Doman Industries Completes Restructuring

On July 27, 2004, Doman Industries Ltd. completed its restructuring and emerged from protection under the Companies’ Creditors Arrangement Act, with Western Forest Products Inc. becoming the successor business to Doman. Western Forest Products (together with its subsidiaries) is an integrated forest products company and the second-largest coastal woodland operator in British Columbia.

Doman filed for protection under the CCAA in November 2002. Following a lengthy period of complex negotiations, a plan of compromise and arrangement was approved by creditors on June 7, 2004 and sanctioned by the British Columbia Supreme Court on June 11. The negotiation and implementation of the plan was led by Tricap Restructuring Fund, an investment fund established by Brascan Corp. and the largest holder of secured notes and unsecured notes of Doman, by certain funds of Merrill Lynch and Quadrangle LLC and by Amaranth LLC (collectively, the “standby purchasers”).

Under the plan, approximately 75 per cent of the total common shares of Western Forest Products were issued to trade creditors of Doman and holders of Doman’s unsecured notes, including the standby purchasers. The remaining 25 per cent of the common shares and US$221 million principal amount of 15 per cent secured bonds of Western Forest Products were issued pursuant to the exercise of warrants distributed to that group of stakeholders, a standby commitment of the standby purchasers and a private placement of common shares and secured bonds to the standby purchasers. The subscription proceeds were used by Doman primarily to repay holders of its US$160 million principal amount of secured notes, to cover related costs and to fund its CCAA exit costs.

Under the plan, Doman shareholders received warrants of Western Forest Products which are exercisable into common shares of Western Forest Products.

The plan required Western Forest Products to establish a working capital facility with CIT Business Credit Canada Inc., replacing a similar facility which had been in place previously between Doman and CIT. Implementing the plan also required an extensive corporate reorganization involving, among other things, numerous transfers of assets.

Doman, Western Forest Products and their respective subsidiaries were represented by Fasken Martineau DuMoulin in Vancouver, with a team that included Michael Fitch, Q.C., Robert Millar, Alison Campbell and Kibben Jackson (bankruptcy/insolvency), Mitch McCormick, Peter Finley, Barbara Vanderburgh, Gary Ott and Alison Oxtoby (corporate and real estate), Paul Wilson, Jason Harris and Carmine Boskovich (environmental and regulatory), Lata Casciano, Melody Schalm and Georald Ingborg (securities), Brent Lewis (banking) and Paul Fairweather (employment); and by US counsel Latham & Watkins in Los Angeles, with a team that included Mark Stegemoeller, Jonathan Shenson and Colin Morris.

The Bondholders’ Committee effectively comprised the vast majority of the unsecured bondholders other than Tricap. The Bondholders’ Committee and the standby purchasers other than Tricap were represented by a Bennett Jones team that included S. Richard Orzy, Kevin Zych and Raj Sahni (bankruptcy/insolvency), Paul Farion, Nick Fader and Mark Laugesen (corporate and securities), Stephen Bowman and Alan Ross (tax), Tony Friend, Q.C., and Marty Kay, Q.C., (litigation), Mary Beth Currie (employment and labour), Chris Brown (pensions), Brad Gilmour (environmental) and Steven Lutz (banking).

Tricap was represented by Ed Nordholm, senior vice-president of Tricap, and by Torys in both Canada and the US, with a team that included Tony DeMarinis, Jennifer Guerard and Natasha De Cicco (bankruptcy/insolvency) and Suh Kim, Darien Leung and Andy Beck (corporate and securities). Tricap’s tax counsel was Tom Bauer of Thorsteinssons, and Fraser Milner Casgrain in Vancouver acted as Tricap’s British Columbia counsel with a team that included Doug Knowles and Mary Buttery (bankruptcy/insolvency) and Tim Bezeredi (corporate and banking).
CIT was represented by Blake, Cassels & Graydon in Vancouver, with a team that included Mike Harquail, Bill Kaplan, Jeff Merrick and Greg Umbach.

The Bank of New York, the indenture trustee under the trust indenture pursuant to which the secured bonds of Western Forest Products were issued, was represented by White & Case in New York, with a team that included Margery Colloff, Chris Murray and David Johansen.
The senior secured noteholders of Doman were represented by Goodmans, with a team that included Robert Chadwick, Geoffrey Morawetz, Joeseph Pasquariello and David Bish (bankruptcy/insolvency), and John J.L. Hunter, Q.C., and Michael Stephens of Hunter Voith in Vancouver acted as the senior secured noteholders’ counsel in British Columbia.

The monitor, KPMG, was represented by John McLean of Davis & Company in Vancouver.
Wells Fargo Bank, the indenture trustee under Doman’s US$160 million secured note indenture, was represented by Shandro Dixon Edgson in Vancouver, with a team that included Fred Shandro and Joe Bateman.