Resolute Forest Products to make takeover bid to acquire Fibrek, valuing offer at about C$130M, says acquisition will serve expanding global pulp markets, provide opportunities for operational optimization

Sandy Yang

Sandy Yang

Nov 28, 2011 – PRNewswire

MONTREAL , November 28, 2011 (press release) – Transaction Highlights

* Offer will be C$1.00 per share of Fibrek: C$0.55 in cash and 0.0284 of a Resolute Forest Products common share

* Shareholders holding approximately 46% of Fibrek have committed to tender their shares

* The offer represents a 39% premium to today's Fibrek closing price

* Acquisition will increase the Company's capacity in growing pulp markets and provides opportunities for operational optimization

Resolute Forest Products ("Resolute") announced today that it intends to make a formal take-over bid to acquire all of the issued and outstanding common shares (the "Common Shares") of Fibrek Inc. ("Fibrek", TSX: FBK).

"The acquisition of Fibrek is consistent with our strategy," stated Richard Garneau , President and Chief Executive Officer. "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 increased value to our shareholders."

The offer would contemplate that holders of Fibrek shares could elect to receive, for each Fibrek share:

* Cash and Share Option: C$0.55 in cash and 0.0284 of a Resolute share

* Cash Only Option: C$1.00 in cash (subject to proration, as described below)

* Shares Only Option: 0.0632 of a Resolute share (subject to proration, as described below)

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. For purposes of calculating the applicable proration, the maximum cash available and the maximum shares available will first be reduced by the amounts necessary to fully satisfy the Cash and Share Option. The Cash Only Option and the Shares Only Option will each be subject to proration in the event aggregate elections exceed the remaining cash or the remaining shares, respectively. If proration applies, the remaining consideration will be delivered in Resolute shares if the Cash Only Option is prorated, or in cash if the Shares Only Option is prorated.

The offer will contain customary conditions for transactions of similar nature, including, among others, a 66⅔% minimum tender condition, waiver or termination of all rights under any shareholder rights plan(s), receipt of all regulatory, governmental and third-party approvals, consents and waivers, Fibrek not having implemented or approved any issuance of shares or other securities or any other transaction, acquisition, disposition, capital expenditure or distribution to its shareholders outside the ordinary course of business, and the absence of occurrence or existence of any material adverse effect or material adverse change.

Resolute has entered into lock-up agreements (the "Lock-up Agreements") with three significant shareholders of Fibrek, including Fairfax Financial Holdings Limited and Pabrai Investment Funds, holding, directly or indirectly, an aggregate of 59,502,822 Fibrek shares (representing approximately 46% of Fibrek's issued and outstanding Common Shares). Under the Lock-up Agreements, each of the locked-up shareholders has agreed to tender, or cause to be tendered, all of its Fibrek Common Shares to Resolute's offer, subject to certain conditions. The Lock-up Agreements provide, among other provisions, that Resolute commence a formal take-over bid on or before December 30, 2011 , provided certain conditions are satisfied, including there not having occurred any material adverse change with respect to either Resolute or Fibrek. Under the Lock-up Agreements, which are being filed with the U.S. Securities and Exchange Commission (the "SEC"), also available on the Canadian SEDAR filing system, the Locked-up Shareholders have no ability to withdraw any Fibrek Common Shares to tender to or facilitate any competing transaction.

The offer represents a premium of approximately 39% over the closing price of Fibrek's shares on November 28, 2011 , and a premium of approximately 31% over the volume-weighted average trading price of the shares on the TSX for the 20 trading days ending on that date.

Full details of the offer will be included in the formal offer and the take-over bid circular to be filed with the securities regulatory authorities and mailed to Fibrek shareholders.

Based on Fibrek's public disclosure, it has 130,075,556 issued and outstanding Common Shares (on a non-diluted basis), valuing the offer at approximately C$130 million , or approximately US$126 million . Resolute currently owns no Fibrek Common Shares.

BMO Capital Markets is acting as financial advisor to Resolute, while UBS is acting as financial advisor to a special independent committee of the Board of Resolute.

About Resolute Forest Products

Resolute is a global leader 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.

Resolute and other member companies of the Forest Products Association of Canada , as well as a number of environmental organizations, are partners in the Canadian Boreal Forest Agreement. The group works to identify solutions to conservation issues that meet the goal of balancing equally the three pillars of sustainability linked to human activities: economic, social and environmental. Resolute is also a member of the World Wildlife Fund's Climate Savers program, in which businesses establish ambitious targets to voluntarily reduce greenhouse gas emissions and work aggressively toward achieving them.

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