Two principal shareholders of Burnaby-based Taiga Building Products Ltd. (TSX:TBL) have withdrawn their support of the company's latest rights offering due to low participation from the public markets.
The company, which distributes wood products, said less than 1% of the rights were being exercised in part because the share price in the offering was no longer a meaningful discount. The company had offered shareholders the right to buy 2.218 shares for each common share held at a purchase price of $0.14 per share. However, the discount offered was above Taiga's share price over the past couple weeks, which ranged from $0.09 and $0.145 per share.
The rights offering was meant to increase the company's liquidity requirements to comply with credit agreements. Instead, Taiga will focus on major cost-cutting initiatives that it says will save the company approximately $22 million over the next fiscal year.
The company also plans to defer interest on its subordinated notes starting April 15 with respect to interest accruing to March 31, 2009. The move is expected to save the company $1.3 million a month as it reviews potential strategic alternatives to deal with its leveraged capital structure.
For the nine-month period ending December 31, 2008, Taiga reported net sales of $827.2 million compared with $853.7 million during the same period in 2007. Net earnings fell to $4.7 million from $5.9 million. In the fourth quarter, Taiga posted a net loss of $2.6 million compared with a net loss of $1.9 million in the same period a year earlier.
Taiga's share price range during the past week: between $0.09 and $0.145; 52-week high: $1.51; 52-week low: $0.05.