• Portfolio of high-quality assets expands footprint across North America
  to better serve customers and reduce operating costs
• Complementary product lines and continued commitment to value-added
  products enhances growth opportunities
• All-share consideration allows for participation in an estimated USD $45
  million in annual synergies and other benefits of the combined company,
  as well as ongoing U.S. housing market recovery
• Transaction supported by controlling shareholder Brookfield and subject
  to Norbord and Ainsworth minority shareholder approval; special
  meetings to be held in January 2015
• Combination expected to enhance shareholder liquidity, financial
  flexibility and lower cost of capital
• Joint investment community call today at 10:30 a.m. ET

TORONTO and VANCOUVER, Dec. 8, 2014 /CNW/ – Norbord Inc. (“Norbord”)
(TSX: NBD) and Ainsworth Lumber Co. Ltd. (“Ainsworth”) (TSX: ANS) today
announced that they have signed a definitive agreement under which they
will merge to create a leading global wood products company focused on
oriented strand board (“OSB”) across North America, Europe and Asia.

The combination of Norbord and Ainsworth will create one of the largest
and lowest-cost OSB producers globally, with a portfolio of
high-quality assets that produce a wide range of products for
residential, industrial and specialty applications. The transaction is
a compelling strategic fit and offers shareholders, customers,
employees and other stakeholders of both companies a significant
opportunity owing to the highly complementary nature of the respective
operations.

Under the terms of the arrangement agreement announced today, Norbord
has agreed to acquire all of the outstanding common shares of Ainsworth
in an all-share transaction in which Ainsworth shareholders will
receive 0.1321 of a Norbord share for each Ainsworth share pursuant to
a plan of arrangement under the British Columbia Business Corporations Act. The transaction value represents a premium of 15% to Ainsworth’s
20-day volume weighted average price (VWAP), and the transaction has
been unanimously approved by the Independent Committees and Boards of
Directors (with directors of each company affiliated with Brookfield
Asset Management Inc. (“Brookfield”) abstaining) of both Ainsworth and
Norbord. This all-share transaction structure will allow both Norbord
and Ainsworth shareholders to participate in the significant synergies
and other benefits expected to result from this combination.

Brookfield and its affiliated entities, which control approximately 55%
and 52% of the outstanding common shares of Ainsworth and Norbord
respectively, have entered into a binding agreement in which they have
committed to vote in favour of the transaction. Upon closing, the
Brookfield entities will control approximately 53% of the outstanding
common shares of the combined company.

On a pro forma basis, the combined company generated USD $1.63 billion
in sales and USD $143 million in Adjusted EBITDAⁱ for the 12 months ended September 27, 2014. The transaction is expected
to be accretive to earnings and cash flow in the first year.

A Leading Global OSB Company

“This transaction unites two complementary businesses behind a common
vision of enhanced service to our customers and growth in North
America, Europe and Asia,” said Peter Wijnbergen, Norbord’s President
and Chief Executive Officer. “Norbord and Ainsworth are each low-cost
producers in their respective regions, and with our complementary
operations and a more diverse range of specialty products, we will be
better able to serve our customers across the globe. Ainsworth has
excellent mills, a proven track record of innovation in value-added
product development, and we look forward to working together. The
growth potential we see in the combined company also offers significant
value to our shareholders.”

Said Jim Lake, Ainsworth’s President and Chief Executive Officer: “The
combination of the two companies will mean tremendous opportunities for
our people and our customers. By joining with Norbord we will be able
to leverage its commitment to low-cost operational excellence to expand
and improve our existing range of products and enhance our customer
relationships. For our shareholders, this transaction offers
significant potential for continued value creation as investors in a
larger and better-capitalized company with ongoing participation in the
current U.S. housing recovery. This is an exciting transaction for
Ainsworth and its stakeholders.”

