Creditors to take majority control of Ainsworth Lumber
Vancouver-based oriented strand board producer Ainsworth Lumber, facing financial difficulty because of tumult in the U.S. housing market, has announced a plan to allow creditors to take over 96 percent of the company.
The recapitalization plan is pending the approval of shareholders and Canadian courts. Under the plan, members of the founding Ainsworth family will lose their controlling interest, according to the Edmonton (British Columbia) Journal. The Ainsworth family members most recently controlled 58 percent of company shares and have been prominent in the company’s management. That will change under the new arrangement, with the new owners of the company being the bondholders who will own 96 percent of newly issued stock.
As part of the plan, $823.5 million in debt will be converted to equity in the company and $150 million in new bonds. A further $200 million in bonds will be issued to fund recapitalization costs and operating expenses.
The company’s board of directors, supported by a recommendation of an independent committee, unanimously recommended the action.
“[Under the] company’s existing capital structure, the recapitalization is the best alternative available to the company and its lenders, noteholders, shareholders and other stakeholders,” read a statement from the lumber company.