Fairfax's action on Fibrek - is it fair to the minor shareholders?

[alertmeipp]

Looking at Fibrek standalone, there is no rational reason for FFH to refuse Merc's $1.3 offer only to take $1 from ABH later on. To me, the only reason that FFH was willing to accept the lower price is because they own a lot of ABH so, to giving less to Fibrek's shareholder is getting more for them.

 

 

http://www.newswire.ca/en/story/927105/fibrek-to-appeal-decision-cease-trading-private-placement-of-special-warrants

 

 

Hubert T. Lacroix, Chairman of the Board of Directors of Fibrek added: "We were surprised to learn during the hearing that in mid-November 2011, only two weeks before signing a hard lock-up agreement with Abitibi for a $1.00 offer, Fairfax Financial Holdings Limited refused to sell its common shares of Fibrek to Mercer for a superior value than that of the Abitibi bid, after having been approached by Mercer.

 

 

One of the execuse Prem gave before was ABH was more liquid. MERC is liquid as well, my friend.

 

I still remember a few years back, when Prem was asked his reasons for buying SFK. He said it's a simple return to mean deal. And SFK wasn't that liquid when he bought it.

 

 

Would we have a survey on that?

[st96dgx8]

Looking at Fibrek standalone, there is no rational reason for FFH to refuse Merc's $1.3 offer only to take $1 from ABH later on. To me, the only reason that FFH was willing to accept the lower price is because they own a lot of ABH so, to giving less to Fibrek's shareholder is getting more for them.

 

 

http://www.newswire.ca/en/story/927105/fibrek-to-appeal-decision-cease-trading-private-placement-of-special-warrants

 

 

Hubert T. Lacroix, Chairman of the Board of Directors of Fibrek added: "We were surprised to learn during the hearing that in mid-November 2011, only two weeks before signing a hard lock-up agreement with Abitibi for a $1.00 offer, Fairfax Financial Holdings Limited refused to sell its common shares of Fibrek to Mercer for a superior value than that of the Abitibi bid, after having been approached by Mercer.

 

 

One of the execuse Prem gave before was ABH was more liquid. MERC is liquid as well, my friend.

 

I still remember a few years back, when Prem was asked his reasons for buying SFK. He said it's a simple return to mean deal. And SFK wasn't that liquid when he bought it.

 

 

Would we have a survey on that?

 

 

The actions of ABH/FFH are abusive and oppressive to minority shareholders, and if successful would deprive minority shareholders of a significantly higher bid. Shame on FFH and Prem Watsa for trying to screw FBK minority shareholders for a mere $30 million.

[alertmeipp]

for those who think FAIRFAX is being fair? Please leave your reasons here.

[Parsad]

Are you guys retarded, or have you been smoking something?  Let me ask you a few questions:

 

Have you guys heard Prem say anything really on this? 

 

Do you really think Prem is going to ruin all the goodwill he's created over his working life over a $250M investment in Abitibi?

 

Did Prem make the tender offer?

 

Did Fairfax make the tender offer?

 

Do you know if Prem prefers Fibrek's management or Abitibi's management?

 

And if he does have a preference for management, could it be because he plans on holding the shares in that company for the long-term?  Do any of you even know this?

 

Do you think that Prem felt the warrants in the Mercer offer would have been dilutive to long-term shareholders?

 

Do you think Prem thinks Fibrek will do significantly better long-term under Abitibi, rather than Mercer?

 

Do you think that both Abitibi and Fibrek may have better access to capital if they were together, than if they were alone or if Fibrek was within Mercer?

 

How come none of you are asking what Mohnish is up to and how he is screwing you guys?  He coughed up his shares just like Prem!

 

I know some of you are pissed because your $1.30 offer is up in the air, but you could have easily sold your shares at that price or better last week in the open market, as millions of shares traded at $1.30 or better.  But I guess it's much easier to bitch about how someone else is screwing you over, when your own greed is actually the root of the problem.  Is Prem really screwing the minority shareholders over, or are you guys whining because he's looking after his shareholder's interests, instead of only yours?  Cheers!

