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Kelso offers to buy Eacom Timber in $182.7 million friendly takeover deal

MONTREAL – Shares of Eacom Timber Corp. (TSXV:ETR) shot up in heavy trading Friday after it announced a friendly takeover offer that values the mill operator’s equity at $181.8 million, a 46 per cent premium to its recent market price.

Investment firm Kelso & Co. is offering 38 cents cash per share — eight cents above the Thursday closing price before the offer was announced Friday morning.

After a trading halt was lifted, the stock shot up 11 cents or 42.31 per cent to 37 cents. By mid-afternoon Friday, more than 37 million shares had traded — making Eacom the most active issue on the TSX Venture Exchange at the time.

Eacom, which owns eight saw mills in Ontario and Quebec, said its directors, senior executive officers and certain significant security holders have signed lockup agreements representing 44 per cent of the company’s common stock.

“We are pleased with Kelso’s offer, which recognizes the company’s inherent value,” said Terry Lyons, chair of a special committee of Eacom directors.

“Kelso is extremely well capitalized and is in a position to provide the capital to implement Eacom’s long-term growth and mill modernization plan. We believe that the offer is in the best interests of the company and its stakeholders, including its shareholders and employees.”

Montreal-based Eacom has the right to accept an unsolicited superior proposal under certain circumstances. Kelso has the right to make a matching offer and will receive a $7-million break fee if its friendly deal doesn’t go through.