ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On January 19, 2021, Resolute Forest Products Inc. (the "Company") announced the
commencement of a private placement of $300 million aggregate principal amount
of a new series of unsecured senior notes due 2026 (the "Offering"). The net
proceeds from the Offering, together with cash on hand and/or borrowings under
the Company's senior secured asset-based revolving credit facility and/or the
Company's senior secured credit facility, will be used to redeem all of the
outstanding $375 million aggregate principal amount of its 5.875% Senior Notes
due 2023 (the "2023 Notes"), at a price of 100% of the aggregate principal
amount thereof, plus interest to, but not including, the redemption date.
In connection with the Offering, the Company is presenting the information
furnished as Exhibit 99.1 to this current report on Form 8-K, which is
incorporated by reference into this Item 2.02.
The information contained or incorporated by reference in this Item 2.01 of Form
8-K shall not be deemed to be "filed" for the purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that section. The information in this Item 2.01 shall not be
incorporated by reference into any registration statement or any other document
filed pursuant to the Securities Act of 1933, as amended, except as otherwise
expressly stated in such filing. By filing this current report and furnishing
the information contained herein the Company makes no admission as to the
materiality of any such information.
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN
OFFICERS
On January 18, 2021, the Company announced the appointment of Sylvain A. Girard
as the Company's next senior vice president and chief financial officer,
effective March 2, 2021. Mr. Girard will join the Company as special advisor to
Remi G. Lalonde, the Company's current senior vice president and chief financial
officer on February 15, 2021 and will continue to serve in this capacity until
he succeeds Mr. Lalonde as the Company's senior vice president and chief
financial officer on March 2, 2021. Mr. Girard will report to Mr. Lalonde.
Mr. Girard, age 50, most recently served as executive vice president and chief
financial officer of SNC-Lavalin Group Inc. from 2016 to 2020. Previously, he
held senior executive positions in finance with SNC-Lavalin, following 22 years
with General Electric Company ("GE"). He held a number of positions at GE of
increasing scope and responsibilities, including 14 years as chief financial
officer in the financial and healthcare sectors of GE in Europe as well as five
years with GE's internal audit team, performing financial and process audits
across the company. He graduated from McGill University in 1992 with a bachelor
of commerce in finance and international business.
Outline of terms for Mr. Girard
The Company has come to an agreement with Mr. Girard on the principal terms of
his compensation arrangement, which will be reflected in a letter agreement and
are summarized below.
Annual compensation. Mr. Girard's annual base salary will be $500,000 to be paid
in accordance with the Company's currency policy that assumes parity in Canadian
and U.S. dollars, with a portion paid in Canadian dollars and a portion paid in
U.S. dollars based on the geographic location of the Company's pulp, paper and
tissue production capacity as of the prior December 31. Based on the currency
policy for 2021, 63.5% of Mr. Girard's base salary will be denominated in
Canadian dollars and 36.5% will be denominated in U.S. dollars.
Short-term incentive compensation. Mr. Girard will be eligible to participate in
the Company's Short-Term Incentive Plans ("STIP") adopted from time to time. For
2021, his STIP target level will be 100% of his annual base salary, with an
annual incentive award ranging from 50% to 150% of target, based on performance
targets established by the board of directors.
Long-term incentive compensation. Mr. Girard will also be eligible to
participate in the Resolute Forest Products Equity Incentive Plan, or the
"LTIP", as determined in the board of directors' discretion from time to time.
Mr. Girard's initial equity grant is equivalent to 125% of his annual base
salary, with the first grant to be made on March 2, 2021 and the value of such
initial grant being a prorated value of 8 months of annual base salary.
Pension. Mr. Girard will be eligible to participate in the Company's registered
defined contribution plan and the DC Make-Up Program.
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Severance. Mr. Girard will be covered by the executive severance policy, which
provides for severance benefits in the event of an involuntary termination other
than for "cause". In the case of a change in control, severance benefits are
also payable upon a termination by Mr. Girard for "good reason". Upon a
triggering separation, Mr. Girard will be eligible to receive a lump sum payment
equal to six weeks of eligible pay per year of continuous service, with a
minimum of 52 weeks and a maximum of 104 weeks. Eligible pay is defined as base
pay, plus the lesser of (i) the average of last two STIP incentive awards paid
or (ii) 125% of target STIP incentive award for the year of termination. In
addition, there is pro rata vesting of equity awards pursuant to the terms of
the award agreements. The severance pay is the same whether the triggering
separation occurs in a change in control or non-change in control context. No
other enhanced benefits in the form of, for example, subsidized continued health
coverage or tax-gross ups, are provided. "Cause," "good reason" and "change in
control" are all defined in the executive severance policy.
Miscellaneous. Mr. Girard will receive an annual allowance of CDN$12,000 to
cover perquisites such as club memberships, tax and financial advice. Mr. Girard
will be eligible to receive comprehensive annual medical examination and medical
concierge services, and will be entitled to five weeks vacation per year.
Mr. Girard will be indemnified pursuant to an indemnification agreement to be
entered into between the Company and Mr. Girard, the Company's indemnification
policy, charter, by-laws and director and officer liability insurance policies
maintained by the Company.
ITEM 8.01 OTHER EVENTS
A copy of the press release announcing the commencement of the Offering
described in Item 2.02 hereof is filed with this Current Report as Exhibit 99.2.
On January 19, 2021, the Company voluntarily decreased the commitment under its
senior secured asset-based revolving credit facility by $50 million, to
$450 million.
