Document:

EX-4.5

 Exhibit 4.5 

 
 

 
 September 12, 2007 
 PRIVATE & CONFIDENTIAL 
 Millar Western Forest Products Ltd. 

16640 – 111th Avenue 

Edmonton, Alberta 
 Canada 

 

			
	 Attention:
	  	Mr. Kevin Edgson, Chief Financial Officer

 Dear Sirs: 

Reference is made to the facility letter (the “Facility Letter”) dated December 29, 2006 from HSBC Bank Canada (the “Bank”) to
Millar Western Forest Products Ltd. (the “Borrower”). Based on the information, representations, and documentation you have provided to the Bank, the Bank has agreed to modify the Loans as follows: 

 

	2.	Credit Facilities: 

  

	 	2.1	the Mastercard Facility will now be in the principal amount of Cdn.$100,000. 

 Each of the terms and conditions of the Facility Letter, as amended by this letter, shall remain in full force and effect and are hereby affirmed by the undersigned. Unless expressly provided herein, the
Loans shall be deemed to be modified, not refinanced, by this letter. 
 The Bank shall continue to have the right to review the Loans on a
periodic basis. 
 Kindly acknowledge receipt and acceptance of this letter by executing and returning to the Bank no later than
October 12, 2007, the enclosed copy of this letter. 
  

					
	Yours truly,	 	
		
	HSBC BANK CANADA	 	
			
	By:	 	/s/ Cory M. Bailey	 	/s/ Wayne Berg
		 	Cory M. Bailey	 	Wayne Berg
		 	Assistant Vice President	 	Vice President

 HSBC Bank Canada 
 Vancouver Main Branch, Suite 200 - 885 West Georgia Street, Vancouver, B.C. V6C 3GI 
 Tel:
(604) 685-1000    Fax: (604) 641-1808 

 AGREED TO AND ACCEPTED THIS 24 DAY OF SEPTEMBER, 2007. 

 

			
	THE BORROWER:
	
	MILLAR WESTERN FOREST PRODUCTS LTD.
		
	Per:	 	 /s/ Kevin Edgson

		 	Kevin Edgson
		 	 Vice President Finance
 and
Chief Financial OfficerEX-4.6

 Exhibit 4.6 

 
 

 
 March 26, 2008 
 Millar Western Forest Products Ltd. 
 16640 – 111th Avenue 
 Edmonton, Alberta 
 Canada 

 

			
	Attention:	  	Mr. Mac Millar, President & CEO
		  	Mr. Kevin Edgson, Chief Financial Officer

 Dear Sirs: 
 We
refer to the facility letter dated December 29, 2006 (the “Initial Facility Letter”) and first supplemental facility letter dated September 12, 2007 (the “First Supplemental Facility Letter” and together
with the Initial Facility Letter, the “Existing Facility Letters”) issued by HSBC Bank Canada (the “Bank”) to Millar Western Forest Products Ltd. (the “Borrower”) and confirm the continued
availability of the Loans on the terms and conditions set forth in the Existing Facility Letters, subject to the following: 
  

	1.	Non-Waiver and Forebearance: 

  

	 	1.1.	The Borrower acknowledges that for the Borrower’s fiscal period ending December 31, 2007, the Borrower was in breach of its minimum tangible net worth
covenant of $65,000,000. This acknowledgement is based upon the Borrower recording its tangible net worth as $61,328,000 as at December 31, 2007. 

  

	 	1.2.	The Bank agrees that notwithstanding and on account of the breach of covenant set forth in section 1.1 and assuming the Bank is satisfied with the Borrower’s 2007
audited financial statements to be prepared in accordance with Section 12.3.1 of the Initial Facility Letter, the Bank shall continue to make the Loans available to the Borrower and the Bank shall forebear from commencing any legal action or
proceedings under the Loans; provided that the Bank may, in its sole and absolute discretion and at any time and without notice to the Borrower, cease to make the Loans available and to so forebear, if there exists an Event of Default.

  

	 	1.3.	 The Borrower hereby acknowledges and agrees that the forbearance of the Bank referred to in section 1.2 above shall not constitute a waiver of any
default or breach by the Borrower of any of its covenants, agreements, obligations and liabilities arising under this second supplemental facility letter, the Existing Facility Letters or the Security Documents or otherwise in connection with the
Loans. Except as set out in section 1.2 above, the Bank shall further be entitled 

  
 HSBC Bank Canada

 885 West Georgia Street, Vancouver, B.C. V6C 3E9 
 Tel: (604) 685-1000    Fax: (604) 641-3062 

	 	
to, at any time, rely on any such breach or default without in any way being limited or prejudiced by any of the terms and conditions of this second supplemental facility letter or any other
documents delivered pursuant hereto. 

