Ainsworth Lumber Co. Ltd.

Ainsworth Lumber Co. Ltd.

November 02, 2012 16:46 ET

Ainsworth Files Preliminary Prospectus in Respect of Rights Offering

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 2, 2012) - Ainsworth Lumber Co. Ltd. (TSX:ANS)(TSX:ANS.WT) ("Ainsworth" or the "Company") today announced that further to its previously announced comprehensive refinancing plan it has filed a preliminary short form prospectus with the securities regulatory authorities in each of the provinces of Canada in respect of a fully backstopped rights offering to holders of its common shares of record in Canada (the "Rights Offering"). Ainsworth expects to raise gross proceeds of $175 million through the issue of 140 million common shares pursuant to the Rights Offering.

The Company intends to use the net proceeds of the Rights Offering, along with the net proceeds from the previously announced proposed new debt financing for gross proceeds of at least US$350 million (the "Debt Financing"), to repay in full all amounts owing under Ainsworth's senior secured term loan due June 2014 and the Company's 11% senior unsecured notes due July 2015, which comprise substantially all of the Company's existing indebtedness.

As previously announced, Ainsworth has entered into a standby purchase agreement on October 22, 2012 (the "Standby Purchase Agreement") with its largest shareholder, Brookfield Asset Management Inc. (NYSE:BAM)(TSX:BAM.A) ("Brookfield"). Pursuant to the Standby Purchase Agreement, Brookfield has agreed to purchase all of the common shares offered under the Rights Offering that are not otherwise purchased under the Rights Offering on the terms and conditions set out in the Standby Purchase Agreement.

Under the Rights Offering, Ainsworth will distribute to common shareholders of record in Canada rights ("Rights") to subscribe for additional common shares of Ainsworth. The exercise price per common share under the Rights Offering will be $1.25. The record date and the expiry date will be determined prior to the filing of the final short form prospectus for the Rights Offering. The Company will confirm these dates in future announcements.

The completion of the Rights Offering is conditional upon, among other things, the completion of the Debt Financing on terms and conditions satisfactory to Ainsworth. To ensure that the Company's common shares do not effectively begin to trade on an ex-rights basis until the rights are issued, the Toronto Stock Exchange (the "TSX") has advised the Company that due bill trading will commence at the ex-rights date.

It is expected that the Rights Offering will be launched and the rights will be issued on the first trading day following the date Ainsworth completes the mailing of the final prospectus for the Rights Offering.

Further details regarding the Rights Offering, the Standby Purchase Agreement and due bill trading are available in the preliminary short form prospectus, which was filed today under Ainsworth's profile on SEDAR at

The Rights Offering and the terms of the Rights are subject to regulatory approval, including approval of the TSX. An application has been submitted to the TSX to approve the listing of the Rights, the common shares issuable upon the exercise of the Rights and the common shares that Brookfield may acquire pursuant to its standby commitment under the Standby Purchase Agreement.

This news release does not constitute an offer to sell or the solicitation of an offer to buy any securities of Ainsworth. Nor is it an offer to sell securities or a solicitation of an offer to buy securities in any state or jurisdiction where prohibited by law. No securities referred to herein have been or will be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Cautionary Statement Regarding Forward-Looking Information

Forward-looking information provided in this news release relating to Ainsworth's expectations regarding the Rights Offering and Ainsworth's future prospects and financial position are forward-looking information pursuant to National Instrument 51-102 promulgated by the Canadian Securities Administrators. Ainsworth believes that expectations reflected in such information are reasonable, but no assurance is given that such expectations will be correct. Forward-looking information is based on Ainsworth's beliefs and assumptions based on information available at the time the assumption was made and on management's experience and perception of historical trends, current conditions and expected further developments as well as other factors deemed appropriate in the circumstances. Investors are cautioned that there are risks and uncertainties related to such forward-looking information and actual results may vary. Important factors that could cause actual results to differ materially from those expressed or implied by such forward looking information include, without limitation, factors detailed from time to time in Ainsworth's periodic reports filed with the Canadian Securities Administrators and other regulatory authorities. The forward-looking information is made as of the date of this news release and Ainsworth assumes no obligation to update or revise them to reflect new events or circumstances, except as explicitly required by securities laws.

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