lessthaniv

My thought today ... Where did the 2.6M shares that were tendered come from? 1) Could an arb fund be buying at $.95 only to tender to ABH to make a quick 5% with virtually no downside, or 2) Now that Prem, Pabrai are no longer involved in the deal (they've tender already) what to stop them from buying up more open market stock and tendering it to ABH? Nothing that I can think of. The Insider bid stuff did not fly and the original transaction is complete. In my simple mind, it's much easier for ABH to find 1.2% that for MERC to find 50.1% when there is only 51.2% left floating around.

Invert: What if ABH / Steelhead are still silently on the same team. The goal is to get ABH to 67% on this bid so the majority of the minority includes all these shares and the vote works in their favour. ABH buys up enough stock to acquire the 50.1% on their own. That kills the MERC bid. Then, Steelhead is free to tender their shares to the ABH deal without any repercussions as their is no longer a competing offer. If Steelhead has acquired more stock in the mean time they may be getting closer to the combined total of 67%. EDIT: Thinking this through further, ABH can only buy in 5% max and must report. As well, Steelhead sits at just under 5% and should it go above ... it must report. ... I wonder if this "secret" meeting that took place was surrounding ABH's need to get to 50% on their own before Steelhead tenders? Love to be a fly on the wall at that meeting.

1) I think you find out next week that Steel head has tendered to ABH. 2) That gives ABH control and kills the MERC deal. 3) ABH will extend the offer again under the same terms to allow remaining shareholders to tender without the competing MERC offer in the way. For those comfortable in following FFH et al into ABH, I think the proper decision was to sell FBK and immediately repurchase ABH over the last two days. FBK could be had for around $.98 after the Supreme Court Decision was made. ABH traded below $13. ABH stock is priced at $15.83 in the deal. So, this manual transaction gives you 22% more ABH shares not including friction costs. Volume was there to support larger trades. Just under 9M shares in the last 2 days. And, at least you could enjoy your weekend knowing you upped Prem by 22%. ;D (Hopefully, ABH doesn't reprice the deal above that! :'()

ABH already met their minimum and now own 46.5%

Probably because in one of the past offers ABH had 51% + tendered. The MERC deal was $1.30 at the time. I think the market is assuming those shares were Steel heads and $.10/share won't change anything.

Hey FFHWatcher, my apologies - I missed your note above. Honestly, I'm just an observer like everyone else but it would appear to me from afar that Steelhead's actions suggest they are partial to the ABH offer and shareholder group. I'm guessing last Fall large shareholders of FBK discussed their displeasure with the direction of FBK and came up with an exit strategy using ABH (common to everyone) as the medium. In a previous offer ABH had 51.5% tendered. I think that include the Steel head shares. (just a guess but the math works). When Mercer screamed foul play, then and only then did Steel head issue the press release suggesting they were not part of the group. I think that was just covering there butt because immediately following that announcement ABH lowered their tender. In fact, Steel head even suggested they would in their own press release. So, they went from making this a one step process to a two step process. The minimum extension to an offer is 10 days. So, as of the 23rd we'll all know for sure. I'm guessing that they are tendering. As suggested, I suspect they probably made a closed door handshake agreement last Fall and I suspect they will honor it. ( Just speculation on my part based on what I've observed).

It would appear it's all up to Steelhead. If they tender to ABH then the game is over for Mercer. The ABH offer expires on the 23rd. The Mercer offer expires on the 27th. So, you'll know shortly.

Here's the confirmation directly from the Supreme Court's website. Application for leave to appeal was dismissed (ie. refused). Private placement is dead. DISMISSED WITH COSTS / REJETÉES AVEC DÉPENS Fibrek Inc. et al. v. AbitibiBowater Inc., doing business as Resolute Forest Products and RFP Acquisition Inc. et al. (Que.) (Civil) (By Leave) (34757) (The applications for leave to appeal are dismissed with costs to the respondents. / Les demandes d’autorisation d’appel sont rejetées avec dépens en faveur des intimées.) Coram: McLachlin / LeBel / Deschamps

Scuttlebut I'm hearing is leave to appeal has been denied. I'm looking to confirm.