  

	2.	Conditions Precedent: 

 It shall be a condition precedent to the continued availability of the Loans on the basis set forth in this second supplemental facility letter that the Bank shall have received this second supplemental
facility letter accepted by the Borrower. 
  

	3.	Counterparts: 

This second supplemental facility letter may be executed in one or more counterparts, by telecopier or otherwise, all of which taken
together shall constitute one and the same original first supplemental facility letter. 
 Unless otherwise defined herein, all the words
capitalized in this second supplemental facility letter shall have the meanings ascribed to such terms in the Existing Facility Letters. 
 The
Existing Facility Letters shall henceforth be read and construed in conjunction with this second supplemental facility letter and shall be deemed to be amended and supplemented hereby, but only to such extent as may be necessary to give full force
and effect to the provisions hereof. Nothing contained in this second supplemental facility letter shall in any way prejudice or derogate from any provision contained in the Existing Facility Letters, except to the extent that any provision of this
second supplemental letter may be inconsistent or conflict with any provision of the Existing Facility Letters, in which case the provisions hereof shall prevail, but save as aforesaid the Existing Facility Letters and all the terms, covenants and
conditions thereof, shall be and continue to be in full force and effect as extended, supplemented and amended hereby. 
 [The
remainder of this page has been intentionally left blank] 

  
 2 

 This second supplemental facility letter and the amendment of the Loans set forth herein may be accepted by
the Borrower by signing, dating and returning to the Bank by 5:00 p.m. on April 4, 2008 the enclosed copy of this letter executed by the Borrower. 
  

							
	Yours very truly,	 		 	
	HSBC BANK CANADA	 		 	
				
	By:	 	/s/ Cory M. Bailey	 	By:	 	/s/ Wayne Berg
		 	Cory M. Bailey,	 	For	 	Wayne Berg,
		 	 Assistant Vice President

Commercial Financial Services
	 		 	 Vice President
 Commercial
Financial Services

  
 — — — — —
— — 
 AGREED TO AND ACCEPTED THIS 27 DAY OF
MARCH, 2008. 
  

			
	THE BORROWER:
	
	MILLAR WESTERN FOREST PRODUCTS LTD.
		
	Per:	 	 /s/ Kevin Edgson

		 	Kevin Edgson
		 	 Vice President Finance &
 Chief Financial Officer

  
 3EX-4.7

 Exhibit 4.7 

 
 

 
 April 22, 2008 
 Millar Western Forest Products Ltd. 
 16640 – 111th Avenue 
 Edmonton, Alberta 
 Canada 

 

			
	Attention:	  	Mr. Mac Millar, President & CEO
		  	Mr. Kevin Edgson, Chief Financial Officer

 Dear Sirs: 
 We
refer to the facility letter dated December 29, 2006 (the “Initial Facility Letter”), the first supplemental facility letter dated September 12, 2007 (the “First Supplemental Facility Letter”), and the
second supplemental facility letter dated March 26, 2008 (the “Second Supplemental Facility Letter” and together with the Initial Facility Letter and the First Supplemental Facility, the “Existing Facility
Letters”) issued by HSBC Bank Canada (the “Bank”) to Millar Western Forest Products Ltd. (the “Borrower”) and confirm the continued availability of the Loans on the terms and conditions set forth in the
Existing Facility Letters, subject to the following: 
  

	1.	CREDIT FACILITY: 

Increase of Cdn.$20,000,000 (the “Operating Loan Increase”) to the existing operating loan from the original principal
amount of Cdn.$30,000,000 (the “Existing Operating Loan”) to the principal amount of $50,000,000 (the “Operating Loan”). Accordingly, all references to “Cdn.$30,000,000” and “U.S.$25,000,000” in
Section 2.1 of the Initial Facility Letter are hereby deleted and replaced with “Cdn.$50,000,000” and “U.S.$45,000,000” respectively. For avoidance of doubt, the principal amount of the B/G Sub-Facility is now
Cdn.$50,000,000. 
  

	2.	PURPOSE: 

 The
Operating Loan Increase shall be used for the same purposes as the Existing Operating Loan. 
  

