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Fibrek wins appeal for private placement, Abitibi extends hostile bid

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Montreal-based Fibrek (TSE:FBK) said after markets closed Friday that it won approval to resume a private placement of special warrants to Mercer International (NASDAQ:MERC), which stymies AbitibiBowater’s (TSE:ABH) hostile takeover for the pulp producer.

Fibrek received approval to sell 32.3 million special warrants to Mercer by the Quebec court which overturned an earlier decision by Bureau de decision et de revision to cease trade.

The company, which said a level playing field has been re-established, expects the placement to close upon receipt of all regulatory approvals.

Fibrek’s chairman, Hubert T. Lacroix, said: "We are pleased that the Court of Québec has preserved the fundamental right of all Fibrek shareholders to benefit from the best available offer for their investment in Fibrek."

However, AbitibiBowater – which does business under the name Resolute Forest Products – said that it plans to appeal the decision.

Abitibi also received notice that Canada’s competition commissioner does not intend to challenge its acquisition of the Fibrek shares and is working to secure investment Canada’s approval.

The Fibrek board of directors has urged shareholders to reject Abitibi’s bid of $130 million and support the Mercer bid, which is a 30 percent premium over Abitibi’s offer.

Mercer has offered $170 million and has also agreed to acquire 32.3 million special warrants from Fibrek for $1 each.

Fibrek’s chief executive, Pierre Gabriel Côté, said: "We are very pleased that Fibrek minority shareholders have been heard and that they can now benefit from a superior offer."

Meanwhile, Abitibi – which has 51.5 percent of Fibrek shares tendered under its offer – has extended its bid until March 19.

Abitibi said that as of Friday, about 60.5 million Fibrek common shares had been deposited under its offer, representing about 46.5 percent of the outstanding common shares.

Fibrek has approximately 500 employees and operates pulp mills in Saint-Felicien, Quebec and Fairmont, West Virginia and Menominee, Michigan.

Shares of Fibrek rose nearly six percent to $1.25 apiece on the Toronto Stock Exchange on Monday afternoon.

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