Canfor Corporation
TSX : CFP

Canfor Corporation

December 22, 2006 13:17 ET

Canfor Corporation Announces the Adoption of a Shareholders Rights Plan

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Dec. 22, 2006) - Canfor Corporation (TSX:CFP) announced today that its Board of Directors has adopted a Shareholder Rights Plan.

The Rights Plan, which takes effect today, is consistent with the terms of the shareholder rights plan that shareholders previously approved in 2003 and that expired in April 2006. Specifically, the Rights Plan provides that it is triggered in the event that a person acquires more than 20% of the Company's outstanding voting shares. The Rights Plan continues to contain a provision that allows a party that currently holds more than 20% of the Company's voting shares to maintain that position without triggering the Rights Plan (provided that it does not increase its position by more than a further 1% of the outstanding voting shares).

The Rights Plan, which has a nine year term, provides that it will expire at the termination of the Annual General Meeting scheduled for May 4, 2007 if the Rights Plan is not confirmed by the shareholders of the Company at that meeting. Subsequently, the Rights Plan will expire if renewal is not reconfirmed by the shareholders each three years thereafter.

The Rights Plan has not been adopted by the Board of Directors in response to, or in anticipation of any offer or take-over bid.

The Company's previous rights plan was originally adopted in November 1999, amended in March 2000, confirmed at the Annual General Meeting in 2000 and reconfirmed at the Annual General Meeting in 2003. The terms of that rights plan provided that it would expire if not reconfirmed at the Annual General Meeting in March 2006.

In early 2006, the Board, as part of its review and analysis of the possible continuation of the previous rights plan, considered the recent experience of Canadian and American companies with shareholder rights plans, the terms of these plans and possible means of providing comparable protection to shareholders. At that time the Board concluded that rather than renewing the previous rights plan it would seek shareholder approval of a Shareholder Rights Plan Policy ("Policy") that would allow the Board to put in place a rights plan in certain circumstances such as after a formal take-over bid had been initiated. That Policy, which received shareholder approval at the Annual General Meeting held in April 2006, provided that the Corporate Governance Committee was to review the Policy on at least an annual basis and that on the advice of the Corporate Governance Committee, the Board could revise or repeal the Policy.

The Corporate Governance Committee has reviewed the appropriateness of the Policy and advised the Board that it should repeal the Policy and adopt the Rights Plan. The Committee and the Board of Directors noted that there have been increases in the ownership of Common Shares of the Company since the adoption of the Policy and the Company has received requests from some shareholders asking that they be given the opportunity to vote on a Rights Plan at a meeting of shareholders. As a result, the Committee and the Board are of the opinion that it is appropriate to adopt the Rights Plan and for the shareholders of the Company, to vote with respect to ratification of the Rights Plan at the next Annual General Meeting. The terms of the Rights Plan and the factors which the Board of Directors considers to be relevant for consideration by the shareholders will be included in the materials distributed with the notice of the Annual General Meeting. A copy of the Rights Plan is available at www.sedar.com and Canfor's website www.canfor.com.

Forward-Looking Statements

Certain statements in this press release constitute "forward-looking statements" which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. Words such as "expects", "anticipates", "intends", "plans", "will", "believes", "seeks", "estimates", "should", "may", "could", and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and actual events or results may differ materially. There are many factors that could cause such actual events or results expressed or implied by such forward-looking statements to differ materially from any future results expressed or implied by such statements. Forward-looking statements are based on current expectations and the Company assumes no obligation to update such information to reflect later events or developments, except as required by law.

Canfor is a leading integrated forest products company based in Vancouver, British Columbia (BC) with interests in over 33 facilities in BC, Alberta, Quebec, Washington state, and North and South Carolina. The company is the largest producer of softwood lumber in Canada while also producing oriented strand board (OSB), plywood, remanufactured lumber products and specialized wood products. Canfor also owns a 50.1% interest in Canfor Pulp Limited Partnership, which is one of the largest producers of northern softwood kraft pulp in Canada and a leading producer of high performance kraft paper. Canfor shares are traded on the Toronto Stock Exchange (TSX:CFP).

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