	3.	AVAILABILITY: 

 So
long as there exists no Event of Default, the Operating Loan Increase shall be made available on the same basis as the Existing Operating Loan (which for greater certainty includes being subject to the Margin Requirements) following satisfaction of
the Conditions Precedent set out hereunder. 
 HSBC Bank Canada 
 885 West Georgia Street, Vancouver, B.C. V6C 3E9 
 Tel:
(604) 685-1000    Fax: (604) 641-3062 

	4.	MARGIN REQUIREMENTS: 

  

	 	4.1.	Section 6.1.6 of the Initial Facility Letter is hereby amended by deleting the following: 

“95% of Insured Receivables” 
 and replacing it with the following: 
 “95% of Insured Receivables, provided
that the maximum contribution which may be made to any margin calculation pursuant hereto on account of Insured Receivables shall not exceed 100% of the principal amount of insurance that may be claimed by the Borrower from the applicable insurer.
For greater certainty, if the maximum margin contribution set forth in this section is exceeded, then any additional Insured Receivables will form part of Other Acceptable Receivables.” 

 

	 	4.2.	Section 6.1.12 of the Initial Facility Letter is hereby amended by deleting the following: 

“provided that the maximum contribution which may be made to any margin calculation pursuant hereto on account of Acceptable
Inventory shall not exceed: 
  

	 	(a)	50% of the Borrowing Base, for the period between June 1 and November 30 in each year; and 

 

	 	(b)	60% of the Borrowing Base, for the period between December 1 and May 31 in each year;” 

and replacing it with the following: 
 “provided that the maximum contribution which may be made to any margin calculation pursuant hereto on account of Acceptable Inventory shall not exceed 60% of the Borrowing Base;” 

 

	5.	REPAYMENT: 

  

	 	5.1.	The Operating Loan, including the Operating Loan Increase, shall be repaid on the same terms and conditions set forth in Section 7 to the Initial Facility Letter,
as amended herein; and 

  

	 	5.2.	Section 7.1.2 (the Maturity Date) of the Initial Facility Letter is hereby amended by deleting “May 31, 2009” and replacing it with “May 31,
2010”. 

  

	6.	INTEREST AND FEES: 

  

	 	6.1.	Interest shall be repaid on the daily balance of principal outstanding under the Operating Loan, including the Operating Loan Increase, on the same terms and conditions
set forth in Section 8 (Interest and Fees) of the Initial Facility Letter, as amended hereby. 

  
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	 	6.2.	Section 8.1 of the Initial Facility Letter (Operating Loan) is hereby amended by deleting the two references to “plus one half of one percent (0.5%) per
annum” and replacing them with “plus four-fifths of one percent (0.80%) per annum”. For greater certainty, this amendment applies to the spread on both the Bank’s Prime Rate and the Bank’s U.S. Base Rate;

  

	 	6.3.	Section 8.2 of the Initial Facility Letter (LIBOR Advances) is hereby amended by deleting the reference to “2.0%) per annum above LIBOR” and replacing it
with “2.30% per annum above LIBOR”; 

  

	 	6.4.	Section 8.3.2 of the Initial Facility Letter (standby fee) is hereby amended by deleting the reference to “0.25% per annum” and replacing it with
“0.50% per annum”; 

  

	 	6.5.	Section 8.3.5 of the Initial Facility Letter and the related provision, section 6.2 of the Schedule to the Initial Facility Letter (stamping fees for Bankers’
Acceptances), are hereby amended by deleting the references to “1.75% per annum” and replacing them with “2.05% per annum”; 

  

	 	6.6.	In addition to the fees payable by the Borrower under the Existing Facility Letters, the Borrower shall also pay to the Bank the sum of Cdn.$100,000 as a non-refundable
set-up and application fee in respect of the Operating Loan Increase and the amendments set forth in this third supplemental facility letter which shall be deemed to be earned upon issuance, and payable upon acceptance of this third supplemental
facility letter. 

  

	7.	SECURITY: 

 The
Loans (including the Operating Loan Increase) and the Borrower’s liabilities and obligations in connection therewith and under the Existing Facility Letters and this third supplemental facility letter shall continue to be evidenced and secured
by the security documents as set out in the Existing Facility Letters (the “Existing Security Documents”) and by the following additional documents (the “Additional Security Documents” and together with the Existing
Security Documents, the “Security Documents”): 
  

	 	7.1.	replacement line of credit by way of current account overdraft agreement from the Borrower in the principal amount of Cdn.$50,000,000 (which shall replace the agreement
delivered pursuant to Section 9.5 of the Initial Facility Letter); 

  

	 	7.2.	agreement for U.S. Dollar line of credit by way of current account overdraft from the Borrower in the principal amount of the lesser of US$45,000,000 and the
U.S. Dollar Equivalent of Cdn.$50,000,000 (which shall replace the agreement delivered pursuant to Section 9.6 of the Initial Facility Letter); and 

  
 Page 3

	 	7.3.	all such additional certificates, documents and opinions as the Bank and its solicitors may reasonably require. 

