CanWel Building Materials Group Ltd.
TSX : CWX.UN

CanWel Building Materials Group Ltd.

January 03, 2007 08:30 ET

CanWel Building Materials Income Fund Completes the Acquisition of Pressure Treating Businesses

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 3, 2007) -

NOT FOR RELEASE OR DISSEMINATION INTO THE UNITED STATES

CanWel Building Materials Income Fund (the "Fund")(TSX:CWX.UN) has completed the acquisition (the "Acquisition") of the assets of five lumber pressure treating plants from Western Pacific Wood Preservers Ltd., Western Cleanwood Preservers Ltd., Alberta Wood Preservers Ltd., Eastern Wood Preservers Ltd., and Quebec Wood Preservers Ltd. (collectively, the "Vendors") through CanWel Holding Partnership (the "Partnership"), a majority-owned subsidiary of the Fund.

As previously announced, the Acquisition was approved by over 83 percent of the Fund's unitholders at the special meeting of unitholders held on November 14, 2006. The Acquisition constitutes a related party transaction for purposes of Ontario Securities Commission Rule 61-501 Insider Bids, Issuer Bids, Business Combinations and Related Party Transactions and Regulation Q-27 Respecting Protection of Minority and Related Party Transactions of the Autorite des marches financiers.

"We are pleased to have closed this acquisition and to have brought pressure treating services in-house at CanWel. We expect that this initiative will enable us to better serve our customers", noted Tom Donaldson, President and CEO of Canwel.

As partial consideration for the sale of the assets of the Vendors to the Partnership, Amar S. Doman, Chairman of the Board of Trustees of the Fund and the owner, directly or indirectly, of the Vendors, indirectly acquired 3,111,111 exchangeable partnership units of the Partnership. Exchangeable partnership units are exchangeable into trust units of the Fund on a one-for-one basis. Mr. Doman now owns, directly or indirectly, 3,100,505 trust units of the Fund and 11,144,279 exchangeable partnership units representing approximately 39% of the issued and outstanding trust units of the Fund, assuming the exchange of all the exchangeable partnership units for trust units.

Mr. Doman may from time to time acquire additional trust units of the Fund, dispose of some or all of the existing or additional trust units, or continue to hold trust units of the Fund in the normal course of his investment activities, subject to applicable securities laws.

Further information on the Fund can be found in the disclosure documents filed by CanWel Building Materials Income Fund with the securities regulatory authorities, available at www.sedar.com.

Certain statements in this press release may constitute "forward-looking" statements. When used in this press release, such statements use words, including but not limited to, "may", "will", "expect", "believe", "plan", "intend", "anticipate" and other similar terminology. These forward-looking statements reflect the current expectations of the Fund's management regarding future events and operating performance, but involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Fund, including the performance of, and distributable cash generated by the Fund, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Actual events could differ materially from those projected herein and depend on a number of factors. These factors include (i) the risk that the integration of the Acquisition may result in significant challenges, and management of CanWel may be unable to accomplish the integration smoothly or successfully or without spending significant amounts of money; any inability of management to successfully integrate the operations of the combined business, including, but not limited to, information technology and financial reporting systems, any of which could have a material adverse effect on the business, financial condition and results of operations of CanWel; (ii) the risk that Plant revenues, profits and margins may not remain consistent with historical levels, (iii) the risk that competing firms which manufacture or distribute competitive product lines will aggressively defend or seek market share, or that existing customers of the acquired plants (some of whom are competitors of CanWel) cease doing business with the plants or CanWel, in each case reducing, eliminating or reversing any potential positive economic impact on the Fund of the Acquisition; (iv) the risk that any increased sales, margin, profit or distributable cash resulting from the Acquisition may not be fully realized, realized at all or may take longer to realize than expected; (v) the risk of disruption from the introduction and implementation of the Acquisition making it more difficult to maintain relationships with customers, employees or suppliers, and (vi) risks related to the operation of pressure treatment facilities, including but not limited to environmental risks, labour risks, risks related to maintenance capital expenditures for manufacturing facilities and risks related to capital expenditures for environmental risks.

Additional risks and uncertainties affecting the Fund, which could cause results to differ materially from those described in these forward-looking statements, include, among others: increased debt and interest costs, general economic and business conditions, product selling prices, product performance, design and liability risk, software and software design risk, commodity price fluctuations, information systems risk, interest rate changes, operating costs, and competitive conditions. A further description of these additional factors can be found in the periodic and other reports filed by the Fund with Canadian securities commissions and available on Sedar (http://www.sedar.com). These forward-looking statements speak only as of the date of this press release. The Fund does not undertake, and specifically disclaims, any obligation to update or revise any forward looking information, whether as a result of new information, future developments or otherwise, except as required by applicable law.

Reference is made above to distributable cash of the Fund. Distributable cash is a non-GAAP measure generally used by Canadian open-ended income funds as an indicator of financial performance. The Fund defines distributable cash as net earnings before depreciation, amortization, gain or loss on sale of fixed assets, provision for future income taxes, stock based compensation and after maintenance of business capital expenditure and contributions to any reserves the board of trustees of the Fund deem to be reasonable and necessary for the operations of the Fund.

Contact Information

  • CanWel Building Materials Income Fund
    Ali Mahdavi
    (416) 962-3300 or 1-866-430-6247
    Email: amahdavi@genoa.ca