Tembec announces a waiver to its Shareholder Rights Plan
11/06/2008 - 16:31
Tembec Inc. (“Tembec”) announced Tuesday, June 5, that its Board of Directors has waived the application of its Shareholder Rights Plan (the “Plan”) to the purchase of additional common shares of Tembec by funds managed by Wayzata Investment Partners LLC (“Wayzata”). The waiver would permit Wayzata to purchase up to a maximum of 30% of Tembec’s outstanding common shares subject to certain conditions.
Tembec has been informed that Wayzata has entered into an agreement to purchase common shares of Tembec which would bring its ownership to approximately 21.54% of Tembec’s outstanding common shares. Wayzata’s agreement to purchase these additional shares is expressly contingent upon obtaining the waiver described herein.
The conditions to the waiver granted to Wayzata include:
* Wayzata must vote all common shares owned or controlled by it over 20% of the issued and outstanding shares of Tembec (the “Excess Shares”) in the manner recommended by the Board of Directors of Tembec, except on the appointment of auditors and compensation matters, as well as certain instances set forth below in which Wayzata will abstain from voting the Excess Shares.
* Wayzata shall abstain from voting any Excess Shares in respect of the election of directors of Tembec and the issuance of Common Shares from treasury (to the extent such issuance requires shareholder approval under applicable law).
* In connection with any take-over bid for Tembec’s common shares or similar type of transaction, Wayzata may only tender Excess Shares to the bid if the Board of Directors of Tembec recommends that shareholders generally tender to the bid (or makes no recommendation).
* Wayzata must provide Tembec with seven days prior notice before any sale of 1,000,000 or more common shares of Tembec expected to occur over a 30-day period.
* Wayzata must provide Tembec with prompt notice of the acquisition of any additional common shares of Tembec.
The waiver granted to Wayzata will terminate upon the earlier of (a) Wayzata’s ownership dropping below 20% of Tembec’s outstanding common shares and (b) a breach by Wayzata of the terms of the waiver.
The Plan was adopted by Tembec in connection with the completion of its recapitalization transaction on February 29, 2008 and outlined in the Management Proxy Circular dated January 25, 2008. Absent a prior waiver from Tembec’s Board of Directors, the Plan is triggered upon a shareholder acquiring beneficial ownership of 20% or more of Tembec’s common shares.
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