 

	8.	CONDITIONS PRECEDENT: 

 It shall be a condition precedent to the availability of the Operating Loan Increase that the Bank shall have received in form and substance satisfactory to the Bank and its solicitors: 

 

	 	8.1.	this third supplemental facility letter executed by the Borrower; 

  

	 	8.2.	the Additional Security Documents completed and, where necessary, registered; 

 

	 	8.3.	confirmation that the Borrower is in compliance with the terms and conditions of the Existing Facility Letters, as amended by this third supplemental facility letter;
and 

  

	 	8.4.	receipt of December 31, 2007 finalized audited year end financial statements for the Borrower. 

 

	9.	CONDITIONS OF LOAN: 

  

	 	9.1.	Section 11.2.1 of the Initial Facility Letter (definition of tangible net worth) is hereby amended by deleting the following: 

“shall exclude unrealized foreign exchange gains or losses related to the Senior Notes from January 1, 2007 provided that such
gains or losses are not materially different, as determined by the Bank, from the relevant figures set out in financial statements for the Borrower dated November 30, 2006 which have been delivered to the Bank” 

and replacing it with following: 
 “shall exclude (a) unrealized foreign exchange gains or losses related to the Senior Notes from January 1, 2007 provided that such gains or losses are not materially different, as
determined by the Bank, from the relevant figures set out in financial statements for the Borrower dated November 30, 2006 which have been delivered to the Bank and (b) and any associated deferred tax liabilities and assets for the same
time period created solely from the GAAP treatment of the aforementioned unrealized foreign exchange gains and losses” 
  

	 	9.2.	The following is added at the end of Section 11.2.1 to the Initial Facility Letter as amended above: 

“notwithstanding the foregoing, the Borrower shall not be in breach of this minimum tangible net worth covenant if its tangible net
worth is less than Cdn.$65,000,000 provided that: 
  

	 	(a)	its minimum tangible net worth is not in any event less than Cdn.$25,000,000, tested and calculated on the same basis as set out above; 

  
 Page 4

	 	(b)	the mark to market value as determined upon receipt of and pursuant to the mark to market report provided by EPCOR Merchant and Capital L.P. (“EPCOR
L.P.”) to the Borrower of the financial interest of the Borrower in the power syndicate agreement between the Borrower, EPCOR PPA Management Inc. and others dated as of January 1, 2001 (the “Power Syndicate Agreement”)
is not less than Cdn.$125,000,000; and 

  

	 	(c)	the indebtedness owed to EPCOR L.P. by the Borrower arising from 2 separate loans (the “Borrower to EPCOR L.P. Indebtedness”) is not greater than
Cdn.$25,626,000 in aggregate, such amount to be determined by either a: 

  

	 	(i)	statement of indebtedness from EPCOR L.P.; or 

  

	 	(ii)	a certified statement sworn by a senior financial officer of the Borrower; 

 The Bank however reserves the absolute right to from time to time amend the terms of the foregoing exception or revoke the exception if the present GAAP treatment of the Power Syndicate Agreement and the
financial interest of the Borrower therein changes or any portion of the Power Syndicate Agreement is assigned, transferred, or terminated.” 
  

	 	9.3.	For greater certainty, the calculation of interest within “EBITDA” and the “Debt Service Requirement” as set forth in Section 11.2.14 to the
Initial Facility Letter shall be made on a net basis. 

  

	 	9.4.	Section 11.2.15 to the Initial Facility Letter is hereby deleted and replaced with the following: 

“if the Threshold Borrowing/Margin Surplus Level does exist, incur Capital Expenditures (net of disposals of any capital equipment
during that same period) in excess of Cdn.$5,000,000 in the Borrower’s fiscal year 2008, and thereafter Cdn.$ 10,000,000 in any consecutive four fiscal quarters of the Borrower”. 

 

	 	9.5.	For greater certainty, Section 11.2.16 to the Initial Facility letter has effectively been amended by reason of the amendments to Section 11.2.15 as set forth
above and the definition of Threshold Borrowing/Margin Surplus Level as set forth in Section 11.2 below. 