 

 

[lessthaniv]

Are you guys retarded, or have you been smoking something?  Let me ask you a few questions:

 

Have you guys heard Prem say anything really on this? 

 

Do you really think Prem is going to ruin all the goodwill he's created over his working life over a $250M investment in Abitibi?

 

Did Prem make the tender offer?

 

Did Fairfax make the tender offer?

 

Do you know if Prem prefers Fibrek's management or Abitibi's management?

 

And if he does have a preference for management, could it be because he plans on holding the shares in that company for the long-term?  Do any of you even know this?

 

Do you think that Prem felt the warrants in the Mercer offer would have been dilutive to long-term shareholders?

 

Do you think Prem thinks Fibrek will do significantly better long-term under Abitibi, rather than Mercer?

 

Do you think that both Abitibi and Fibrek may have better access to capital if they were together, than if they were alone or if Fibrek was within Mercer?

 

How come none of you are asking what Mohnish is up to and how he is screwing you guys?  He coughed up his shares just like Prem!

 

I know some of you are pissed because your $1.30 offer is up in the air, but you could have easily sold your shares at that price or better last week in the open market, as millions of shares traded at $1.30 or better.  But I guess it's much easier to bitch about how someone else is screwing you over, when your own greed is actually the root of the problem.  Is Prem really screwing the minority shareholders over, or are you guys whining because he's looking after his shareholder's interests, instead of only yours?  Cheers!

 

x2

 

I think people are forgetting where FBK was in early fall. You had $.70/share on the table, falling pulp prices and a management team that we've subsequently found out was looking to spend more shareholder capital and dilute your position for a questionable acquisition. Your current FBK management team is only now looking to create value by selling the assets because of the ABH offer. Without that offer I think it highly questionable whether or not you'd even have $.70/share right now.

 

[alertmeipp]

how does what prem thinks and the pps related to this being fair or not?

and how does it matter whether we are greedy or not?

[Uccmal]

Well said Parsad, Less than Iv.

 

Bunch of whining suckie babies.  Welcome to the real world.

 

With those recent earnings be grateful your getting a dollar for this turd.

[EdWatchesBoxing]

I haven't made any comments regarding the FBK situation, but I got out last week. I am glad to put this business behind me. I think Fairfax wanted out and needed to get the ball moving.

 

I would have saved myself a lot of pain if I had just ignored FBK and bought CFX. Especially when the shit hit the fan in 2009.

 

My biggest complaint is with myself. Hopefully I've learned enough to not make the same mistake in the future.

 

I will continue to follow the other FBK thread because the discussion is extremely good. I have nothing to add there, so I'll just watch from the sidelines.

 

<IV, great call on the warrants becoming disallowed!

[alertmeipp]

Guys, I was on the fence with Fairfax tactics (okay, slighty -ve) on this one until I saw the news that says they refuse Merc's higher offer to takes ABH's lower one?

 

That would only benefit us if we are all  ABH's shareholders but it's not the case here.

 

Uccaml, we all know this is a cyclical stock, look at the current earning won't give us full picture and you know what's coming to FBK in next couple years. We've waited so long for the power contract and RBK to become cost-basis, etc... only to sell out at 1 buck (if they still keep buying at 1.2-1.3 to tender back to ABH at 1 - we will be eventually be forced to sell out.)

 

 

 

 

[alertmeipp]

I understand that it's all business and the plan is to maximize profits for our own stake.

 

I am not whining - FBK is only a small position for me (less than 5%) - All I want is to see what various board members think about some of the tactics different parties used to win this battle. And are those tactics fair to us minor shareholders?

 

 

[Nnejad]

Are you guys retarded, or have you been smoking something?  Let me ask you a few questions:

 

Have you guys heard Prem say anything really on this? 