Silvercorp not defamed by us, says Bronte 2012-04-12 14:31 ET - Street Wire by Mike Caswell Bronte Capital Management Pty. Ltd., the Australian hedge fund manager facing a defamation lawsuit from Silvercorp Metals Inc., denies that it had any role in a short-and-distort scheme that targeted the company in 2011. Bronte says a report on its website that suggested shorting the stock merely conveyed an opinion. The fund manager had no intention to manipulate Silvercorp with the posting. The statements come in response to a lawsuit that Bronte faces in the Supreme Court of British Columbia from Silvercorp over an Oct. 25, 2011, blog posting. The post, written by Bronte employee John Hempton, left readers with the impression that the company was a fraud on investors, the suit claimed. It questioned the company's reported costs for its Ying mine in China, saying they were "ludicrously cheap." Bronte claims that there was nothing defamatory about the report, and certainly nothing that would portray Silvercorp as a fraud on investors. Even if there were a defamatory meaning, the report constitutes fair comment on a matter of public interest, Bronte says. The case against Bronte is separate from the defamation action that Silvercorp is pursuing in New York against hedge fund manager Anthion Management LLC (also known as Chinastockwatch.com) and Alfredlittle.com. In that case, the company complains about a letter sent to regulators and media in August, 2011, that accused Silvercorp of being an accounting fraud. The letter stated that the company had reported 2010 earnings of $66-million (U.S.) in North America when government filings in China showed a $500,000 (U.S.) loss. Anthion denies any wrongdoing, and the case has not yet been decided. Silvercorp sues Bronte The case against Bronte began on Dec. 1, 2011, when Silvercorp filed a notice of claim against it and Mr. Hempton at the Vancouver courthouse. The claim identified Mr. Hempton as a British national living in Australia who served as the chief investment officer of Bronte. The blog posting that the suit complained of appeared on Oct. 25, 2011, right after a report by KPMG cleared Silvercorp of the accounting issues raised by Chinastockwatch.com. Mr. Hempton wrote that the KPMG report "does not mean that [silvercorp] is not a fraud but it does mean that it is not a simple fraud as alleged by the anonymous short sellers." He went on to compare the company's cost of developing the Ying mine with costs incurred by mining companies in Australia, and found that Silvercorp's expenses were so low as to be implausible. Silvercorp complained that the post left readers with the impression that the company was engaged in fraudulent business practices and was a fraud on investors. The post also contained links to the earlier Alfredlittle.com and Chinastockwatch.com reports, which constituted a republication of statements that Mr. Hempton knew were false. The suit further claimed that Mr. Hempton and Bronte were part of a broader conspiracy that included the authors of the Alfredlittle.com and Chinastockwatch.com reports. Silvercorp sought an accounting of profits, general damages, special damages, aggravated damages and punitive damages. It also asked that the court enter an injunction barring future publication of the article and an injunction preventing Bronte from dissipating assets. Vancouver lawyer Howard Shapray of Shapray Cramer LLP filed the suit on Silvercorp's behalf. Bronte's response In their response to the suit, filed on Tuesday, April 10, Bronte and Mr. Hempton deny that they did anything wrong. They say that the blog had a disclaimer which stated that the content represented Mr. Hempton's opinions. The disclaimer also advised readers that the content should not be used for investment advice and "is intended solely for the entertainment of the reader, and the author." Bronte and Mr. Hempton further deny conspiring with Chinastockwatch.com or Alfredlittle.com. They say they had little or no knowledge of Silvercorp until September, 2011, after the short-and-distort scheme the company complains of had already begun. They also say that if Silvercorp did suffer any damages from such a scheme, those damages were caused by others, including the authors of the Alfredlittle.com and Chinastockwatch.com reports. In legal terms, the defence that Bronte relies on is fair comment on a matter of public interest. Mr. Hempton made the comment honestly and without malice, the response states. He also included a link to a website that Silvercorp had set up to respond to allegations the short-sellers were making. Bronte and Mr. Hempton ask that the case be dismissed, with costs. Vancouver lawyer Jim Schmidt of Fraser Milner Casgrain LLP filed the response on their behalf.

