Tembec Announces Pricing and Upsizing of Senior Secured Notes Offering

TEMISCAMING, QC, Aug. 11 /CNW Telbec/ - Tembec Inc. ("Tembec") announced today the pricing of an offering of US$255 million in aggregate principal amount of 11.25% Senior Secured Notes due 2018 at an issue price of 98.717%. The aggregate principal amount of the notes offered was increased from US$250 million. The notes are being offered by Tembec's wholly-owned subsidiary, Tembec Industries Inc. (the "Company") in a private offering to "qualified institutional buyers" as defined in Rule 144A under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and outside the United States in reliance on Regulation S under the Securities Act.

The notes will be senior secured obligations of the Company, secured by a first priority lien on certain of the property and assets of the Company and the guarantors of the notes, other than receivables, inventory and certain intangibles upon which the note holders will have a second priority lien. The notes will be guaranteed by Tembec and certain of the Company's subsidiaries. The proceeds from the offering, together with cash on hand, will be used to permanently repay all outstanding indebtedness under Tembec's and the Company's existing US $300 million term loan facility, to pay prepayment premiums in connection therewith and to pay fees and expenses related to the offering.

Upon issuance, the notes will not be registered under the Securities Act or the securities laws of any other jurisdiction. In connection with the offering, the Company will agree that following completion of the offering, it will file an exchange offer registration statement with the U.S. Securities and Exchange Commission with respect to an offer to exchange the notes and, under certain circumstances, a shelf registration statement with respect to resale of the notes. Until registered, the notes may be offered only in transactions that are exempt from registration under the Securities Act or the securities laws of any other jurisdiction and will therefore be subject to substantial restrictions on transfer.

This press release is neither an offer to sell nor the solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale of any security in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Tembec is a large, diversified and integrated forest products company which stands as the global leader in sustainable forest management practices. The Company's principal operations are located in Canada and France. Tembec's common shares are listed on the Toronto Stock Exchange under the symbol TMB and warrants under TMB.WT. Additional information on Tembec is available on its website at www.tembec.com.

    
    This press release includes "forward-looking statements" within the
    meaning of securities laws. Such statements relate to the Company's or
    management's objectives, projections, estimates, expectations or
    predictions of the future and can be identified by words such as "will",
    "anticipate", "estimate", "expect" and "project" or variations of such
    words. These statements are based on certain assumptions and analyses
    made by the Company in light of its experience and its perception of
    future developments and may not be appropriate for any purposes other
    than what is stated herein. Such statements are subject to a number of
    risks and uncertainties, including, but not limited to, changes in
    foreign exchange rates, product selling prices, raw material and
    operating costs and other factors identified in our periodic filings with
    securities regulatory authorities. Many of these risks are beyond the
    control of the Company and, therefore, may cause actual actions or
    results to materially differ from those expressed or implied herein. The
    Company disclaims any intention to update or revise any forward-looking
    statements, whether as a result of new information, future events or
    otherwise, unless required by applicable securities legislation.
    

For further information: John Valley, Executive Vice President, Business Development and Corporate Affairs, Tel.: [phone], [email protected]; Michel J. Dumas, Executive Vice President, Finance and Chief Financial Officer, Tel.: [phone], [email protected]