Resolute Forest Products makes takeover bid for Fibrek
Resolute Forest Products has announced its intention to acquire all the issued and outstanding common shares of Fibrek Inc. The offer of C$1 per share in cash, or C$0.55 in cash and 0.0284 of a Resolute Forest Products common share will expire on or before Dec. 31.
According to Resolute, the offer represents a premium of approximately 39% over the closing price of Fibrek’s shares on Nov. 28, and a premium of approximately 31% over the volume-weighted average trading price of the shares on the Toronto Stock Exchange or the 20 trading days ending on that date.
The maximum amount of cash available will be approximately C$71.5 million, and the maximum number of Resolute shares to be issued will be approximately 3.7 million shares. Shareholders holding approximately 46% of Fibrek have already committed to tender their shares, according to Resolute.
"The acquisition of Fibrek is consistent with our strategy," said Richard Garneau, president and CEO of Resolute. “As we continue to focus on building a sustainable and profitable company, growth in expanding global pulp markets is the right move, at the right time, for Resolute Forest Products. The range of optimization opportunities that we expect from this acquisition will, over time, deliver value to our shareholders."
Noting that the unsolicited offer “appears opportunistic,” Fibrek has issued a statement urging its shareholders to delay taking any action until its board of directors can fully evaluate Resolute’s offer.
The board is evaluating other strategic alternatives, it said. "The consideration offered under the Resolute proposal does not capture Fibrek’s true value for its shareholders," said Pierre Gabriel Côté, president and CEO of Fibrek.
Fibrek is a leading producer and marketer of high-quality virgin and recycled kraft pulp. The company operates three mills located in Saint-Félicien, Quebec; Fairmont, W.Va.; and Menominee, Mich. It supplies various sectors of the paper industry mainly in Canada, the United States and Europe. Fibrek trades on the Toronto Stock Exchange under FBK.
Resolute is a global supplier in the forest products industry with a diverse range of products, including newsprint, commercial printing papers, market pulp and wood products. Resolute owns or operates 18 pulp and paper mills and 23 wood product facilities in the United States, Canada and South Korea.
Marketing its products in close to 90 countries, Resolute has third-party certified 100% of its managed woodlands to sustainable forest management standards. The shares of Resolute trade under the stock symbol ABH on both the New York Stock Exchange and the Toronto Stock Exchange. BMO Capital Markets is acting as financial adviser to Resolute, while UBS is acting as financial adviser to a special independent committee of the board of Resolute.
Builders FirstSource secures $160 million
Dallas-based Builders FirstSource announced the completion of a $160 million first-lien Term Loan financing agreement with affiliates of Highbridge Principal Strategies.
The company also announced it had entered into a standalone letter of credit facility with SunTrust Bank, which provides for the issuance of up to $20 million of letters of credit.
With the proceeds, the LBM dealer intends to repay the $20 million outstanding under the current revolving credit facility, use $14.2 million to collateralize letters of credit outstanding under the new LC Facility, and pay fees and expenses related to the transaction.
"This financing transaction strengthens our liquidity and positions us to take full advantage of the expected recovery in housing," said Floyd Sherman, Builders FirstSource CEO.
Sherman added that improvement in 2011 financial results allowed the deal to happen — sales in November have exceeded the company’s expectations.
"Our sales results through November have exceeded our expectations, delaying the anticipated seasonal reduction in working capital typically seen by this point in the year," Sherman said. "Our liquidity has also enabled us to take advantage of opportunistic inventory buys to protect customer pricing as we head into 2012."
Upon receipt of the $119.6 million in net proceeds related to this transaction, Builder FirstSource’s cash balance was about $150 million, and net liquidity was about $115 million after giving effect to a $35 million minimum cash requirement contained in the term loan.
Rolling out its ERP system, ProBuild hires Mohawk exec
Don Riley, the former chief information officer of carpet manufacturer Mohawk, has been selected as the new executive VP supply chain and technology for ProBuild. This surprise appointment, announced Nov. 23, reached outside the LBM industry to fill a role overseeing the largest pro dealer’s supply chain, information technology and manufacturing organizations.
Reporting to Riley will be Paul Dodge, senior VP supply chain; Lonnie Bernardoni, senior VP manufacturing and business process improvement lead; and John Huber, chief information officer.
According to the announcement, Riley’s job will be to integrate the company’s IT, supply chain and manufacturing divisions. “Riley’s duties will also include the planning and implementation of enterprise IT systems in support of business operations in order to improve cost-effectiveness and service quality. Additionally, Riley will direct and manage ProBuild’s technology infrastructure and environment, including the design and development of business-focused application solutions to support ProBuild’s business operations.”
A tall order, given the scope of the company’s attempt to integrate all its lumberyard acquisitions into one Oracle-based ERP system. An initial rollout of the “ProEdge” platform on the East Coast to former Strober units did not go smoothly, and a series of snags and cost overruns have followed as the company has tried to make it work on both the front and back end at other ProBuild locations. But ProBuild is determined to move forward with ProEdge and has scheduled more rollouts for next year. Jennifer Thurman, a spokeswoman for ProBuild, would not disclose the exact number of lumberyards or their locations, but she called the ProEdge rollout “a top priority” for the Denver-based company.
“We have already begun additional deployment efforts [this year],” Thurman said. “In 2012, we will continue to focus on deploying ProEdge and driving new and enhanced capabilities and technology, delivering competitive advantage into the marketplace.”
Leading the charge will be Riley, who has a strong background in both information technology and logistics. As the senior VP and CIO at Mohawk, the 49-year-old executive was responsible for the carpet manufacturer’s global information systems and strategies and its logistic functions in North America. The company operates 50 distribution centers and 250 wholesale outlet stores and operates its own trucking fleet.
Prior to Mohawk, Riley worked for Kellwood Co., a privately held, $2.4 billion women’s apparel firm. During his six years there, Riley implemented a new ERP and warehouse management system as the company’s chief information officer.
Riley also has 13 years of sales experience earlier in his career, when he worked for information technology and services firm EDS.
“Don brings significant experience to ProBuild, having led the successful implementation and extension of enterprise systems in previous roles,” said Fred Marino, president and CEO of ProBuild. “A critical element of our vision is the successful integration of technology into all areas of our business. We believe that technology will transform the home-building industry, and it is our goal to take a significant leadership role in that transformation. We look forward to the expertise and leadership Don brings to help us achieve our vision.”
ProBuild is the nation’s largest LBM chain, with more than 435 locations serving 45 U.S. states.