This doesn't make sense to me, unfortunately SD: 1) I don't trust nor expect Steelhead to not tender to the ABH offer: a) When Steelhead put out their press release on Saturday, March 31 it must be read with the knowledge that they were heading into a hearing on Monday morning with The Bureau de decision et de revision (Quebec). Mercer was going to argue that Steelhead was working in concert with ABH and other shareholders. In my opinion, this press release was nothing but a CYA move in advance of going into that hearing. Also, the actual newswire coming from Steelhead reads very differently than the press releases from Fibrek and Mercer on the same subject. The later parties eliminate key language and in my opinion attempt to positively spin this press release in their favour. The full press release is pasted below with the key language highlighted. Steelhead Partners, LLC Announces Position with respect to Resolute and Mercer Offers for Fibrek, Inc. BELLEVUE, WA, March 31, 2012 /CNW/ - Steelhead Partners, LLC ("Steelhead") announced today that it has reserved its decision whether or not to tender shares of Fibrek, Inc. ("Fibrek") held by Steelhead Navigator Master, L.P. ("Steelhead Navigator") to the offer made by AbitibiBowater, Inc. doing business as Resolute Forest Products ("Resolute") until the minimum tender condition contained in the Resolute offer (as it may be amended) has been met. Steelhead has not yet made any decision or commitment to tender Steelhead Navigator's Fibrek shares to the Resolute offer should such condition be satisfied. Steelhead has not currently tendered Steelhead Navigator's shares to either the Resolute offer or to the competing offer of Mercer International Inc. ("Mercer"). Both Steelhead and Steelhead Navigator are independent parties in this matter. Steelhead Navigator is a shareholder of each of Fibrek, Mercer and Resolute. Steelhead's only goal has been to support the offer which creates the greatest possible value for Steelhead Navigator's investment. In evaluating any tender offer, Steelhead seeks to look past the cash price. Instead, Steelhead carefully examines the overall package of consideration offered and focuses on the potential synergies that will be created by the combined companies as the true drivers of long-term value. Steelhead expects that such an offer will have the support of a significant majority of Fibrek shareholders and will ultimately be successful. Steelhead Navigator holds 6,479,000 common shares of Fibrek, representing 4.98% of the outstanding shares. Steelhead Navigator's weighted average acquisition cost of its Fibrek common shares is $0.993 per share. Steelhead Navigator's weighted average acquisition cost for Fibrek common shares purchased subsequent to the announcement of the Resolute offer is $0.991 per share and the highest price paid was $1.02 per share. For further information: Brent Binge, Steelhead Partners, LLC Tel: 425.974.3788 It's important to note that immediately following this press release, ABH dropped the minimum tender amount below the lock up threshold. By doing so, were able to take up the locked up shares (which they subsequently have done) and put Steelhead in a position where they could follow up on a subsequent extension. b) Secondly, Steelhead has already shown us their cards. At the end of February when Mercer's warrants were thwarted a press release was issued to announce this. In the press release it was revealed that ABH had 51.5% under their offer. Any guesses where that 5% came from? FP/wire say Fibrek private placement to Mercer thwarted 2012-02-27 07:28 ET - In the News The Financial Post reports in its Saturday edition that Fibrek shed six cents to close Friday at $1.23. A Reuters dispatch to the Post reports that the shares advanced after Quebec regulators blocked a private placement by Fibrek to friendly suitor Mercer International, boosting chances that AbitibiBowater's hostile lower bid may succeed. "This ruling makes it significantly more difficult for Mercer to gain control of Fibrek, given Resolute's hard lock-up of 46 per cent of Fibrek's shareholder base," says RBC Capital Markets analyst Paul Quinn. AbitibiBowater, which operates under the name Resolute Forest Products, has 51.5 per cent of Fibrek shares tendered under its offer. AbitibiBowater has extended its $130-million offer, which is lower by 30 per cent than Mercer's bid, till March 9. Mercer has offered $170-million and has also agreed to buy 32.3 million special warrants from Fibrek for $1.00 each. This has been blocked by the provincial tribunal of Quebec. "Mercer's management was creative in its first bid, so we would not rule them out at this time," says Mr. Quinn. AbitibiBowater and Mercer are competing to get access to Fibrek's three mills with a combined annual production capacity of 760,000 tonnes. 2) Finally, pari passu ensures that should a price increase be offered as you suggest, it must be extended to the entire equity class. So, any increase would cost ABH significantly if its done under the same offer. They may be willing to do that but given my view that Steelhead will give them 50.1% - I don't expect it. On the other hand, if ABH puts out a new offer once they have acquired the 50.1% they wouldn't be bound by the limits of pari passu. The downside, of course, is that those previously acquired shares are not part of the minority in any eventual majority of the minority vote. I'm not sure that ABH wants to get into that either. I expect, Steelhead will tender and cite the internal synergies as reasons for doing so. This gives ABH 50.1%+ and control. At that point ... the Mercer offer is dead in the water. At this point, I will expect ABH to extend their offer at $1 again to see if anyone else will tender knowing the Mercer offer is dead.

