Jolina says Tembec rejects 'more favorable' recapitalization

New York, Jan. 23 - Tembec Inc. rejected a recapitalization proposal put forward by Jolina Capital Inc., the investment firm said.

Jolina said it was told by the board of directors that they did not believe the investment firm's proposal qualified as an "alternative transaction," defined by the support agreement with noteholders as one that could reasonably be expected to result in a transaction more favorable to Tembec and its stakeholders including the noteholders.

Jolina added that it disagreed with the board's conclusion.

In a press release, Jolina described the non-binding plan it put forward as 'more favorable' to Tembec and all of its stakeholders than the recapitalization announced by Tembec on Dec. 19.

Jolina is a company controlled by Emanuele "Lino" Saputo, a significant shareholder of Tembec and a director of the company from January 2006 to Dec. 6, 2007. Saputo controls, directly or indirectly through his affiliates, 19.35% of Tembec's stock. Rothschild is advising.

As previously reported, the recapitalization plan will convert bondholders' debt into new equity, reduce the company's interest payments and allow Tembec to access new liquidity.

Based in Montreal, Tembec is an integrated forest products company with operations primarily in North America and France.

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