TimberWest Forest Corp. (TSX:TWF.UN) announced a $150 million private placement and rights offering on Sunday that the company says it will use to pay off debt and for general corporate purposes.
The rights offering will entitle TimberWest unitholders to buy up to $50 million in extendible convertible debentures of the company at an annual interest rate of 9%.
The debentures will initially mature on or about February 27, 2009.
As well, two wholly owned subsidiaries of the British Columbia Investment Management Corp. have agreed to buy $100 million in convertible debentures of TimberWest, under terms similar to those of the debentures being issued in the rights offering.
The company said that half of the $150 million proceeds from the private placement are to go toward repaying a portion of the company's credit facilities.
TimberWest, Western Canada's largest private land management company, also negotiated a term sheet with lenders to provide the company with more flexibility to operate through the current market downturn.
"TimberWest continues to experience very weak business conditions," Paul McElligott, the company's president and CEO, said in a release. "This refinancing will allow the company to overcome current challenges and provide sufficient flexibility to execute its business plan through the current downturn."
TimberWest's share price last week ranged between $3.45 and $4.47; 52-week high: $15.10; 52-week low: $2.81.