Recently we've just been reintroduced! :) And, as promised it's down about 10%. Don't say I didn't warn you though....

GAS.to Not leveraged but simply rolls forwards http://ca.ishares.com/product_info/fund/overview/GAS.htm

see above. this article was obviously constructed and printed before last nights events. imo, as I've been saying the Mercer offe would appear to be dead assuming Steelhead now tenders under the extension.

This deal has more twists and turns than a Dan Brown novel. Crazy. I'm curious to see how things develop today. Given the warrants (at this point) have already been ceased I can't imagine the commission will be too happy to see this new rights plan. The ABH offer expires today and the hard lock up agreements are done on April 13th. I'd bet we'll see a counter from ABH asking for an immediate cease trade of these rights so they can take up the hard lock shares today. Whether they get it or not .... who knows? This one has been a real education on deal process. Sorry SD, This ones looks to be developing as I've laid out in my past posts. The new shareholder rights was indeed ceased immediately and ABH has taken up 46.8% shares. The offer was extended the minimum 10 days to April 23 as I mentioned and this will allow Steelhead to tender their 5%. That will give ABH a majority and render the Mercer offer dead. If Steelhead tenders in the second round then I'd expect another extension to see who of the remaining FBK shareholders is willing to tender. They try to get to 67%. This bump in price to $1.40 appears to have been a last ditch effort. I suspect the material change was likely the foundation for arguing the new shareholder rights plan but that attempt was futile. Press Release 1: 2012-04-11 23:51 ET - News Release Ms. Patsie Ducharme reports FIBREK PROVIDES UPDATE ON THE BUREAU DE DECISION ET DE REVISION RULING Fibrek Inc. confirmed today that the Bureau de decision et de revision (Quebec), the administrative tribunal with statutory jurisdiction in securities law and regulatory matters in the province of Quebec, issued an order to cease trade Fibrek's new shareholder rights plan, adopted on April 11, 2012, effective immediately. Fibrek intends to appeal the BDR's decision before the Court of Quebec as soon as possible. As previously disclosed, Fibrek announced today that Mercer International Inc. has increased the consideration offered to Fibrek shareholders under its offer to purchase all of the issued and outstanding common shares of Fibrek from $1.30 to $1.40, which represents a 40-per-cent premium over the unsolicited insider bid made by AbitibiBowater Inc. (carrying on business as Resolute Forest Products). Fibrek also announced today that the Supreme Court of Canada has granted Fibrek's request to expedite the application for permission to appeal the Quebec Court of Appeal's decision to maintain the cease trade order of the proposed private placement of 32.32 million special warrants to purchase common shares of Fibrek to Mercer. The board of directors strongly recommends that shareholders defer making any decision until the Supreme Court of Canada's decision with respect to the private placement is rendered, in order to benefit from the superior $1.40 offer from Mercer. As such, the board urges shareholders to reject and not tender to the Abitibi unsolicited insider bid and to tender to the increased Mercer offer. A notice of change, variation and extension setting forth details of the increased Mercer offer will be mailed to shareholders and will be available on SEDAR in due course. The support agreement, the special warrant agreement and the directors' circular in respect of the Mercer offer is available on SEDAR under the company's profile. For more information on how to tender Fibrek common shares, for any other inquiries regarding the increased 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 e-mail at inquiries@phoenixadvisorypartners.com. We seek Safe Harbor. Press Release 2: AbitibiBowater takes up 60.83 million Fibrek shares 2012-04-12 01:22 ET - News Release Mr. Remi Lalonde reports RESOLUTE ANNOUNCES TAKE-UP OF 46.8% OF FIBREK SHARES AND EXTENSION OF OFFER TO APRIL 23 All applicable conditions to the AbitibiBowater Inc., doing business as Resolute Forest Products, offer for Fibrek Inc. have been satisfied and the company has taken up and accepted for payment the 60,831,859 shares deposited as of 11:59 p.m. on April 11. The tendered shares represent approximately 46.8 per cent of the currently outstanding Fibrek shares. As aggregate consideration for the shares, Resolute will distribute approximately 1.7 million newly issued shares of its common stock and $33.5-million in cash through RFP Acquisition Inc., a wholly owned subsidiary. The company also announced that the Bureau de revision et decision (Quebec) has issued an order to cease trade, effective immediately, Fibrek's second shareholder rights plan, which its board adopted on April 11. In addition, in order to allow additional Fibrek shareholders to participate, the company announced that it has extended the expiry time for its offer to 5 p.m. on April 23. As further described in the offer circular and other ancillary documentation related to the offer (as amended), Resolute intends to carry out a second-step transaction to acquire the Fibrek shares not deposited in the offer. The offer to acquire all of the issued and outstanding shares of Fibrek made by Resolute, together with RFP Acquisition Inc., a wholly owned subsidiary, is more fully described in the offer circular and other ancillary documentation that Resolute filed on Dec. 15, 2011, on SEDAR. The offer will expire at 5 p.m. (Eastern Time) on April 23, 2012, unless it is extended by Resolute. Questions and requests for assistance or further information on how to tender Fibrek common shares to the offer should be directed to, and copies of the above referenced documents may be obtained by contacting, Georgeson at 1-866-598-0048 or by e-mail at askus@georgeson.com. We seek Safe Harbor.