 

Do you really think Prem is going to ruin all the goodwill he's created over his working life over a $250M investment in Abitibi?

 

Did Prem make the tender offer?

 

Did Fairfax make the tender offer?

 

Do you know if Prem prefers Fibrek's management or Abitibi's management?

 

And if he does have a preference for management, could it be because he plans on holding the shares in that company for the long-term?  Do any of you even know this?

 

Do you think that Prem felt the warrants in the Mercer offer would have been dilutive to long-term shareholders?

 

Do you think Prem thinks Fibrek will do significantly better long-term under Abitibi, rather than Mercer?

 

Do you think that both Abitibi and Fibrek may have better access to capital if they were together, than if they were alone or if Fibrek was within Mercer?

 

How come none of you are asking what Mohnish is up to and how he is screwing you guys?  He coughed up his shares just like Prem!

 

I know some of you are pissed because your $1.30 offer is up in the air, but you could have easily sold your shares at that price or better last week in the open market, as millions of shares traded at $1.30 or better.  But I guess it's much easier to bitch about how someone else is screwing you over, when your own greed is actually the root of the problem.  Is Prem really screwing the minority shareholders over, or are you guys whining because he's looking after his shareholder's interests, instead of only yours?  Cheers!

 

Your emotions and love for Prem must have clouded your judgment on this one, because you are clearly not thinking straight.

 

Here's an scenario that exemplifies what is happening here:

 

Say you and your man-crush Prem are partners in a business. Prem owns 60%, you own 40%.  The business is currently at cyclical lows, but you both believe instrinsic value to be ~$1.30.  In fact, an arms-length party offers you $1.30 for it, but Prem declines (however you are keen to sell).  Instead, he decides to squeeze you out and pay you $0.10 for your minority stake, because he believes the business would be better under his care, and he is in control.  Would you still be madly in love with him in this scenario?  I believe most rational businessmen would be quite angry, justifiably so.

 

Stick to the facts on this, not your emotions.  He's clearly doing the opposite of his supposed "fair and friendly acquisition" mantra.

 

That's hardly a fair scenario: here's a better one. Me and Prem are partners in business- I own 60%, he owns 40%. The business is at cyclical lows, and he wants out. I, as managing partner, try to assuage his concerns by telling him with the same message I have been telling him the past three years. Seeing no progress is being made, decides to get the process rolling: he enters into a lock-up agreement to sell his stake at $1 in order to get a third party (Abitibi) interested. If he hadn't done it, that third party would never have begun the process. Now, a new superior bid has come in. Prem has no say past this; as I mentioned before, he's locked in at $1.

 

Now you may argue that he did not need to go to court against the private placement. But see this from his angle: he owns 20% of a firm which he has locked in to sell at $1. There are three options: Abitibi fails, Mercer prevails at $1.30; Abitibi prevails; Abitibi fails and Mercer walks away.

In option 1, Prem would still walk away at $1, as Abitibi is not crazy- they will buy at $1 and sell at $1.30.

In option 2, Prem still walks away at $1, as Abitibi has prevailed.

In option 3, Prem is stuck back holding the shares, but now his economic stake has been significantly reduced. Further, he is no longer in a position to force change, as the white knight bidder now has enough power to keep current management in place.

 

I don't know how you argue option 3 is an unlikely scenario; once the warrants are issued, Mercer could easily walk away, Fibrek could keep their jobs, and everything would ground to a halt. Regardless, from Prem's perspective, the ONLY rational path was to fight against the warrants. He had nothing to gain from them being issued, and only something to lose.

 

Furthermore, one last point.

1) Mercer fell to about $.30 per share in the last recession. Fairfax believes in a coming recession.

2) Prem bought plenty of shares of ABH at prices above $22 per share.

 

So from their perspective, it doesn't take much reconciliation to see why they originally opted for a Abitibi deal instead of a Mercer deal. (Similar logic would apply for Steelhead, as well)

 

[alertmeipp]

look, you miss one key pt, this 60% partner refused a superior offer before he accept the 1 dollar one.

