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Proposed Acquisition of Ainsworth Lumber Co Ltd (Notes) | 3 Months Ended
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Mar. 31, 2014
Proposed Acquisition [Abstract] |
Proposed Acquisition [Text Block] | PROPOSED ACQUISITION OF AINSWORTH LUMBER CO. LTD. In September of 2013, LP entered into an Arrangement Agreement (the “Arrangement”) with Ainsworth Lumber Co. Ltd., a British Columbia corporation (“Ainsworth”), providing an arrangement under British Columbia law whereby a wholly owned subsidiary of the Company will acquire all of the outstanding shares of Ainsworth capital stock in exchange for 0.114 shares of LP common stock (“LP Shares”) and C$1.94 in cash per Ainsworth common share (“Ainsworth Shares”) subject to certain terms and conditions. Although the Arrangement provides for Ainsworth shareholders to elect among cash consideration, share consideration and mixed consideration, proration provisions will ensure that the aggregate amounts of cash and LP Shares issued in the Transaction are fixed at approximately C$467.0 million and 27.5 million LP Shares, respectively. The requisite approvals of the Transaction by Ainsworth shareholders and the Supreme Court of British Columbia were obtained on October 29, 2013 and October 31, 2013, respectively. As of the date of this report, the consummation of the Transaction remains subject to other closing conditions, including the receipt of certain regulatory approvals and clearances. LP and Ainsworth have entered into timing agreements with each of the Canadian Competition Bureau (the “CCB”) and the Antitrust Division of the U.S. Department of Justice (the “DOJ”) pursuant to which LP and Ainsworth agreed, subject to certain conditions, that they will not consummate the Transaction before giving the CCB and DOJ at least 14 days' prior written notice. LP and Ainsworth have also amended the Arrangement Agreement to extend the outside date for completion of the Transaction from April 18, 2014 to June 2, 2014. The Arrangement Agreement permits either party to extend the outside date if required to obtain certain regulatory approvals. As of the date of this report, the CCB and DOJ have indicated that they are unwilling to permit the Transaction to be completed in the absence of divestitures that would go beyond those contemplated in the Arrangement Agreement. Although LP and Ainsworth continue to explore possible solutions and alternatives, LP is currently unable to conclude as to whether, when or the terms upon which a transaction may be completed. Because of their indicated positions, it may require LP and Ainsworth prevailing in litigation to complete the transaction under the current terms of the Arrangement Agreement. To complete a transaction, it may be necessary to make one or more divestitures of existing operations of LP and/or Ainsworth, to make changes to the Arrangement Agreement, including possible changes to the purchase price payable by LP and / or to engage in litigation with the CCB and / or DOJ. The Arrangement Agreement contains certain termination rights for each of LP and Ainsworth. Either party may terminate the Arrangement Agreement if: (i) the parties mutually agree; (ii) the Transaction has not been consummated by the outside date; (iii) a governmental authority issues a law or order prohibiting the Transaction; (iv) the other party materially breaches its representations, warranties or covenants such that the applicable closing condition would not to be satisfied; or (v) the other party has incurred a Material Adverse Effect (as defined in the Arrangement Agreement). LP expects to fund the cash portion of the purchase price contemplated by the Arrangement agreement (as the same be modified) and related fees and expenses through a combination of cash on hand at LP and Ainsworth and borrowings under our revolving credit facility. On October 17, 2013, Ainsworth issued a press release announcing that it had received the requisite consents in connection with its consent solicitation (the “Consent Solicitation”) from holders of Ainsworth’s 7.5% Senior Secured Notes due 2017 (the “Notes”) . The press release also announced that Ainsworth has entered into a supplemental indenture relating to the Notes, which modified certain definitions in the indenture relating to the Notes (the “Indenture”) so that the consummation of the Transaction pursuant to the Arrangement Agreement, and the designation by LP of members of Ainsworth’s board of directors upon and after the consummation of the Transaction, will not constitute a “Change of Control” under the Indenture and Ainsworth will not be required to make a “Change of Control Offer” under the Indenture in connection with the Transaction. Subject to the satisfaction or waiver of the conditions set forth in the solicitation statement distributed by Ainsworth to holders of the Notes, LP will make the consent payments contemplated thereby as and when they become due. Promptly following the consummation of the Transaction, LP will unconditionally guarantee the prompt payment and performance of the obligations of Ainsworth under the Indenture and the Notes. The transaction contemplated by the Arrangement Agreement is expected to have a material effect on LP’s consolidated financial position, results of operations and cash flows.

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