Glass Lewis Recommends Shareholders Vote Against Rayonier’s Proposed Acquisition of Tembec

Leading Proxy Firm Supports Oaktree’s View that Proposed Transaction Undervalues Tembec

LOS ANGELES--()--Investment funds managed by Oaktree Capital Management, L.P. (“Oaktree”), which own 19.9% of the common stock of Tembec, Inc. (“Tembec”), today announced that Glass Lewis & Co. (“Glass Lewis”), a leading independent proxy firm, recommended that shareholders of Tembec vote against Rayonier’s proposed acquisition of Tembec.

Glass Lewis analyzed the proposed transaction and the value it provides for Tembec shareholders and concluded that Tembec shareholders should vote against this transaction at the current offer price.

In making its recommendation, Glass Lewis noted the following1:

  • We believe Oaktree makes a credible argument that Rayonier could likely justify paying a higher purchase price, including based on comparable market valuations and in light of the significant increase in the market price of Rayonier shares following announcement.”
  • We believe there is reasonable cause for concern with the valuation of the proposed transaction, which implies EBITDA multiples that fall well below multiples paid in precedent transactions and below the trading multiples of comparable companies.”
  • Including projected synergies and the estimated present value of deferred tax assets further reduces the implied deal multiples to levels that are well below market, in our view.”
  • The significant increase in the price of Rayonier shares following [the transaction] announcement suggests Rayonier may be underpaying for the Company and could afford to share more of the potential value with Tembec shareholders, in our view.”
  • In the event Rayonier declines to improve its offer terms, we believe the Company faces reasonable stand-alone prospects, with improved volume and pricing contracts for 2017 and growing core markets.”

Oaktree agrees with Glass Lewis’s conclusion that Tembec shareholders vote AGAINST the proposed transaction.

About Oaktree Capital Management, L.P.

Oaktree is a leader among global investment managers specializing in alternative investments, with $100 billion in assets under management as of March 31, 2017. The firm emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in distressed debt, corporate debt (including high yield debt and senior loans), control investing, convertible securities, real estate and listed equities. Headquartered in Los Angeles, the firm has over 900 employees and offices in 18 cities worldwide.

Forward-Looking Information

Certain statements in the press release are forward-looking statements and are prospective in nature, including statements with respect to the Oaktree’s future intentions regarding their investment in Tembec. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Such forward-looking statements should therefore be construed in light of such factors, and Oaktree is not under any obligation, and expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Information in Support of Public Broadcast Solicitation

Oaktree is relying on the exemption under section 9.2(4) of National Instrument 52-102 – Continuous Disclosure Obligations to make this public broadcast solicitation. The following information is provided in accordance with corporate and securities laws applicable to public broadcast solicitations.

This solicitation is being made by Oaktree and investment funds managed by Oaktree (excluding Oaktree, the “Oaktree Funds”), and not by or on behalf of the management of Tembec.

The address of Tembec is 100-4 Place Ville-Marie, Montréal, Québec, H3B 2E7.

Proxies for the Tembec shareholders meeting may be solicited by mail, telephone, facsimile, email or other electronic means as well as by newspaper or other media advertising and in person by managers, directors, officers and employees of Oaktree who will not be specifically remunerated therefor. In addition, Oaktree may solicit proxies in reliance upon the public broadcast exemption to the solicitation requirements under applicable Canadian corporate and securities laws, conveyed by way of public broadcast, including press release, speech or publication, and by any other manner permitted under applicable Canadian laws. Oaktree may engage the services of one or more agents and authorize other persons to assist it in soliciting proxies on behalf of Oaktree and the Oaktree Funds.

Oaktree has entered into an agreement with Kingsdale Advisors (“Kingsdale”) pursuant to which Kingsdale has agreed that it will act as Oaktree’s strategic shareholder, communications and proxy agent. Pursuant to this agreement Kingsdale will receive a fee of up to approximately $220,000 plus disbursements.

All costs incurred for the solicitation will be borne by the Oaktree Funds.

In addition to revocation in any other manner permitted by Law, any Tembec shareholder executing a proxy form may revoke it at any time, as long as it has not been exercised, by an instrument in writing executed by such shareholder or his attorney authorized in writing and deposited either at the head office of Tembec at 100-4 Place Ville-Marie, Montréal, Québec, H3B 2E7 at any time up to and including the last business day preceding the date of the Tembec shareholders meeting on July 27, 2017, or any adjournment or postponement thereof, or with the chair of the Tembec shareholders meeting on the day of such meeting or any adjournment or postponement thereof. For any Tembec shareholder holding shares through an intermediary, the methods to revoke a proxy may be different, and such shareholder should carefully follow the instructions provided by such intermediary.

Neither Oaktree, the Oaktree Funds, nor any of their managing members, directors or officers, or any associates or affiliates of the foregoing, has: (i) any material interest, direct or indirect, in any transaction since the beginning of Tembec’s most recently completed financial year or in any proposed transaction that has materially affected or would materially affect Tembec or any of its subsidiaries; or (ii) any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter currently known to be acted on at the upcoming meeting of Tembec shareholders, other than the proposed transaction between Tembec and Rayonier Advanced Materials Inc.

1 Permission to quote from the Glass Lewis report was neither sought nor obtained. Emphasis added.


Sard Verbinnen & Co
John Christiansen / David Millar
415-618-8750 / 212-687-8080 /
Kingsdale Advisors
Ian Robertson
Direct: 416-867-2333/Cell: 647-621-2646

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