VANCOUVER, BC, April 29, 2021 /CNW/ - GreenFirst Forest Products
Inc. (TSXV: GFP) ("GreenFirst" or the "Company") today filed its
audited consolidated financial statements for the year ended
December 31, 2020, and the related
management discussion & analysis, both of which are available
under GreenFirst's profile on SEDAR at www.sedar.com. All amounts
are in Canadian dollars unless indicated otherwise.
The Company reported net loss attributable to common
shareholders of $1.527 million, or
$0.07 loss per share, and total
comprehensive loss of $1.958 million
in the fourth quarter of 2020, compared to net loss attributable to
common shareholders of $0.209
million, or $0.01 loss per
share, in the fourth quarter of 2020.
For the year ended December 31,
2020, Greenfirst reported net loss attributable to common
shareholders of $2.250 million, or
$0.11 loss per share, and total
comprehensive loss of $2.375 million,
compared to net income attributable to common shareholders of
$0.047 million, or $0.002 earnings per share, for the year ended
December 31, 2019.
Significant events during 2020 included the following:
- On September 17, 2020, the
Company announced that 1347 Investors LLC, an investee company of
GreenFirst, had agreed to acquire (the "Acquisition") , a sawmill
and related assets located in Kenora,
Ontario for consideration of $11,500,000 in cash from the court-appointed
receiver of a resource-based vendor. The Acquisition was approved
by a court vesting order of the Manitoba Court of Queen's Bench on
September 9, 2020. The Acquisition
closed on October 6, 2020. The assets
purchased in the Acquisition are comprised of a sawmill and related
equipment, and land of approximately 114 acres with approximately 1
km of shoreline, plus a 4-acre island. The sawmill operations
occupy approximately 42 acres of the land with the remaining land
surplus to the mill operations. The sawmill is located near major
transportation routes, including the Trans-Canada Highway and the
main Canadian Pacific rail line, providing easy access to the
nearby Canadian-United States border and several key mid-west U.S.
markets, including Minneapolis,
Chicago, St. Louis and Dallas.
- In connection with the Acquisition, Company also completed a
non-brokered private placement financing (the "Private Placement")
of 2,000,000 units (the "Units") at a purchase price of
$0.50 per Unit and of 4,000
convertible debentures (the "Convertible Debentures") at a purchase
price of $1,000 per Convertible
Debenture for aggregate gross proceeds of $5,000,000. The Company closed the Private
Placement on October 22, 2020.
Concurrently with the closing of the Private Placement, each of Mr.
Paul Rivett and Rick Doman were appointed to GreenFirst's Board
of Directors.
Recent developments
On April 12, 2021, the Company
announced that it had entered into an asset purchase agreement (the
"Purchase Agreement") pursuant to which a newly formed, a
wholly-owned subsidiary of the Company (the "Purchaser") will
acquire six lumber mills and one newsprint mill located in
Ontario and Quebec, for a purchase price of US$140 million plus the value of the inventory
on-hand at the time of closing of the transaction (the "Closing),
reflecting an aggregate purchase price expected to be approximately
US$214 million (the "Purchase
Price"). The Purchase Price is payable approximately 85% in
cash and approximately 15% in common shares in the capital of the
Company (each a "Common Share"). In addition, a chip offset
credit note (the "Credit Note") will be issued by the Purchaser to
the vendor in the amount amount of C$7.9
million. The credit note is non-interest bearing and is
payable in five equal annual installments on the anniversary of the
closing. The Purchaser may elect to set-off the principal
amount of the Credit Note against amounts owing by the vendor to
the Purchaser or the Company under a chip purchase
agreement.
In connection with entering into of the Purchase Agreement, and
to satisfy a portion of the purchase price, the Company intends to
conduct a rights offering (the "Rights Offering") for gross
proceeds of at least US$75 million.
The Company intends to issue three rights (each a "Right") for each
of its outstanding Common Shares with each Right being exercisable,
at a subscription price of C$1.50
(the "Exercise Price") to acquire a subscription receipt (each a
"Subscription Receipt"). Each Subscription Receipt will, upon
Closing and without any further consideration, automatically be
exchanged into a Common Share. Senvest Management, LLC (including
its related parties, "Senvest") has, pursuant to a binding backstop
commitment, agreed to purchase, at the Exercise Price, all
Subscription Receipts that are not otherwise subscribed for under
the Rights Offering such that at least US$75
million of Subscription Receipts are issued.
Certain directors and officers of the Company have agreed with
Senvest that they will not exercise all or a portion of their
Rights and will transfer their Rights to Senvest to the extent
required to ensure that Senvest will hold a minimum of US$50 million in the Company following completion
of the Rights Offering. In consideration for providing the backstop
commitment, Senvest will be granted warrants to acquire Common
Shares equal to US$18,750,000 at an
exercise price equal to the lower of C$3.18 and such other price as may be consented
to by the TSX Venture Exchange and given customary nomination
rights in respect of one independent director and customary
registration rights for so long as Senvest holds at least 15% of
the issued and outstanding Common Shares. The backstop commitment
is subject to customary terms and conditions, which will be
detailed in a formal backstop commitment agreement. Insiders of the
Company and their families have likewise committed, either directly
or indirectly, to exercising at least US$4
million of Rights or other already outstanding convertible
or exercisable securities of the Company and have agreed not to
sell or transfer their Common Shares for a period of six months
following closing other than under customary exceptions.