* * *
Cautionary Statements Regarding Forward-Looking Information
Statements in this Current Report on Form 8-K, including the exhibits hereto,
that are not reported final financial results or other historical information of
the Company are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. They include, for example, statements
relating to the impact of the novel coronavirus (or, "COVID-19") pandemic and
resulting economic conditions on the Company's business, results of operations
and market price of the Company's securities, and to the Company's: efforts and
initiatives to reduce costs, increase revenues, and improve profitability;
business and operating outlook; future pension obligations; assessment of market
conditions; growth strategies and prospects, and the growth potential of the
Company and the industry in which the Company operates; liquidity; future cash
flows, including as a result of the changes to the Company's pension funding
obligations; estimated capital expenditures; and strategies for achieving the
Company's goals generally. Forward-looking statements may be identified by the
use of forward-looking terminology such as the words "should," "would," "could,"
"will," "may," "expect," "believe," "see," "anticipate," "continue," "attempt,"
"focus on," "improve," "challenge," "positioned," "maintain," "strive," "trend,"
"strategy," "seek," "evolve," "vision," "commit," "develop," "project,"
"progress," "build," "pursue," "plan," "grow" and other terms with similar
meaning indicating possible future events or potential impact on the Company's
business or its shareholders.
The reader is cautioned not to place undue reliance on these forward-looking
statements, which are not guarantees of future performance. These statements are
based on management's current assumptions, beliefs, and expectations, all of
which involve a number of business risks and uncertainties that could cause
actual results to differ materially. The potential risks and uncertainties that
could cause the Company's actual future financial condition, results of
operations and performance to differ materially from those expressed or implied
in this Current Report include, but are not limited to, the impact of: the
COVID-19 pandemic and resulting economic conditions; developments in non-print
media, and the effectiveness of the Company's responses to these developments;
intense competition in the forest products industry; any inability to offer
products certified to globally recognized forestry management and chain of
custody standards; any inability to successfully implement the Company's
strategies to increase its earnings power; the possible failure to successfully
integrate acquired businesses with the Company's or to realize the anticipated
benefits of acquisitions, such as the Company's entry into wood manufacturing in
the U.S., and tissue production and sales, or divestitures or other strategic
transactions or projects, including loss of synergies following business
divestitures; uncertainty or changes in political or economic conditions in the
U.S.,
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Canada or other countries in which the Company sells its products, including the
effects of pandemics; global economic conditions; the highly cyclical nature of
the forest products industry; any difficulties in obtaining timber or wood fiber
at favorable prices, or at all; changes in the cost of purchased energy and
other raw materials; physical and financial risks associated with global,
regional, and local weather conditions, and climate change; any disruption in
operations or increased labor costs due to labor disputes or occupational health
and safety issues; difficulties in the Company's employee relations or in
employee attraction or retention; disruptions to the Company's supply chain,
operations, or the delivery of the Company's products, including due to public
health epidemics; disruptions to the Company's information technology systems
including cybersecurity incidents; risks related to the operation and transition
of legacy system applications; negative publicity, even if unjustified; currency
fluctuations; any increase in the level of required contributions to the
Company's pension plans, including as a result of any increase in the amount by
which they are underfunded; the Company's ability to maintain adequate capital
resources to provide for all of the Company's substantial capital requirements;
the terms of the Company's outstanding indebtedness, which could restrict the
Company's current and future operations; changes relating to the London
Interbank Offered Rate, which could impact the Company's borrowings under its
credit facilities; losses that are not covered by insurance; any shutdown of
machines or facilities, restructuring of operations or sale of assets resulting
in any additional closure costs and long-lived asset impairment or accelerated
depreciation charges; any need to record additional valuation allowances against
the Company's recorded deferred income tax assets; the Company's exports from
one country to another country becoming or remaining subject to duties, cash
deposit requirements, border taxes, quotas, or other trade remedies or
restrictions; countervailing and anti-dumping duties on imports to the U.S. of
the vast majority of our softwood lumber products produced at the Company's
Canadian sawmills; any failure to comply with laws or regulations generally; any
additional environmental or health and safety liabilities; any violation of
trade laws, export controls, or other laws relating to the Company's
international sales and operations; adverse outcomes of legal proceedings,
claims and governmental inquiries, investigations, and other disputes in which
the Company is involved; the actions of holders of a significant percentage of
the Company's common stock; and the potential risks and uncertainties set forth
under Part I, Item 1A, "Risk Factors," of the Company's annual report on Form
10-K for the year ended December 31, 2019, filed with the U.S. Securities and
Exchange Commission (or, the "SEC") on March 2, 2020, which have been heightened
by the COVID-19 pandemic, including related governmental responses and economic
impacts, market disruptions and changes in consumer habits, and which should be
read in conjunction with the COVID-19 pandemic risk factor update further set
forth in Part II, Item 1A, "Risk Factors," in the Company's Annual Report on
Form 10-Q, filed on November, 9, 2020.
All forward-looking statements in this Current Report are expressly qualified by
the cautionary statements contained or referred to in this section and in the
Company's other filings with the SEC and the Canadian securities regulatory
authorities. The Company disclaims any obligation to publicly update or revise
any forward-looking information, whether as a result of new information, future
events or otherwise, except as required by law.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
Exhibit
No. Description
99.1 Certain Business Updates
99.2 Press Release dated January 19, 2021 with respect to the Offering
104 Cover Page Interactive Data File (embedded withing the Inline XBRL
document).
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