This deal has more twists and turns than a Dan Brown novel. Crazy. I'm curious to see how things develop today. Given the warrants (at this point) have already been ceased I can't imagine the commission will be too happy to see this new rights plan. The ABH offer expires today and the hard lock up agreements are done on April 13th. I'd bet we'll see a counter from ABH asking for an immediate cease trade of these rights so they can take up the hard lock shares today. Whether they get it or not .... who knows? This one has been a real education on deal process.

Why doesn't Resolute just buy FFH, Pabrai and Oakmont's FBK shares for $1.00 and become a large shareholder of FBK. If FFH wants to give away their shares for $1.00, let them. Then, they can look at buying the other 50% or so that they don't already own. I'm am not sure of the laws in this case, but if 40-50% of the shareholders feel the price is too low, can they forcibly cause almost 50% of shareholders to tender their shares at $1.00? 50.1% seems crazy. I don't recall a discussion of the legal implications in this case. Is it standard, a fixed percentage, different on a case by case situation, etc.? I'll share my understanding FFHWatcher: <50% lands them as a large shareholder without control >50% puts them in a control position but restricts some things (like flowing dividends upstream) >66.66% allows them to call a meeting and proceed with a majority of the minority vote: a) If ABH got >66.66% tendered on the original offer, those shares would be considered part of the minority. Hence, they will easily have a majority of the minority and the minority shareholders will be rubbed out. b) If ABH got > 66.66% but did so over two separate offers (ie: Take up everything they can now, and offer a higher price down the road in a completely separate offer) then the definition of minority would exclude the shares they already own. Hence, when the majority of the minority vote occurs they may or may not win. You could have a look at Sears Holdings Corporations run at Sears Canada a while back. The circumstances are different but you will see what can happen when the definition of what constitutes the minority changes. http://www.searsholdings.com/pubrel/pressOne.jsp?id=2006-11-14-0004474235 >90% would allow for a compulsory acquisition. Simple and cost effective statutory process to complete in about a months time. My best guess at this point: 1) ABH takes up the 46.4% that is currently tendered under their bid as the hard lock ups expire on April 13th. 2) ABH extends the offer again. 3) Steelhead is now open to tender their 5% as the minimum tender condition was met. 4) This gives ABH 51.4% and control. The mercer bid in now dead as they cannot get their minimum tender of 50.1%. ABH's perspective from this point? You're guess is as good as mine: 5) ABH extends again to see who will now tender knowing there are no alternatives. If they can get to 66.66% as above, they will call a meeting for the majority of minority vote but their 51.4% will be part of the minority. Therefore, they will easily win and acquire FBK successfully. 6) if ABH cannot get to 66.66% they may be content as a controlling shareholder of FBK going forward or, 7) they could try upping their bid to get to 66.66% but this could get expensive. Under Canadian Securities laws, as the consideration paid for one security must be pari passu with another security that possesses identical features, ABH could not up the price on their current tender without doing so for the entire group. They may or may not be prepared to do that. 8.) they could also try a follow up offer down the road but they would have the 51.4% shares ownership excluded from the majority of the minority vote should they get to 66.66%. They may not be able to force the rub out. And it's important to note that lot's of other things could also change. If the Supreme Court decides to grant leave to appeal and the decision is overturned, yet again, Mercer's warrants are back in play and ABH gets diluted. SD seems to think this has a good chance to happen? Perhaps he would be willing to share his thoughts? I rank it as a low probability event. But, we'll all find out shortly... Happy Easter - time to go paint some eggs with the kids. :)