[tyska]

Are you guys retarded, or have you been smoking something?  Let me ask you a few questions:

 

Have you guys heard Prem say anything really on this? 

 

Do you really think Prem is going to ruin all the goodwill he's created over his working life over a $250M investment in Abitibi?

 

Did Prem make the tender offer?

 

Did Fairfax make the tender offer?

 

Do you know if Prem prefers Fibrek's management or Abitibi's management?

 

And if he does have a preference for management, could it be because he plans on holding the shares in that company for the long-term?  Do any of you even know this?

 

Do you think that Prem felt the warrants in the Mercer offer would have been dilutive to long-term shareholders?

 

Do you think Prem thinks Fibrek will do significantly better long-term under Abitibi, rather than Mercer?

 

Do you think that both Abitibi and Fibrek may have better access to capital if they were together, than if they were alone or if Fibrek was within Mercer?

 

How come none of you are asking what Mohnish is up to and how he is screwing you guys?  He coughed up his shares just like Prem!

 

I know some of you are pissed because your $1.30 offer is up in the air, but you could have easily sold your shares at that price or better last week in the open market, as millions of shares traded at $1.30 or better.  But I guess it's much easier to bitch about how someone else is screwing you over, when your own greed is actually the root of the problem.  Is Prem really screwing the minority shareholders over, or are you guys whining because he's looking after his shareholder's interests, instead of only yours?  Cheers!

 

Your emotions and love for Prem must have clouded your judgment on this one, because you are clearly not thinking straight.

 

Here's an scenario that exemplifies what is happening here:

 

Say you and your man-crush Prem are partners in a business. Prem owns 60%, you own 40%.  The business is currently at cyclical lows, but you both believe instrinsic value to be ~$1.30.  In fact, an arms-length party offers you $1.30 for it, but Prem declines (however you are keen to sell).  Instead, he decides to squeeze you out and pay you $0.10 for your minority stake, because he believes the business would be better under his care, and he is in control.  Would you still be madly in love with him in this scenario?  I believe most rational businessmen would be quite angry, justifiably so.

 

Stick to the facts on this, not your emotions.  He's clearly doing the opposite of his supposed "fair and friendly acquisition" mantra.

 

It keeps being brought up they are just looking after their shareholders so what is wrong with that. Nothing, but lets not pretend they are different than say your average hedge fund. JetsFan pointed out exactly what is being done, I'm not sure it can be explained any other way as to what was done to the minority shareholders at FBK. So at least man up and admit FFH is acting no different than most other companies out there.

 

 

[Cardboard]

I don't think that they are breaching any law. They could actually have sold their shares to Mercer or Abitibi without any offer to minority shareholders and that would have been legal. They simply liked ABH better when both offers were on the table and we don't know how much MERC offered. Then I have a feeling that ABH got wind of MERC's interest and asked for a hard lock-up.

 

Sorry to say but, IMO you guys have been greedy. The stock traded above $1.30 for a while and the offer from MERC never really matched $1.30. However, you guys kept dreaming about that PPA and some fantasy valuations (SD is king at that). If you want the PPA then you need to find a way for both MERC and ABH to go away. What is left for them without that PPA? A negative EBITDA business with pulp north of $900 a ton?

 

The hard part to understand in that story is Oakmont and Pabrai. If they don't hold any ABH, then they are paying a disservice to their own investors by not getting out at the highest bid. Maybe that they were not aware of MERC's interest when they signed.

 

Cardboard

[Parsad]

how does what prem thinks and the pps related to this being fair or not?

and how does it matter whether we are greedy or not?

 

The title of the thead says "Fairfax's action on Fibrek - is it fair to the minor shareholders?".  Who else are you talking about?  Cheers!

[alertmeipp]

how does what prem thinks and the pps related to this being fair or not?

and how does it matter whether we are greedy or not?

