ainsworth also announced that it has entered into a standby purchase agreement (the "Standby Purchase Agreement") with its largest shareholder, Brookfield Asset Management Inc. (NYSE: BAM; TSX: BAM.A) ("Brookfield") pursuant to which Brookfield has agreed to purchase all of the common shares offered under the Rights Offering that are not otherwise purchased under the Rights Offering on the terms and conditions set out in the Standby Purchase Agreement. In consideration for its agreement to acquire such common shares, Brookfield will be entitled to a standby fee in the amount of $4.375 million. 

The completion of the Rights Offering is conditional upon, among other things, the completion of the Debt Financing on terms and conditions satisfactory to Ainsworth. It is expected that the Rights Offering will be launched at or around the date that the Debt Financing is completed.

Ainsworth President and Chief Operating Officer, Jim Lake said, "I am pleased to announce a refinancing plan that will de-leverage the Company''s balance sheet and position us well across industry cycles. We are also pleased that our major shareholder Brookfield has agreed to support the refinancing plan by backstopping our proposed rights offering."

The Rights Offering and the Standby Purchase Agreement were approved by Ainsworth''s Board of Directors based on a unanimous recommendation of an independent committee of the Board. BMO Capital Markets is acting as financial advisor to the independent committee with respect to the Rights Offering and the Refinancing Plan.

The terms and timing of the Rights Offering and further details regarding the Debt Financing will be provided in future disclosure by Ainsworth. The Company currently anticipates filing the preliminary short form prospectus for the Rights Offering on or about November 2, 2012 subsequent to the release of Ainsworth''s third quarter results. 

The Rights Offering and the terms of the Rights are subject to regulatory approval, including approval of the Toronto Stock Exchange.