If the Rights are exercised in full, the gross proceeds to the
Company from the Rights Offering are expected to be approximately
C$148 million.
The Purchaser has also entered into a Commitment Letter with a
New York-based investment fund, on
behalf of itself and certain of its affiliates and fund managed,
sub-advised by its (the "Lenders") pursuant to which the Lenders
have committed to make available to the Purchaser a US$120 million senior secured term credit
facility, conditional on the fulfilment of certain customary
conditions (the "Debt Financing"). Completion of the Debt Financing
is subject to certain conditions including, but not limited to, the
completion of an equity financing, which is intended to be
satisfied by the Rights Offering.
The Purchaser has also entered into a commitment letter with
Royal Bank of Canada, pursuant to
which it has committed to make available to the Purchaser a senior
secured asset-based revolving credit facility, in an amount of
$50 million (which may be increased
upon syndication) subject to the terms therein. The asset-based
revolving credit facility is not intended to be used to finance the
payment of any of the Purchase Price due on Closing.
Management Comments:
Larry G. Swets, Jr., Chief
Executive Officer, stated, "We're excited to begin this new chapter
with GreenFirst as we pursue our plans to focus on lumber and
forestry opportunities. We began this transformation with the
purchase of the Kenora sawmill in
2020 and continued into 2021, entering into an asset purchase
agreement with Rayonier A.M. Canada G.P. and Rayonier A.M. Canada
Industries Inc. to acquire six sawmills and a newsprint mill in
Ontario and Quebec, making us one of the largest companies
in the North East focused in this space."
For more information, please contact:
Larry G. Swets, Jr.
630-290-2432
CAUTIONARY NOTE
Book value per share is a non-IFRS
measure calculated as the total of shareholders' equity divided by
the issued and outstanding shares of GreenFirst. The term "book
value per share" does not have any standardized meaning according
to IFRS and therefore may not be comparable to similar measures
presented by other companies. There is no comparable IFRS measure
presented in GreenFirst's audited consolidated financial statements
and thus no applicable quantitative reconciliation for such
non-IFRS financial measure. GreenFirst believes that book value per
share can provide information useful to its shareholders.
Forward Looking Information
Certain statements in this press release and in GreenFirst's
oral and written public communications may constitute
forward-looking statements that reflect management's expectations
regarding GreenFirst's future growth, financial performance and
business prospects and opportunities, including in respect of the
proposed transaction, as of the date of this press release.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as "anticipate",
"believe", "plan", "forecast", "expect", "estimate", "predict",
"intend", "would", "could", "if", "may" and similar
expressions.
This press release includes, among others, forward-looking
statements regarding GreenFirst's expectations regarding: the
impact of the transaction on GreenFirst and its business; the
anticipated timing for Closing the transaction; the nature, size
and sources of financing available to GreenFirst; the timing,
details and pricing of the Rights Offering; the replacement credit
facility; timing for the satisfaction of closing conditions under
the Purchase Agreement; and the expected date of the Closing. All
such statements are made pursuant to the "safe harbour" provisions
of applicable Canadian securities legislation. These statements
reflect current expectations of management regarding future events
and operating performance, and speak only as of the date of this
press release. In addition, forward-looking statements are provided
for the purpose of providing information about management's current
expectations and plans relating to the future. Readers are
cautioned that reliance on such information may not be appropriate
for other purposes.
By their nature, forward-looking statements require
management to make assumptions and are subject to inherent risks
and uncertainties. There is a significant risk that predictions,
forecasts, conclusions or projections will not prove to be
accurate, that management's assumptions may not be accurate and
that actual results, performance or achievements may differ
significantly from such predictions, forecasts, conclusions or
projections expressed or implied by such forward-looking
statements. We caution readers not to place undue reliance on the
forward-looking statements in this press release as a number of
factors could cause actual future results, conditions, actions or
events to differ materially from the targets, outlooks,
expectations, goals, estimates or intentions expressed in the
forward-looking statements.
These factors include, but are not limited to: general global
economic, market and business conditions; governmental and
regulatory requirements and actions by governmental authorities;
relationships with employees, customers, business partners and
competitors; and diversion of management time on the transaction.
There are also risks that are inherent in the nature of the
transaction, including failure to satisfy the conditions to the
completion of the transaction and failure to obtain any required
regulatory and other approvals (or to do so in a timely manner).
The anticipated timeline for Closing of the transaction may change
for a number of reasons, including the inability to secure
necessary regulatory or other approvals in the time assumed or the
need for additional time to satisfy the conditions to the Closing
of the transaction. As a result of the foregoing, readers should
not place undue reliance on the forward-looking information
contained in this news release concerning the timing of the
transaction.
GreenFirst cautions that the foregoing list is not exhaustive
of all possible factors, as other factors could adversely affect
our results. When relying on our forward-looking statements to make
decisions with respect to GreenFirst and its securities, investors
and others should carefully consider the foregoing factors and
other uncertainties and potential events. GreenFirst does not
intend, and disclaims any obligation, to update any forward-looking
statements, whether written or oral, or whether as a result of new
information or otherwise, except as may be required by law.
Neither TSXV nor its Regulation Services Provider (as that
term is defined in policies of the TSXV) accepts responsibility for
the adequacy or accuracy of this news release.
SOURCE GreenFirst Forest Product Inc.