Fibrek Inc : TSX approves Fibrek's private placement of special warrants to Mercer [PDF]

N e w s R e l e a s e For Immediate Release

TSX: FBK

fibrek.com

TSX APPROVES FIBREK'S PRIVATE PLACEMENT OF SPECIAL WARRANTS TO MERCER

MONTREAL, March 20, 2012 - Fibrek Inc. ("Fibrek" or the "Company") announced today that the Toronto Stock Exchange (the "TSX") has determined to accept notice of Fibrek's private placement (the "Private Placement") of special warrants (the "Special Warrants") to Mercer International Inc. ("Mercer") and has conditionally approved the listing of the common shares issuable on conversion of the Special Warrants. Completion of the Private Placement is subject to customary conditions.
Pursuant to the Private Placement, Mercer has agreed to purchase 32,320,000 Special Warrants at a price of $1.00 per Special Warrant, for total subscription proceeds to Fibrek of $32,320,000. The Special Warrants are convertible into common shares of Fibrek on a one-for-one basis. Conversion of the Special Warrants is automatic in certain events and otherwise at the option of Mercer subject to certain conditions. The Special Warrants are also redeemable by Mercer or Fibrek in certain events at their subscription price, including in the event that Fibrek receives and supports a superior proposal. It is expected that the proceeds of the Private Placement will be deposited in trust at closing and will be releasable to Fibrek on conversion of the Special Warrants or to Mercer in the event of a redemption. In the event the Mercer Offer is not completed, any proceeds received by Fibrek from the Private Placement upon conversion of the Special Warrants will provide Fibrek with necessary funding to continue operations and the execution of its strategic plan.
The Private Placement is made in connection with Mercer's offer to acquire all of the outstanding common shares of Fibrek launched on February 29, 2012. The Mercer offer at $1.30, which represents a 30% premium over the unsolicited insider bid made by AbitibiBowater Inc. (doing business as Resolute Forest Products) ("Abitibi"), will remain open until 5:00 p.m. (Eastern time) on April 6, 2012, unless extended by Mercer.
As previously disclosed, the Québec Court of Appeal has granted Abitibi permission to appeal the Court of Québec's decision rendered on March 9, 2012. The Court of Québec's decision reversed the cease trade order issued by the Bureau de decision et de revision (Québec) on Fibrek's Private Placement to Mercer. The appeal will be heard on March 22, 2012.

The Board of Directors continues to unanimously recommend that shareholders ACCEPTand TENDERtheir common shares to Mercer's $1.30 offer. The superior Mercer offer represents a 30% premium over Abitibi's unsolicited insider bid and only requires that 50.1% of the common shares, on a fully-diluted basis, be tendered, including the common shares issuable upon the exercise of the Special Warrants.

The Board also recommends that shareholders REJECTand NOT TENDERtheir common shares to Abitibi's $1.00 unsolicited insider bid. According to Abitibi, as of the close of business on March 16, 2012, approximately 60.4 million common shares of Fibrek had been deposited to Abitibi's offer, representing approximately 46.4% of the outstanding common shares. Abitibi's insider bid requires that a minimum of
66 2/3% of common shares be tendered. If shareholders have tendered their shares to the Abitibi insider bid, the Board recommends that they WITHDRAWthem immediately.
The Support Agreement, the Special Warrant Agreement and the Directors' Circular in respect of the
Mercer offer have been filed and are available at www.sedar.comunder the company's profile.
For more information on how to tender Fibrek common shares, for any other inquiries regarding the Mercer offer or on how to withdraw shares tendered to the Abitibi bid, please contact Fibrek's information agent, Phoenix Advisory Partners, at 1-800-398-1129 (North American Toll Free) or via email at [e-mail].

About Fibrek

Fibrek (TSX: FBK) is a leading producer and marketer of high-quality virgin and recycled kraft pulp. The company operates three mills located in Saint-Félicien, Québec, Fairmont, West Virginia, and in Menominee, Michigan with a combined annual production capacity of 760,000 tonnes. Fibrek has approximately 500 employees. The Saint-Félicien mill provides northern bleached softwood kraft pulp (product known as NBSK pulp) to various sectors of the paper industry mainly in Canada, the United States and Europe, for use in the production of specialized products. The Fairmont and Menominee mills manufacture air-dried recycled bleached kraft pulp (product known as RBK pulp) and primarily supply manufacturers of fine uncoated paper, tissue paper for commercial and industrial uses, and coated paper in the United States.

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of applicable securities laws. These statements can be identified by expressions of belief, expectation or intention, as well as those statements that are not historical facts and include statements concerning Fibrek's future outlook, business strategy, plans, expectations, results or actions, or the assumptions underlying any of the foregoing. Forward-looking statements can generally be identified by words such as "may", "should", "would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate", "expect", "outlook" and similar expressions. These statements are based on information currently available to Fibrek's management and on the current assumptions, intentions, plans, expectations and estimates of Management regarding Fibrek's future growth, results of operations, performance, business prospects and opportunities and ability to attract and retain customers as well as the economic environment in which it operates. Forward- looking statements are subject to known and unknown risks, uncertainties and other factors which could cause actual results of Fibrek to differ materially from the conclusion, forecast or projection stated in such forward-looking statements. These risks, uncertainties and other factors include, but are not limited to: actions taken by Abitibi or Mercer, actions taken by shareholders of Fibrek in respect of Abitibi's unsolicited offer and the Mercer Offer, the possible effect of Abitibi's unsolicited offer and the Mercer Offer on Fibrek's business, the award of a power purchase agreement to Fibrek under the new Québec Government cogeneration program, general economic conditions, pulp prices and sales volume, exchange rate fluctuations, cost and supply of wood fibre, wastepaper and other raw materials, pension contributions, competitive markets, dependence upon key customers, increased production capacity, equipment failure, disruptions of production, capital requirements and other factors referenced in Fibrek's continuous disclosure filings which are available on SEDAR at www.sedar.com. The completion of the Mercer Offer is subject to a number of terms and conditions. The conditions to the Mercer Offer may not be satisfied in accordance with their terms, and/or Mercer may exercise its termination rights under the support agreement, in which case the Mercer Offer could be terminated. The outcome of the appeal of the Court of Québec's decision may also have an impact on the completion of the Mercer Offer. Failure to complete the Mercer Offer could have a material adverse impact on the market price of Fibrek's shares. Readers should not place undue reliance on these forward-looking statements. These forward-looking statements are made as of the date of this press release and, except as required by applicable securities laws, Fibrek assumes no obligation to update or revise them to reflect new events or circumstances.

Information:

Investor Relations: Patsie Ducharme 514 871-0550

Vice President and Chief Financial Officer

Media Relations: Lyla Radmanovich 514 843-2336

NATIONAL Public Relations

Dany Paradis 514 871-0550

Vice President, Change Management and Supply Chain