 

The title of the thead says "Fairfax's action on Fibrek - is it fair to the minor shareholders?".  Who else are you talking about?  Cheers!

 

okay, let's say Prem loves the deal but does it mean it's fair to us?

okay, let's say Prem thinks FBK management sucks (which I agree), does it mean it's fair to us?

[Parsad]

how does what prem thinks and the pps related to this being fair or not?

and how does it matter whether we are greedy or not?

 

The title of the thead says "Fairfax's action on Fibrek - is it fair to the minor shareholders?".  Who else are you talking about?  Cheers!

 

okay, let's say Prem loves the deal but does it mean it's fair to us?

okay, let's say Prem thinks FBK management sucks (which I agree), does it mean it's fair to us?

 

What I'm saying is that we don't know exactly what Prem thinks, and it's probably unlikely that he's supporting a specific decision where it may not be entirely beneficial to minority shareholders simply because he wants to make a buck or take over Fibrek.  Let's see what he has to say about all of this in the next month or two.

 

In the meantime, the market in the last week gave minority shareholders an opportunity to reap a price better than the best deal offered.  If minority shareholders didn't take it, how is that Prem's fault or even Abitibi's fault?  I think some shareholders were waiting for the deal to be bid even higher and that's a risk they decided to take.  Cheers!

[SharperDingaan]

We know:

 

FBK advised FFH management, in good faith, of their intent to execute a value enhancing acquisition. Had the acquisition proceeded ALL shareholders would have owned a smaller share of FBK that was worth more, but there would supposedly have been a diluting share issue. We know that at about the same time 1) FFH rejected a solicitation from Merc for their FBK shares at $1.00/share, & 2) ABH was negotiating for a hard lock-up with FFH/Oaktree/Pabrai.

- The ABH lock-up was rushed to spike FBK’s deal & avoid dilution of the combined FFH/Oaktree/Pabrai stake in FBK. It deprived FBK shareholders of the acquisitions value enhancement, circumvented the governance we pay our senior management to do, and could not have been accomplished without the FFH explicit agreement to enter a hard lockup. The transaction was a clear minority shareholder abuse, it defrauded all shareholders except FFH/Oaktree/Pabrai, & it was abetted by FFH/Oaktree/Pabrai.

- There is no reason to believe that existing shareholders would have been denied the opportunity to maintain their existing proportionate ownership, or that there would not have been a subsequent share consolidation to bring the trading value of FBK’s shares > the minimum $5/share institutional threshold. If it wished, FFH could have chosen not to participate, allowed its holding to dilute, & sold consolidated shares into a stronger & more liquid market after the fact.

- Give FFH/Oaktree/Pabrai the benefit of the doubt, & assume they didn’t fully realize what “it’s just business” really meant.

 

The lock-up abets a transfer of the IV of FBK minority shareholders to ABH shareholders at below fair value.  At above 66 2/3% FBK minority shareholders will be forced to accept an offer on the ABH terms of $1.00/share at best –materially below Merc’s competing price of $1.30/share. A “just business” current defraudment of $0.30/share that is not possible without the explicit lockup consent of FFH/Oaktree/Pabrai 

- We know from the recent 51.5% tender that ABH/Steelhead/Other Affiliated have been buying FBK, & that the shares could only have been purchased at well > the $1.00 ABH offer price. Within the terms of the ABH bid, the purpose can only be to coerce a tender > 66 2/3% & perpetrate a defaudment on FBK minority shareholders.

- We know that ABH unsuccessfully attempted to spike the Merc offer of $1.30, & that FFH/Oaktree/Pabrai publicly supported that ABH effort.  FFH/Oaktree/Pabrai have a fiduciary obligation to their shareholders & investors to maximize the value of their holdings – & they cannot meet that obligation unless their opportunity gain on the ABH side of this transaction exceeds their opportunity loss on the FBK side. To take this approach, is to imply that FFH/Oaktree/Pabrai are in full agreement with the intent to defraud.  “It’s just business”.   

