EACOM Timber Corporation
NEX BOARD : ETR.H

EACOM Timber Corporation

October 07, 2009 20:32 ET

EACOM Timber Corporation Announces Proposed Private Placement

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 7, 2009) -

NOT FOR DISTRIBUTION IN THE US

EACOM Timber Corporation (NEX:ETR.H) today announced the Company has agreed to a non-brokered, private placement of 10,000,000 Units for proceeds of $3,000,000. Peninsula Merchant Syndications Corp. is the lead investor in this private placement.

Mr. Sam Magid, a Principal of Peninsula Merchant Syndications Corp. said, "Peninsula is pleased to be involved in this sector of the capital markets, specifically with a pure play, low cost lumber opportunity. EACOM has the vision and team in place with a focus on shareholder value creation."

Mr. Rick Doman, President and CEO of EACOM Timber Corporation said, "Completion of this offering will put EACOM in a position to exercise its option to purchase the Big River sawmill in Saskatchewan and to initiate operations." On June 1, 2009, EACOM announced that it entered into an exclusive option agreement (the "Option") to acquire the Big River sawmill from Domtar Corporation (TSX:UFS)(NYSE:UFS) subject to certain conditions being met to the satisfaction of EACOM.

Mr. Doman went on to say that, "We are very pleased to have Mr. Magid's support considering his extensive investment banking expertise in the solid wood and lumber sector and look forward to his involvement with EACOM."

The private placement will be closed in escrow and will be released only if EACOM exercises the Option, or alternatively, purchases another asset in the forestry sector, in each case subject to TSX-Venture Exchange (the "Exchange") approval.

EACOM has no immediate plans to add to its board of directors, however, it is reviewing its current board composition in light of its expected growth, which may result in future changes to the board of directors.

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 to acquire one common share for a price of $0.60 up until the third anniversary of the private placement closing. The Warrants will not be eligible for listing.

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. There are no audited or unaudited financial statements available with respect to the sawmill.

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, if the Option is exercised. 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.

Sponsorship

Canaccord Capital Corp. ("Canaccord"), subject to completion of satisfactory due diligence, has agreed to act as sponsor to EACOM Timber Corporation in connection with its request for listing on the Exchange. EACOM has entered into a sponsorship agreement with Canaccord to assist the Company in its move from the NEX to the TSX Venture Exchange. Pursuant to this agreement, EACOM has agreed to pay Canaccord $25,000 for its assistance. An agreement to sponsor should not be construed as any assurance with respect to the merits of the transactions or the likelihood of completion.

Conditions

The completion of the private placement and the purchase of the Big River sawmill is subject to a number of conditions, including Exchange acceptance. There can be no assurance that these transactions will be completed as proposed or at all.

Investors are cautioned that, except as disclosed by the Company, any other information released or received with respect to the exercise of the Big River option or the private placement may not be accurate or complete and should not be relied upon. Investors are cautioned that trading in the securities of EACOM Timber Corporation should be considered highly speculative.

Under Policy 5.2 of the Exchange, the shares in EACOM will be subject to a trading halt as a result of the proposed transactions until a Sponsorship Acknowledgement Form is filed by Canaccord. EACOM is working together with Canaccord so that the necessary filing can be completed as soon as possible.

About Mr. Magid

Mr. Magid was one of the co-founders of Salman Partners in 1994 and started his career as a top performing forestry analyst. As Head of Institutional Equity, he led Salman Partners to become a top rated boutique firm built originally on success in the Forestry sector. Mr. Magid has been ranked #1 in the past for Quality of Ideas and Average Share of Business Revenue in Pulp, Paper & Forest Products by Brendan Wood International. Mr. Magid has an extensive background in investment banking, specifically in the solid wood and lumber sector.

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.

The TSX Venture Exchange has in no way passed upon the merits of the proposed private placement or Big River purchase option and has neither approved nor disapproved the contents of this press release.

Contact Information

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