West Fourth Capital Inc.
TSX VENTURE : WTF.P

April 22, 2010 22:40 ET

West Fourth Capital Inc. Enters Into an Arrangement Agreement With DTR Wood Acquisitionco Ltd.

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 22, 2010) -

THIS NEWS RELEASE, REQUIRED BY APPLICABLE CANADIAN LAWS, IS NOT FOR DISTRIBUTION TO U.S. NEWS SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

West Fourth Capital Inc. ("West Fourth" or the "Corporation") (TSX VENTURE:WTF.P) has entered into an arrangement agreement (the "Arrangement Agreement") dated April 21, 2010 with DTR Wood Acquisitionco Ltd. ("DTR") pursuant to which West Fourth will acquire (the "Arrangement") all of the issued and outstanding securities of DTR in exchange for securities of West Fourth. DTR is the parent company of Conifex Inc. ("Conifex") which operates a forestry and sawmilling business in Fort St. James, BC from assets that it purchased in 2008. DTR is also the parent of 0869550 BC Ltd. ("0869550") which signed an agreement with Abitibi-Consolidated Company of Canada and 1508756 Ontario Inc. in March 2010 to acquire certain sawmill and other assets located in Mackenzie, BC.

The proposed Arrangement with DTR, to include the other transactions described below in this news release, when completed, will constitute a Qualifying Transaction for West Fourth under the policies of the TSX Venture Exchange (the "Exchange"). Approval of the shareholders of West Fourth to the Arrangement will not be required by the Exchange.

Share Consolidation and Name Change

Prior to the completion of the Arrangement, an annual and special meeting of West Fourth shareholders is scheduled to be held in Vancouver, BC on May 27, 2010 (the "Meeting").

It is a condition precedent to the completion of the Arrangement that the Corporation consolidate its share capital and change its name. At the Meeting, shareholders will be asked to approve a consolidation of the outstanding share capital of West Fourth on a 27.5 to 1 basis (27.5 pre-consolidated shares for each post-consolidated share) (the "Share Consolidation").

The Corporation currently has 2,330,000 common shares issued and outstanding, and options granted to directors and officers which entitle them to purchase an additional 233,000 common shares at a purchase price of $0.20 per share. Upon completion of the Share Consolidation, the Corporation will have an aggregate of 84,727 post consolidated common shares and stock options that entitle the holders to purchase up to 8,472 post consolidated common shares issued and outstanding. It is anticipated that the outstanding stock options of the Corporation will be exercised shortly after the completion of the Arrangement.

Shareholders of the Corporation will also be asked at the Meeting to change the name of the Corporation to "Conifex Timber Inc." (the "Name Change") or such other name as is acceptable to DTR and the applicable regulatory authorities. Shareholders of the Corporation will also be asked at the Meeting to approve the adoption of a stock incentive plan in accordance with the policies of the Exchange.

Arrangement

Under the terms of the Arrangement Agreement, DTR will complete a statutory plan of arrangement (the "Arrangement") pursuant to the Business Corporations Act (British Columbia), pursuant to which all issued and outstanding securities of DTR will be exchanged for post consolidated securities of West Fourth. DTR currently has an aggregate of 4,255,782 common shares issued and outstanding, pursuant to which each issued and outstanding DTR share will be acquired by West Fourth in exchange for one of its post-consolidated shares and DTR's $10 million of convertible subordinated notes will be exchanged by West Fourth for notes having substantially similar terms. The notes currently have a five-year term and carry an interest rate of 2.5% from issue to December 15, 2012 payable in cash or shares and 10.5% thereafter to be settled in cash. The convertible notes mature on December 15, 2014 and are convertible at the option of the holder into common shares at a conversion price of $8.00 per share. The notes are redeemable by the issuer on or before December 15, 2013 at a redemption price equal to the principal amount plus accrued and unpaid interest. If the notes were fully converted after the completion of the Arrangement, a total of 1,250,000 shares of the Corporation would be issued to holders of the notes. DTR also has incentive restricted stock units outstanding that entitle the holders to receive up to 200,000 common shares.