Compelling Strategic Fit:

• Geographically Complementary Operations – Norbord and Ainsworth are
  leading producers in each of their geographies, with minimal overlap.
  Norbord operates seven North American mills, principally in the U.S.
  southeast with one mill in Quebec, along with four mills in Europe
  principally serving the United Kingdom, Germany and the Benelux region.
  Ainsworth operates four Canadian mills, three in Western Canada and one
  in Ontario. Together, the combined company will be better positioned to
  serve national customer accounts and realize savings in freight and
  logistics costs. With total OSB capacity of approximately 7.7 billion
  square feet (3/8 inch basis), the combined company will be the largest
  in the global OSB industry.

• Balanced Portfolio of High Quality Assets – This transaction combines
  Norbord’s low-cost operations and larger mill network with Ainsworth’s
  innovation in value-added strand-based engineered wood products. This
  will support new product development and allow the combined company to
  expand the range of specialty products it can offer. The transaction
  also provides the opportunity to optimize product mix across a broader
  network of mills to lower manufacturing costs.

• Enhanced Market Diversification – The combined company will be better
  able to weather market cycles through increased geographic
  diversification. The transaction will enhance each company’s strong
  North American presence with the more stable margin European operations
  of Norbord and Asia-focused export business of Ainsworth.

• Strong Financial Position – Norbord and Ainsworth believe that the
  combined company will have an enhanced credit profile and lower overall
  cost of capital. The merged entity will focus on maintaining a prudent
  balance sheet to provide financial flexibility and a solid capital base
  to support the business through periods of commodity price weakness.

• Growth Potential – The combined company will be well positioned to take
  advantage of the ongoing recovery in the U.S. housing market and
  growing OSB demand in Europe and Asia. Together, the company will have
  opportunities to increase capacity through the expansion of Norbord’s
  OSB production in Western Europe, the restart of Norbord’s two idled
  mills in North America, and the completion of Ainsworth’s second line
  in Grand Prairie, Alberta.

• Improved Capital Markets Presence – The combined company will have a
  broader shareholder base with increased market liquidity and a larger
  public float. As of December 5, 2014 the combined company had a pro
  forma market capitalization of approximately CAD $2.0 billion. The
  combined company is expected to remain a member of the S&P/TSX
  Composite index which provides increased visibility and broader market
  participation.

• Synergies – Management expects that the combined company will deliver
  significant cost savings through substantial operating synergies
  estimated at approximately USD $45 million annually, achievable over an
  18-24 month period. These savings are expected to come primarily from
  best practices and technology transfers in the companies’ mills, sales
  and logistics improvements, and cost reductions.

The combined company will operate under the Norbord name, and Norbord’s
CEO Peter Wijnbergen will lead the business following the close of the
transaction while drawing upon the extensive strategic, operating and
financial experience of both Norbord and Ainsworth. Ainsworth’s CEO Jim
Lake has agreed to stay on with the combined company in an advisory
capacity for a period of six months. As part of its strategy to
continue growing exports to Asia, the combined company will maintain an
office in Vancouver, B.C.

The Board of Directors of the combined company will have equal
representation of independent directors from the current Norbord and
Ainsworth Boards of Directors, with a majority of the Board comprised
of directors who are not Brookfield nominees.

Other Transaction Details

The transaction was negotiated by Independent Committees of the Boards
of both Norbord and Ainsworth. Following receipt of fairness opinions
and valuations from independent financial advisors, each Independent
Committee unanimously recommended that its Board of Directors approve
the definitive agreement governing the transaction, and recommend that
their shareholders vote in favour of the transaction. Each Independent
Committee was comprised of directors independent of Brookfield.

The Board of Directors of each of Norbord and Ainsworth have each
unanimously approved the transaction (with directors of each company
affiliated with Brookfield abstaining) and recommend that their
respective shareholders vote in favour of the transaction. Upon
completion of the transaction, Norbord shareholders will own
approximately 63% and Ainsworth shareholders will own approximately 37%
of the combined company.

