EACOM Timber Corporation
NEX BOARD : ETR.H

EACOM Timber Corporation

November 11, 2009 18:18 ET

EACOM Board Approves Big River Purchase and Closes Private Placement in Escrow

VANCOUVER, BRITISH COLUBMIA--(Marketwire - Nov. 11, 2009) -

NOT FOR DISTRIBUTION IN THE US

EACOM Timber Corporation (NEX:ETR.H) today announced the Company has received conditional approval from the TSX Venture Exchange to close in escrow the $3,000,000 non-brokered private placement of 10,000,000 units previously announced.

The private placement will be released from escrow when EACOM exercises its option to acquire the Big River sawmill, or alternatively, purchases another asset in the forestry sector, in each case subject to TSX-Venture Exchange (the "Exchange") approval.

EACOM has substantially completed its due diligence on the Big River sawmill and its board has approved the purchase of the Big River sawmill subject to the execution of a final purchase agreement and TSX-Venture Exchange approval.

In addition to the private placement proceeds, EACOM can also force the exercise of outstanding warrants, for proceeds of $2.5 million, upon exercising the Big River option. Under the terms of these warrants, once EACOM gives the warrant holders notice that it has exercised the option to purchase the Big River sawmill, the warrant holders have 3 business days to exercise the warrants and forward the proceeds to EACOM.

EACOM estimates it has approximately $2 million in working capital and with the addition of the private placement proceeds of $3 million, plus the warrant exercise proceeds of $2.5 million, the company has a total of $7.5 million in available capital with which to purchase the Big River sawmill and initiate operations.

The start-up of operations will depend on, among other things, EACOM securing a timber allocation from the Saskatchewan government, on terms acceptable to EACOM. EACOM has not been allocated a timber supply to operate the mill, and there is no assurance that such a timber supply will be forthcoming. EACOM plans to purchase the Big River sawmill and pursue other alternatives for the mill if it cannot negotiate a timber allocation, on acceptable terms, in Saskatchewan. Other regions in Canada may have timber available and EACOM would consider moving the sawmill to another region if it did not get a timber allocation in Saskatchewan.

Private Placement Details

Each Unit in the private placement consists of one common share and one warrant to purchase a common share and the Units are priced at $0.30 per Unit. Each Warrant entitles the holder, at the holder's discretion, to acquire one common share for a price of $0.60 up until the third anniversary of the private placement closing. If these warrants get exercised, EACOM would issue 10,000,000 common shares for proceeds of $6 million. The Warrants will not be eligible for listing.

The private placement will be held in escrow until EACOM exercises its option to acquire the Big River sawmill, or alternatively, purchases another asset in the forestry sector, in each case subject to TSX-Venture Exchange (the "Exchange") approval. Under the terms of the escrow, EACOM must receive Exchange approval on or before November 30, 2009 or the participants in the private placement may have their funds returned.

Big River Purchase Option

The sawmill, located in Big River Saskatchewan, has been idle since 2006 following the closure of the Prince Albert pulp and paper mill. The sawmill underwent significant capital upgrades in 2000 and currently has an estimated maximum production capacity of 250 million board feet annually.

EACOM has paid $140,000 in cash for the option, which is an exclusive right to purchase the Big River sawmill. The amount paid is non-refundable but will be credited against the $3 million purchase price. Subject to certain conditions, the purchase price could be increased by $500,000, however, EACOM believes those conditions are unlikely to be met. The Option expires on November 25, 2009.

Statements in this news release other than historical information are forward-looking statements subject to risks and uncertainties. Actual results could differ materially depending on factors such as the availability of resources, the timing and effects of regulatory actions, the strength of competition, the outcome of litigation and the potential for acquisition transactions. Additional information regarding risks and uncertainties is set forth in the current MD&A for EACOM Timber Corporation on file with the Canadian Securities Commissions.

Contact Information

  • EACOM Timber Corporation
    Michael Liggett
    C.F.O.
    1.800.315.3660/604.279.8511
    604.279.8711