- We know that if FFH/Oaktree/Pabrai were released from the lock-up tomorrow, & the ABH bid put on the same 50%+1 terms as the Merc bid, the ABH bid would fail. It would fail because it is below the $1.30 Merc bid, & FFH/Oaktree/Pabrai have each have the  fiduciary duty to tender to the highest offer. As FFH/Oaktree/Pabrai  have not spoken out, ABH has not released the lock-up, or matched the Merc $1.30 bid - we can only conclude that ABH intends to defraud by coercion, & that FFH/Oaktree/Pabrai have agreed to it. 

   

Should ABH prevail at the $1.00 vs $1.30 bid they will save approx 39M on the 130M o/s shares. If they can avoid paying the estimated $1.00/share PV of the PPA they will save an additional 130M. A total potential defraudment of 82M on the non-affiliated 48.5% who have not tendered to the ABH offer. 

 

Apparently  fraud “is just business” ?   

 

SD

 

 

[Parsad]

We know:

 

FBK advised FFH management, in good faith, of their intent to execute a value enhancing acquisition. Had the acquisition proceeded ALL shareholders would have owned a smaller share of FBK that was worth more, but there would supposedly have been a diluting share issue. We know that at about the same time 1) FFH rejected a solicitation from Merc for their FBK shares at $1.00/share, & 2) ABH was negotiating for a hard lock-up with FFH/Oaktree/Pabrai.

 

- The ABH lock-up was rushed to spike FBK’s deal & avoid dilution of the combined FFH/Oaktree/Pabrai stake in FBK. It deprived FBK shareholders of the acquisitions value enhancement, circumvented the governance we pay our senior management to do, and could not have been accomplished without the FFH explicit agreement to enter a hard lockup. The transaction was a clear minority shareholder abuse, it defrauded all shareholders except FFH/Oaktree/Pabrai, & it was abetted by FFH/Oaktree/Pabrai.

 

You have no idea whatsoever what the "value enhancement" from the acquisition would have been.  It could very well have been a terrible acquisition, and Prem/Oaktree/Pabrai are preventing such an acquisition by their lock-up with ABH.  They are probably in a much better position to judge this than you are.  And if they think it is bad for them, then it is probably bad for the minority shareholders as well.

 

- There is no reason to believe that existing shareholders would have been denied the opportunity to maintain their existing proportionate ownership, or that there would not have been a subsequent share consolidation to bring the trading value of FBK’s shares > the minimum $5/share institutional threshold. If it wished, FFH could have chosen not to participate, allowed its holding to dilute, & sold consolidated shares into a stronger & more liquid market after the fact.

 

This is pure speculation!  Did FBK announce that they were considering a share consolidation?  Deal with the facts please.

 

- Give FFH/Oaktree/Pabrai the benefit of the doubt, & assume they didn’t fully realize what “it’s just business” really meant.

 

The lock-up abets a transfer of the IV of FBK minority shareholders to ABH shareholders at below fair value.  At above 66 2/3% FBK minority shareholders will be forced to accept an offer on the ABH terms of $1.00/share at best –materially below Merc’s competing price of $1.30/share. A “just business” current defraudment of $0.30/share that is not possible without the explicit lockup consent of FFH/Oaktree/Pabrai

 

Again, explain to me how minority shareholders were deprived from realizing the full value of their shares.  They could have sold millions last week at well above the $1.30 offer price.  And the assumed "$0.30/share" that they have been defrauded assumes what the true value of their shares would have been correct?  Then why is Mercer buying 32M warrants at only $1.00!  Who is defrauding whom?

 

- We know from the recent 51.5% tender that ABH/Steelhead/Other Affiliated have been buying FBK, & that the shares could only have been purchased at well > the $1.00 ABH offer price. Within the terms of the ABH bid, the purpose can only be to coerce a tender > 66 2/3% & perpetrate a defaudment on FBK minority shareholders.