The transaction requires the approval of two-thirds of the votes cast by
securityholders of Ainsworth and a majority of the votes cast by
shareholders of Norbord, as well as a majority of the votes cast by
Ainsworth and Norbord shareholders (other than Brookfield and its
affiliated entities) at separate special meetings of Ainsworth and
Norbord. These special meetings are expected to take place in January
2015.

Details concerning the review and approval process carried out by the
Independent Committee of each company, together with a copy of the
formal valuation and fairness opinion prepared by each committee’s
independent financial advisor, will be contained in a joint information
circular to be provided for special meetings of securityholders of each
company. The circular will be filed and mailed to Ainsworth and Norbord
shareholders later this month and will be available on both company
websites, as well as on SEDAR at www.sedar.com.

In addition to securityholder approval described above, the transaction
is subject to customary conditions to closing, including court approval
of the plan of arrangement. Subject to satisfying those conditions, the
transaction is expected to close in the first quarter of 2015. The
transaction is not reportable under the U.S. Hart-Scott-Rodino
Antitrust Improvement Act of 1976 or the Canadian Competition Act because Ainsworth and Norbord share a common controlling shareholder.
The U.S. and Canadian antitrust and competition authorities may review
non-reportable transactions at their discretion.

A copy of the arrangement agreement between Ainsworth and Norbord will
also be available on SEDAR. The arrangement agreement provides for,
among other things, the payment of a termination fee of CAD $25 million
by Norbord or Ainsworth, as applicable, if the proposed transaction is
not completed under certain circumstances. Brookfield has advised the
Board of Directors of each of Norbord and Ainsworth that, as a major
shareholder, it will not approve an alternative transaction.

Advisors

The Norbord Independent Committee’s financial advisor is TD Securities
and its legal advisor is Stikeman Elliott LLP. Norbord’s legal advisors
are Torys LLP and Gibson Dunn & Crutcher LLP. The Ainsworth Independent
Committee’s financial advisor is BMO Capital Markets and its legal
advisor is Fasken Martineau DuMoulin LLP. Ainsworth’s legal advisors
are Goodmans LLP and Skadden, Arps, Slate, Meagher & Flom LLP.

Dividend

It is anticipated that the Board of Directors of the combined entity
will continue with Norbord’s dividend policy which targets the payment
to shareholders of a portion of free cash flow. The amount of dividends
under the combined entity’s dividend policy, and the declaration and
payment thereof, will be based upon the combined entity’s financial
position, results of operations, cash flow, capital requirements and
restrictions under the combined entity’s revolving bank lines, among
other factors.

Taking into account growth and other attractive capital investment
opportunities, and to maintain flexibility in the company’s capital
structure, the Board of Directors of Norbord expects to set the
dividend at CAD $0.25 per common share in the first quarter of 2015. In
the arrangement agreement with Ainsworth, Norbord has agreed to not pay
more than CAD $0.25 per common share for any future quarterly dividends
with a record date prior to the closing of the merger, after which the
Board of Directors of the merged entity will determine the appropriate
level of dividends on a quarterly basis.

The Board of Directors retains the power to amend the companies’
dividend policy in any manner and at any time as it may deem necessary
or appropriate in the future. For these reasons, as well as others,
there can be no assurance that dividends in the future will be equal or
similar to the amount described above or that the Board of Directors
will not decide to suspend or discontinue the payment of cash dividends
in the future.

Investor Conference Call Details

Norbord and Ainsworth will host a joint investment community conference
call today at 10:30 a.m. ET. An investor presentation is available for
download from www.norbord.com and www.ainsworthengineered.com. Members of the media are welcome to listen to the call, but questions
will be restricted to the investment community.

Canada & USA Toll Free Dial In: 1-800-319-4610
Outside of Canada & USA call: +1-604-638-5340
Callers should dial in 5-10 minutes prior to the scheduled start time.

