Ainsworth Lumber completes US$1.2 billion recapitalization and restructuring

Client

On July 30, 2008, Ainsworth Lumber Co., a leading manufacturer of engineered wood products, completed a US$1.2 billion recapitalization and restructuring. The transaction involved the exchange of US$824 million of debt for new equity and warrants and US$150 million of new senior unsecured notes, as well as the issuance for cash of US$200 million of new senior unsecured notes.

An exceptional aspect of this transaction is that the recapitalization and restructuring were completed pursuant to a plan of arrangement under Canada Business Corporations Act. Typically transactions of this nature are implemented pursuant to Canadian insolvency legislation but the use of the Canada Business Corporations Act not only resulted in a significantly reduced timeline versus insolvency legislation but also resulted in substantially reduced costs.

Included in the $1.2 billion restructuring was the amendment of three credit facilities representing approximately US$175 million in senior secured and unsecured debt. The syndicate of senior secured lenders (which was led by TPG Credit Management LP of Minneapolis) under the Goldman Sachs facility was represented by Fasken Martineau with a team which included Jon Levin, John Elias, Don Weaver, Ian Cassie, Kevin Clinton and KC Miu.

Fasken Martineau was involved in extensive structuring negotiations and advised TPG Credit on inter-lender negotiations with other lender groups including negotiations regarding competing priorities, default and acceleration triggers. In addition, Fasken Martineau had extensive dealings with TPG Credit regarding devising and implementing strategies which achieved a successful result for TPG Credit and the other members of the syndicate.