SD: All I'm saying is right now the dilution isn't a factor because the current ruling stands in ABH's favor. To make the dilution relevant again, the Supreme Court of Canada first must be willing to hear the application for leave to appeal and the appeal itself. Reading your comments it's as if you've bypassed that entire step. I guess that is where we differ at this point. I'm not sure the Supreme court will even grant the application for leave to appeal let alone overturn the under courts decision. I certainly agree that if the Supreme court agrees to here the appeal AND overturn the previous ruling ... then the dilution is relevant again. I just have a low probability assigned to that event. We obviously differ here. What gives you such confidence? If ABH ends up with only a minority position after the take up of the lock up shares ... I can't imagine that they would not follow up with another tender. As you correctly state, their is nothing that forces them too, but I don't think they want to end in the position. That's why I suggest Steelhead holds the trump cards. But, judging by Steelhead's actions it would appear that they have been committed to the ABH deal from the get go. I believe their recent press release suggesting they won't tender until the minimum tender has be taken up ... is just a bunch of CYA.

SD, Right now, the dilution is not an issue for ABH. As it stands the Quebec courts (as you know) have ruled against the warrants. I place a small probability on the Supreme Court of Canada granting permission to appeal. Although, the way this case is going, nothing will surprise me. Recently, ABH's minimum tender was reduced to 45.7% and the deal was extended to April 11th. The minimum tender is important because it's below the amount of shares held under the hard lock agreements which is 46.4%. The date is also important. There is a special 2 day settlement in place for shares traded on April 11th. They settle April 13th which happens to be the day that the hard lock agreements expire. So, as of April 11th - I suspect ABH will take up the 46.4%. If they don't, they would lose those committed shares. ABH can then extend the offer at $1 at which point Steelhead is open to tender their 5%. If ABH takes up the 46.4% next week and extends I believe its for a minimum of 10 days. That takes us out to April 23rd. During that period if Steelhead decides to tender- the Mercer deal is dead. At this point, for me, the only catalyst that I can conceive changing Steelheads mind is a potential PPA announcement. Realistically, do you expect a PPA to be signed/announced by then? Without the PPA, I would think Steelhead tenders and ABH follows up with another extension again at $1 and sees who of the remaining shareholders tender without another competing offer on the table. Any increase in price would have to be extended to the entire offer. That gets expensive. If they let this offer die and start the process again at a later date they could change the price without having to pay it to all the shareholders but that would also change the definition of who the "minority" is for any future majority of the minority vote. In other words, assume on the second stage offer they get to 68%. The 51.4% acquired in the first transactions would be excluded as part of the minority. If they somehow got to 68% on this stage 1 offer those share should count as part of the minority as its based on what was owned prior to the deal. It's much easier for ABH to complete this deal that way.