A replay of the call will be available until January 19, 2015, at the
following numbers:

Canada & USA Toll Free: 1-800-319-6413
Outside Canada & USA: +1-604-638-9010
Code: 1335, followed by the # sign

A written transcript will be made available on the Norbord and Ainsworth
websites.

About Norbord

Norbord Inc. is an international producer of wood-based panels with
assets of more than $1 billion, employing approximately 1,950 people at
13 plant locations in the United States, Europe and Canada. Norbord is
one of the world’s largest producers of OSB. In addition to OSB,
Norbord manufactures particleboard, medium density fibreboard (MDF) and
related value-added products. Norbord is a publicly traded company
listed on the Toronto Stock Exchange under the symbol NBD.

About Ainsworth

Ainsworth Lumber Co. Ltd. is a leading manufacturer and marketer of OSB
with a focus on value-added specialty products for markets in North
America and Asia. Ainsworth’s four OSB manufacturing mills, located in
Alberta, British Columbia and Ontario, have a combined annual capacity
of 2.5 billion square feet (3/8-inch basis). Ainsworth is a publicly
traded company listed on the Toronto Stock Exchange under the symbol
ANS.

Forward Looking Statements

Forward-looking information provided in this news release relating to
the expectations of Norbord and Ainsworth regarding OSB demand and
pricing and the combined company’s future prospects and financial
position are forward-looking information pursuant to National
Instrument 51-102 promulgated by the Canadian Securities
Administrators. Norbord and Ainsworth believe that the expectations
reflected in such information are reasonable, but no assurance is given
that such expectations will be correct. Forward-looking information is
based on the beliefs and assumptions of Norbord and Ainsworth based on
information available at the time the assumptions were made and on
management’s experience and perception of historical trends, current
conditions and expected further developments as well as other factors
deemed appropriate in the circumstances. Investors are cautioned that
there are risks and uncertainties related to such forward-looking
information and actual results may vary. Important factors that could
cause actual results to differ materially from those expressed or
implied by such forward looking information include, without
limitation, general economic conditions; risks inherent with product
concentration; effects of competition and product pricing pressures;
risks inherent with customer dependence; effects of variations in the
price and availability of manufacturing inputs; risks inherent with a
capital intensive industry; ability to realize synergies; and other
risk factors detailed from time to time in the periodic reports of both
Norbord and Ainsworth filed with the Canadian Securities Administrators
and other regulatory authorities. The forward-looking information is
made as of the date of this news release and neither Norbord or
Ainsworth assumes any obligation to update or revise them to reflect
new events or circumstances, except as explicitly required by
securities laws.

_____________________________
ⁱ Adjusted EBITDA is defined as earnings before finance costs, foreign
exchange loss, gain on derivative financial instrument, costs on early
debt extinguishment, costs incurred on terminated Louisiana-Pacific
Corp. (LP) acquisition, income tax and depreciation. Adjusted EBITDA is
a non-International Financial Reporting Standards (IFRS) financial
measure, does not have any standardized meaning prescribed by IFRS and
is therefore unlikely to be comparable to similar measures presented by
other companies.

Reconciliation of unaudited pro forma Earnings to pro forma Adjusted
EBITDA
(Last twelve months ended September 27, 2014; USD millions)

Pro forma Earnings				$(19)
Finance costs				58
Foreign exchange loss				26
Loss on derivative financial instrument				5
Costs on early debt extinguishment				20
Costs incurred on terminated LP acquisition				4
Depreciation				84
Income tax recovery				(35)
Pro forma Adjusted EBITDA				$143

This unaudited pro forma financial information has been presented for
informational purposes only. The pro forma combined amounts for the
twelve month period ended September 27, 2014 have been determined by
combining the respective historical amounts of Norbord and Ainsworth to
give effect to the merger as if it had occurred on January 1, 2013.
This pro forma information is not necessarily indicative of what the
combined company’s financial performance actually would have been had
the merger been completed as of the date indicated and does not purport
to project the future financial position or operating results of the
combined company.

SOURCE Norbord Inc.