 

Rubbish!  This is actually libel...that you are accusing ABH and Steelhead of a coordinated fraud.  Whatever shares they are buying is no different than boardmember here who were buying at $1.00 or higher, speculating that this deal may get done for a little more.  If ABH is buying shares to solidify their ability to close the tender, then that is one thing.  To say that Steelhead and ABH are working together is libel.

 

- We know that ABH unsuccessfully attempted to spike the Merc offer of $1.30, & that FFH/Oaktree/Pabrai publicly supported that ABH effort.  FFH/Oaktree/Pabrai have a fiduciary obligation to their shareholders & investors to maximize the value of their holdings – & they cannot meet that obligation unless their opportunity gain on the ABH side of this transaction exceeds their opportunity loss on the FBK side. To take this approach, is to imply that FFH/Oaktree/Pabrai are in full agreement with the intent to defraud.  “It’s just business”.

 

I think you are confusing taking care of their shareholder interests versus taking care of everyone's interests.  I believe that some level of this type of accusation was thrown at Fairfax earlier by some shareholders regarding their purchase of Odyssey.  It's their responsibility to take care of their shareholder's first.  Just like it's FBK's executives responsibility to take care of their shareholders as well.  Do you believe selling 32M in $1.00 warrants to Mercer to be in FBK minority shareholder's interest?  Or would you categorize that as "It's just business."

 

- We know that if FFH/Oaktree/Pabrai were released from the lock-up tomorrow, & the ABH bid put on the same 50%+1 terms as the Merc bid, the ABH bid would fail. It would fail because it is below the $1.30 Merc bid, & FFH/Oaktree/Pabrai have each have the  fiduciary duty to tender to the highest offer. As FFH/Oaktree/Pabrai  have not spoken out, ABH has not released the lock-up, or matched the Merc $1.30 bid - we can only conclude that ABH intends to defraud by coercion, & that FFH/Oaktree/Pabrai have agreed to it.  

 

Glad you can read their minds Sharper!  Cheers! 

 

[Parsad]

By the way, if ABH is defrauding minority shareholders of FBK by stealing the company for $1/share, then would it not make sense for FBK shareholders to simply tender to ABH in lieu of ABH shares?  All these shareholders could have easily sold their stock for $1.30 or better in the last week in the open market if all they wanted was cash.  So what is the big stink about when they could easily receive ABH shares...who are apparently stealing away a company with $70M in 4th quarter losses and barely any cash on hand. 

 

Incidentally, does this sound like a company that is worth $1.30?  They need cash pretty badly!  By the way, I call bullshit on (i) and (iii) below.  Let's call a spade a spade...FBK's management is crappy.

 

Mercer and Fibrek also entered into a special warrant agreement (the “Special Warrant Agreement”) pursuant to

which Mercer agreed to purchase 32,320,000 special warrants of Fibrek (the “Special Warrants”) on a private

placement basis, at a price of $1.00 per Special Warrant for total subscription proceeds of $32,320,000. The

Special Warrants are convertible into Common Shares of Fibrek on a one-for-one basis. Proceeds from the

Special Warrants are initially to be used by Fibrek to reduce the amount drawn on its ABL Credit Facility given (i)

the recent costs associated with its strategic alternatives review process in response to Abitibi’s Insider Bid, (ii)

the high level of RBK Pulp inventories and lower than anticipated sales which have resulted in a 5-week market

shutdown of the Fairmont Mill effective February 20, 2012, and an increased need for liquidity, and (iii) capital

expenditures required in connection with Fibrek’s power-generation initiatives and other growth and

diversification opportunities.

 

Cheers!

[SharperDingaan]

As at 7:25 EST, 02/27, 20 of 27 voters see the ABH bid as an abuse of minority shareholder rights.

