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Tembec sale? Sounds far from a done deal

Disgruntled shareholders stand ground against sale to Rayonier
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Tembec Kap mill
Tembec's Kapuskasing mill

One of the Tembec’s largest shareholders, Oaktree Capital Management, is coming out against the proposed US$320-million sale of the regional forest products giant to Rayonier Advanced Materials, a Florida cellulose maker.

The Los Angeles-based investment firm announced July 17 that they intend to line up Tembec shareholders in opposition to the proposed transaction announced on May 25.

Oaktree sent a July 14 letter to the boards of directors of Rayonier and Tembec stating its intention to vote against the transaction.

A special meeting of Tembec shareholders is scheduled for July 27.

Oaktree believes the sale “materially undervalues Tembec to the detriment of all Tembec shareholders,” among other concerns it has with the transaction.

Oaktree holds more than 19,900,000 Tembec shares, or 19.9 per cent of the total outstanding shares.

Connecticut-based Restructuring Capital Associates (RCA), a 17.1 per cent shareholder, chimed in on July 18 that it will vote against the deal.

"We have held shares in Tembec for almost a decade and are highly supportive of management and the board of directors,” said James Bennett, founder of RCA, in a statement.

“They have done a terrific job in turning around the company into a profitable and growing enterprise. While they support the Rayonier merger, we are not prepared to vote for the transaction unless Rayonier responds more appropriately to the points made by Oaktree.

“The strategic merit of this unique combination can improve profitability exponentially and Oaktree makes a compelling case that Rayonier can and should improve its offer. Rayonier's response was not persuasive. We urge Rayonier to engage constructively in order to accomplish a combination that is fair to both sets of shareholders."

In a July 17 release, Rayonier said the deal of $4.05 in cash or 0.2302 of a share of Rayonier common stock per Tembec common share “provides compelling value to Tembec shareholders.”

Rayonier said it does not intend to sweeten the offer.



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