With the agreement of the participants, could not the hard lockup price be increased if they were so inclined? If they are locked into a position that they cannot get out of, why are they perusing legal action to push the matter so hard? If they want the company, offer a fair price, don’t try to force shareholders to take an lower offer Sure they could raise the $1 bid but why would they? They stand a good chance of winning the auction as it is. From the perspective of the ABH shareholders, would you want your company to increase their bid just to appease the minority shareholders of the target? I would suggest that you'll only see a price increase if that's their only option left. Remember the ABH deal was for $1/share or roughly $130M. But only $71.5M (55%) can come in the form of cash. The remaining (45%) will come in the form of ABH stock. Assuming many investors will want cash, the cash payout will likely be maximized. Therefore, we are most likely to get $.55/share in cash and .0284 (.0632 * 45%)of ABH stock per each FBK common. Hence, it's imperative to form an opinion on what the ABH paper is worth. I don't want to hijack this thread and turn it into a discussion on the value of ABH but suffice it to say that one should study ABH ( MERC too) and form an opinion. It's interesting to note that Neil Gilmer of Canaccord Genuity holds a value of US$25/share on ABH, currently. I bring to the table this analyst opinion only becuase Canaccord Genuity is the firm that did the independent valuation work for Fibrek citing value between $1.25 - $1.45/share of FBK. The ABH deal values ABH stock at $15.83/share. So, according to the analyst you're relying on for your FBK valuation of $1.25 -$1.45, this deal undervalues ABH paper by 58%. For each 1000 shares of FBK, under my example, you'll get: $550 and 28 shares of ABH. However, Neil Gilmer is telling you ABH shares are really worth $25. Therefore, total deal value is intrinsically worth more : $550 + (28 * $25) = $1,250. The Intrinsic Value of this offer (according to Neil Gilmer) is $1.25/share of FBK. ______________________________ For Balance, Neil also covers MERC and holds a $10/share target. 130M shares * $1.30/share = $170M Max cash offer = $70M Remaining in MERC paper = $100M MERC paper being valued $8.44 in deal. On a per share basis we will get $.54 in cash + .0903 in MERC stock. Per 1000 shares of FBK (to make it comparable to ABH) you'll get; $540 in cash + 90 shares of MERC. However, the Canaccord analyst values those shares at $10. Therefore the intrinsic value of this deal is $540 + (90 * $10) = $1,440. The Intrinsic Value of this offer (according to Neil Gilmer) is $1.44/share of FBK. Note: ABH with the lock ups in place sits on the bottom end of Neils fair value range of $1.25/share MERC without any lock ups in place sits on the high end of Neils fair value range of $1.44/share. Both deals, as per Neil are fair deals but having the hard locks in place is affording ABH the luxury of sitting on the low end. Without the same share committment, MERC has to be on the high end to try and swing the remaining shareholders to meet their minimum tender of 50.1% IMO, I think Steelhead has acted most intelligently for their own benefit. They own MERC, ABH and FBK in their own accounts and I believe they saw an opportunity to control the direction of this deal for their own benefit. Paying $.90 for FBK or paying $1.02 didn't matter to them. Why? Because both prices paid are well below the intrinsic value of the deals. But by acquiring the shares they also acquired the swing votes which puts them in the drivers seat. At a price of $1.02/share for FBK Steelhead held virtually no downside and can essentially control the outcome of this deal which matters to them immensely as shareholders.