Financings

DTR has already raised over $30 million through the sale of its common shares in addition to $10 million of convertible subordinate notes. As a condition of the Arrangement, DTR intends to raise a further minimum of $45 million by issuing subscription receipts in order to complete the purchase of the Mackenzie Assets and for working capital. The terms of the above mentioned financing commitment in connection with the Arrangement and a summary of the significant financial information with respect to DTR will be disclosed in a news release to be issued by the Corporation at a later date.

Following the closing of the Arrangement, DTR shareholders will hold approximately 99% of the issued and outstanding shares of the Corporation and current shareholders of the Corporation will hold the remaining 1%. The actual relative holdings will be dependent upon the amount of additional equity raised by DTR prior to the completion of the Arrangement.

Applications to the TSX Venture Exchange

The Exchange will be asked to approve the Arrangement and the transactions contemplated thereby in accordance with the policies of the Exchange, as the Corporation's Qualifying Transaction. The Corporation will make an application to the Exchange for an exemption from sponsorship and escrow requirements that would otherwise apply due to the size of the Qualifying Transaction. There is no assurance that any such exemption will be granted.

About DTR

DTR was incorporated in British Columbia and has a head office at Suite 110, 2925 Virtual Way, Vancouver, BC. It is the parent corporation of Conifex and 0869550. DTR's long-term business strategy is to create high returns on shareholder investment by locating in promising fibre supply regions and building a margin-focussed lumber business of sufficient size and scale to compete successfully with the best mills in North America. To achieve this, DTR's strategy includes: (i) having access to plentiful supplies of quality sawlogs at competitive prices, (ii) operating efficient, low-cost converting facilities, (iii) producing and selling high-value softwood lumber in demand by North American and offshore markets, and (iv) optimizing revenues from the sale of by-products and residues from its logging and sawmilling activities.

DTR's wholly-owned subsidiary Conifex is a softwood forest products producing company operating in the Interior region of BC. Its primary business is solid wood and includes timber harvesting, reforestation, forest management, sawmilling logs into lumber and wood chips, and value-added lumber finishing.

Conifex produces softwood lumber which is primarily obtained from evergreen, coniferous trees, mainly from the spruce, pine, and fir ("SPF") families. The main use of softwood lumber products is for new home and building construction and remodelling. The sawmill processes high-quality SPF logs into higher-grade and commodity-grade lumber, wood chips that are sold externally and used for pulp production, and other residual products.

The Fort St. James sawmill has a current annual production capacity of 300 million board feet of lumber on a two-shift basis, as well as timberland operations with approximately 640,000 cubic meters of harvestable AAC from high-quality Crown-owned tenures in the north central interior of BC.

The Fort St. James sawmill was idled by its previous owner in September 2007 and Conifex resumed operations on a one-shift basis on March 2, 2009.

DTR's wholly-owned subsidiary 0869550 has entered into an agreement with Abitibi-Consolidated Company of Canada ("Abitibi") dated March 24, 2010, to acquire certain sawmill and other assets located in Mackenzie, BC (the "Mackenzie Assets") for $33.5 million.

The Mackenzie Assets include two sawmills, with a combined annual capacity of approximately 445 million board feet of lumber, a forestry license with an annual allowable cut of 932,500 cubic metres, a power plant and a paper mill (excluding the headbox). The paper mill will not be operated but its equipment, including the paper machine, will be sold.

Abitibi shutdown the Mackenzie Assets in December 2007 due to market conditions, but kept the sawmills in operating/start-up condition. 0869550 intends to consolidate the two Mackenzie sawmills into one expanded and upgraded facility capable of producing high quality lumber on a more cost-effective basis.

Board and Management of the Resulting Issuer

It is anticipated that upon closing of the Arrangement, the current directors and officers of West Fourth will resign and West Fourth will be managed by the existing management of DTR and its subsidiaries. The following are brief biographies of the individuals who will be expected to be the directors of the Corporation on closing of the Arrangement.

Ken Shields, Chairman and CEO, Director

Active in the Canadian business and financial community, Mr Shields is the former CEO and Chairman of Raymond James Ltd. and serves on the Board of Directors of Nasdaq-listed Mercer International Inc. and NYSE-listed Raymond James Financial, Inc.