 

We were deliberately provocative - to demonstrate how a voter could arrive at a conclusion of abuse, using publicly released information. Those who insist on drunk driving, or beating their wives, do not see their actions as abusive either.

 

Most would conclude that given these statements, the longer the lock-up now continues the greater the likelihood that the conclusions are true. The solution is simple – drop the lock-up, or match the Merc bid.

 

In the interest of fairness our rebuttals are as follows;

 

1. You have no idea whatsoever what the "value enhancement" from the acquisition would have been. The deal had to have a material & significant NPV or it would never have been proposed (Corporate Finance 101). The NPV also had to have been > the BV loss of the new shares that would have been issued (Corporate Finance 101). It was a bad deal for FFH because it would have diluted the size of the lock-up stake being negotiated.

 

2. This is pure speculation! Agreed we do not know what was considered. We do know that FBK was under pressure to demonstrate value, & that share consolidation &/or major shareholder dilution are mechanisms that would have increased FBK’s value (Corporate Finance 101).

 

3. Again, explain to me how minority shareholders were deprived from realizing the full value of their shares. They could have sold millions last week at well above the $1.30 offer price.  superior bid. Selling last week was to assume no further improvements in what is a hostile takeover.  < 10% probability that the PPA will be realized. 0% probability that the Merc private placement will go ahead. Mr Markets price today, NOT the Merc or ABH final offer.   

 

4. Rubbish! This is actually libel...that you are accusing ABH and Steelhead of a coordinated fraud. We do not make this statement. We simply point out that the ABH bid has gained more support. Those votes could be because the group has bought more shares, or a new party (other affiliate) has bought shares & chosen to align with ABH for the present.

 

5. It's their responsibility to take care of their shareholder's first. Agreed. If they are not tendering to Merc’s $1.30 offer it must be because they will make more from an ABH win A win that can only be achieved by abusing FBK minority shareholders.

 

6. Glad you can read their minds Sharper. We don’t read minds, we look to fiduciary responsibilities.

 

SD

 

[cwericb]

You guys can argue all the facts and figures you want, but perception is everything.

 

The average small FBK shareholder sees two things. ABH offering $1.00 for FBK and MERC  offering $1.30.

 

The appearance is that FFH, as a major shareholder of FBK and ABH, is trying to force the deal through at $1.00. No small shareholder is going to be very happy with that and the perception is that FFH is trying to bully the deal through at the small shareholder’s expense and that does not help either Prem’s or Fairfax’s image.

[alertmeipp]

For those that said FBK only worth 1$ or less - I don't know what metrics you guys are using but that's quite a bit lower than I had hoped for. And this POS rarely trade under $1 in its history.

 

You guys know Prem's cost on this?

 

Fibrek is getting pretty pathetic to release something like this:

 

 

Fibrek: Proud Partner of the Carbon Footprint Québec Pilot Project

 

http://finance.yahoo.com/news/Fibrek-Proud-Partner-Carbon-cnw-1193360464.html?x=0

 

[Uccmal]

As insiders Ffh, & Pabrai would have to announce they were exiting the stock.  If they had simply announced this without the Abh agreement what does anyone here think the stock would trade at.  My guess would be that they would have had to dump it way below $1 to get rid of their holdings. 

 

That would have killed everyone.  We dont really know who received MERC's original offer or what it was.

 

Keeping in mind that FFH speaks to Fair Friendly Acquisitions.  This is not an acquisition.  Prem has a reputation for being ruthless with his terms of acquisitions or financial support, similar to Buffett.  I generally avoid investing along side FFH prefering to stay clear of things they hold.  For me it makes more sense to invest with them.  FBK was an exception since I held it before FFH was ever involved. 

[SharperDingaan]

Going forward we'll very likely take the same approach, despite having done very investing alongside them. Silence on what we like & why, but where we touch FFH it will be for seasonal trading purposes only. Unfortunately, the canadian investment pool is really too small to allow any other approach.

 

SD