They certainly are, but the situation has changed since that time and just because they are within their rights still doesn’t mean that their offer is either “fair or friendly”. I guess that if someone goes through a red light in front of me I would be within my rights to hit him, it still doesn’t make it the "right" thing to do.The real situation here is simply that our shares are up for sale and we have two offers, one is $1.30, the other is $1.00. Related parties are colluding to force us to take a the lower offer and also eliminate any other potential offers. FFH is not buying FBK. FFH is selling their shares to ABH who are hoping to buy FBK. This talk about FFH not adhereing to their "fair and friendly" acquisition mantra is ridiculous. They are acquiring nothing. They are trying to surface the value of their deflated FBK shares on behalf of the FFH shareholders. They obviously feel ABH was the best option at the time. Yes but that was many months ago when there was no other offer on the table. If I make an offer to buy your car for $10,000 and you say,”No that isn’t enough, I know my car is worth a lot more than that”. Then someone else comes along and says “I’ll give you $13,000 for your car”. Then you might expect for the first guy to come back with a higher offer, but when he says "I’ll still give you $10,000 for your car” should you not be free to accept the second offer? Sure in the FBK situation there are lots of technicalities involved and that is why this mess is in court. Respectfully, your metaphor is wildly off base on many levels, cwericb. At the time of ABH's offer to acquire FBK - FFH and others committed under a "hard lock" agreement to support the ABH bid. In layman's terms they cannot tender their shares to another deal, for a fixed period of time - subject of course to all kinds of conditions. Remember, at the time FFH made that commitment the stock price was $.70 heading into a falling pulp market with no apparent interest in the assets from other parties. If you want to be pissed at someone then how about the management team of FBK? Ask yourself why the management team of FBK were looking to do an acquisition financed through further dilution instead of trying to sell this company to Mercer for $1.30/share or higher in 2011? Self preservation perhaps? FBK management should have been way more active putting the company assets in play to surface our value. Instead, they wanted to spend more of our money on a venture that carried significant risk. But, they would get to keep their jobs... After the fact, the Mercer bid enters the picture. FFH cannot break their agreement at this time. They are already committed. Once the hard lock agreement expires, then FFH would be able to consider other options. But until such time they are contractually bound and unable to tender to the Mercer bid. I'm sure if Domtar entered the picture tomorrow and offered $1.50/sh in straight cash, Fairfax and friends would be wishing they could tender to that offer, no doubt. But, ABH was aware of this possibility from day one and intelligently only committed to the takeover of FBK with the knowledge that 46% of the shares were locked to their offer. Steelhead holds the trump cards. They also own ABH, FBK and MERC.

sent you a PM

You can choose which offer you want to go with. But other shareholders are entitled to those same rights. Contrary to the tone of this thread, FFH, Pabrai, Oakmont etc are well within their rights to lock up shares to an offer. Remember the Mercer offer didn't exist when they made that commitment and the stock price was around $.70.They voted their shares in a manner that they believed gave them the best opportunity for success at the time. I think too many invested in FBK because they were riding the coattail of FFH. And, now they are caught. I have a problem with blaming FFH for that.

Look. when one faction offers shareholders $1.00 and the other offers $1.30, nearly everyone looking at this can see who the good guys and bad guys are. Not necessarily - both sides have limited the cash available under their tender offers to roughly $70M. Therefore, it becomes necessary to value their paper to determine which one is the best option. Not taking sides ... but the nominal offer price doesn't always direct you to the best place.

I have been looking at FTP.db as well but I have no idea how I can value the convertibles correctly. Anyone got an idea? What is not clear to me is what is the claim in a reorganization for the debenture holders? Is the claim exclusively against this new subsidiary that they are trying to jump start with the financing from the debenture? That's a risky collateral for the investment. Can ftp.db holders make subordinated debt claims to the parent in a reorg? All this information is contained in the prospectus which you should fully digest before buying ... Debentures, by definition are subordinate to some other senior claim(s). The Debentures will be subordinate to Senior Indebtedness of the Company and to any indebtedness of trade creditors of Fortress. The Debentures will also be effectively subordinated to claims of creditors of the Company's subsidiaries, except to the extent that the Company is a creditor of such subsidiaries ranking at least pari passu with such creditors. In the event of the Company's insolvency, bankruptcy, liquidation, reorganization, dissolution or winding up, its assets would be made available to satisfy the obligations of the creditors of such Senior Indebtedness before being available to pay the Company's obligations to the holders of the Debentures. Accordingly, all or a substantial portion of the Company's assets could be unavailable to satisfy the claims of the holders of the Debentures.