Among his many industry accomplishments, Mr. Shields has served as a past Governor of the Vancouver Stock Exchange, past President of the Vancouver Society of Financial Analysts, past Chairman of the Investment Dealers Association of Canada, and as a former Director of TimberWest Forest Corp., Slocan Forest Products Ltd., Pacifica Papers Inc., the Investment Dealers Association of Canada, the Mutual Fund Dealers Association of Canada, the B.C. Business Council, the Council for the Business and Arts in Canada and the B.C. Progress Board.

George Malpass, Director

Mr. Malpass is the former President, CEO and Founder of Primex Forest Products Ltd., a coastal BC lumber company. Mr. Malpass has also served as a director of Interfor and Riverside Forest Products Ltd. and is a former Chairman of the Council of Forest Industries of BC.

Jim Shepherd, Director

Mr. Shepherd has over 25 years experience in the forest product sector. Mr. Shepherd is a former President and CEO of Canfor Corporation and Slocan Forest Products Ltd. Mr. Shepherd is a former President of Crestbrook Forest Industries Ltd. and Finlay Forest Industries Limited and is also a former Chairman of the Forest Products Association of Canada.

David Roberts, Director

Mr. Roberts recently retired from Raymond James Ltd. where he headed up that firm's institutional equity business based in Toronto.

Brad Johansen, Director

Mr. Johansen is the President and CEO of Welco Lumber Corp., a privately held employee-owned lumber marketing and distribution company headquartered in Greater Vancouver.

Jim Jia, Director

Mr. Jia is the President of LJ Resources Co. Ltd., a Canadian resource subsidiary of a substantial northern Chinese industrial company. Mr. Jia has 17 years of forest industry experience and was formerly a Senior Account Executive at Canfor Corporation where he helped pioneer the SPF lumber market in China.

Significant Conditions to Closing

Completion of the Qualifying Transaction is subject to a number of conditions including, without limitation, approval of the Share Consolidation and Name Change by West Fourth's shareholders, approval by the Exchange, approval of the Arrangement by DTR's securityholders and by the Supreme Court of British Columbia, and completion by DTR of an equity financing of at least $45 million. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.

Trading Halt

In accordance with Exchange policy, the shares of West Fourth will remain suspended from trading on the Exchange until such time as the Exchange reinstates the shares for trading, which, depending on the policies of the Exchange, may not occur until the completion of the Qualifying Transaction.

Termination of Option Agreement with Bruce A. Doyle

The Corporation and Bruce A. Doyle have agreed to terminate the Option Agreement dated March 7, 2010 that was announced in a news release of the Corporation dated March 9, 2010. As part of the termination, West Fourth paid $10,000 to Mr. Doyle and agreed to extend the expiry date of the mineral claims previously under option for a period ranging between one and three years. The Corporation has no ongoing rights or obligations under the Option Agreement.

General

Completion of the Transaction is subject to a number of conditions, including but not limited to Exchange acceptance. The Transaction cannot close until the required Exchange approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Qualifying Transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

On behalf of the Board

Brian R. Canfield, Chief Executive Officer

Certain statements contained in this release constitute forward-looking information. These statements relate to future events or future performance. The use of any of the words "could", "intend", "expect", "believe", "will", "projected", "estimated" and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on the Corporation's current belief or assumptions as to the outcome and timing of such future events. Actual future results may differ materially. In particular, this release contains forward-looking information relating to the completion of technical reports and satisfaction of Exchange listing requirements. Various assumptions or factors are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking information. Those assumptions and factors are based on information currently available to the Corporation. The material factors and assumptions include the Corporation being able to obtain the necessary director and regulatory approvals; Exchange policies not changing; completion of satisfactory due diligence; no unforeseen circumstances with respect to the Arrangement that would cause delay while the parties rectified deficiencies. Risk Factors that could cause actual results or outcomes to differ materially from the results expressed or implied by forward-looking information include, among other things: conditions imposed by the Exchange, the failure to obtain the required directors' approval to the Agreement; and general economic and business conditions. The Corporation cautions the reader that the above list of risk factors is not exhaustive. The forward-looking information contained in this release is made as of the date hereof and the Corporation is not obligated to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information contained herein.

The Exchange has in no way passed upon the merits of the Qualifying Transaction. Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • West Fourth Capital Inc.
    Brian R. Canfield
    Chief Executive Officer
    (604) 661-9362
    (604) 661-9349 (FAX)