  
 Page 5

	10.	FINANCIAL STATEMENTS AND REPORTS 

 The following is added as Section 12.2.A to the Initial Facility Letter: 
  

	 	“12.2.A	quarterly, within 60 days of each of the Borrower’s fiscal quarter year ends: 

 

	 	12.2.A1	the mark to market report prepared by EPCOR L.P. setting out the mark to market value of the financial interest of the Borrower in the Power Syndicate Agreement as at
the end of the Borrower’s most recent fiscal quarter year; and 

  

	 	12.2.A2	amount of the Borrower to EPCOR L.P. Indebtedness as at the end of the Borrower’s most recent fiscal quarter year either by way of a certified statement from
authorized representatives of EPCOR L.P. or a signed declaration by a senior financial officer of the Borrower, in either case to be satisfactory to the Bank.” 

 

	11.	SCHEDULE TO INITIAL FACILITY LETTER 

  

	 	11.1.	Section 8.8 of the Schedule to the Initial Facility Letter is hereby deleted and replaced with the following: 

“Borrowing Base” means the aggregate of 75% of Other Acceptable Receivables, 95% of Government of Canada Receivables,
95% of Insured Receivables and 95% of L/C Supported Receivables and 60% of Acceptable Inventory (previously 50% Acceptable Inventory);” 
  

	 	11.2.	Section 8.26 of the Schedule to the Initial Facility Letter is hereby deleted and replaced with the following: 

“GAAP” means generally accepted accounting principles in Canada, from time to time;” 

 

	 	11.3.	Section 8.42 of the Schedule to the Initial Facility Letter shall be amended in that the words in the fourth and fifth line “from customers approved by the
Bank” shall be deleted and replaced with “from customers approved by the Bank who are resident in Canada or United States”. 

  

	 	11.4.	Section 8.54 of the Schedule to the Initial Facility Letter is hereby deleted and replaced with the following: 

“Threshold Borrowing/Margin Surplus Level” means at any time either more than $35,000,000 (previously
$20,000,000) being advanced and outstanding under the Operating Loan (including outstanding bank guarantees or letters of credit under the B/G Sub-Facility) or the Borrowing Base exceeding the amount then advanced and outstanding under the
Operating Loan (including outstanding bank guarantees and letters of credit under the B/G Sub-Facility) by less than $15,000,000;” 

  
 Page 6

	12.	LAPSE AND CANCELLATION: 

 This third supplemental facility letter shall lapse and all obligations of the Bank hereunder and in respect of the Operating Loan Increase shall cease, all at the option of the Bank, if in the opinion of
the Bank the conditions precedent hereunder have not been met and the Operating Loan Increase made available in accordance with this third supplemental facility letter by not later than June 30, 2008. 

 

	13.	COUNTERPARTS: 

This third supplemental facility letter may be executed in one or more counterparts, by telecopier or otherwise, all of which taken
together shall constitute one and the same original third supplemental facility letter. 
  

	14.	APPLICATION OF THIRD SUPPLEMENTAL FACILITY LETTER 

 The terms and conditions set forth in this third supplemental facility letter shall become in force and effect upon satisfaction of the conditions precedent set forth in Section 8 above. 

Unless otherwise defined herein, all the words capitalized in this third supplemental facility letter shall have the meanings ascribed to such terms in
the Existing Facility Letter. Unless the context requires otherwise, all references to the Operating Loan and the Loans shall be deemed to include the Operating Loan Increase. 
 The Existing Facility Letters shall henceforth be read and construed in conjunction with this third supplemental facility letter and shall be deemed to be amended and supplemented hereby, but only to such
extent as may be necessary to give full force and effect to the provisions hereof. Nothing contained in this third supplemental facility letter shall in any way prejudice or derogate from any provision contained in the Existing Facility Letters,
except to the extent that any provision of this third supplemental facility letter may be inconsistent or conflict with any provision of the Existing Facility Letters, in which case the provisions hereof shall prevail, but save as aforesaid the
Existing Facility Letters and all the terms, covenants and conditions thereof, shall be and continue to be in full force and effect as extended, supplemented and amended hereby. 
 Without limiting any of the foregoing, the Borrower acknowledges and agrees that there shall not, by virtue of any amendments to the Existing Facility Letters or the Loans effected hereby, be deemed to
have been any refinancing, repayment, extinguishment or novation of any indebtedness, obligation or liability of the Borrower existing at the date of the issuance of this third supplemental facility letter. 

  
 Page 7

 Kindly acknowledge and confirm your agreement to and acceptance of the foregoing terms and conditions by
returning the enclosed duplicate copy of this letter executed by the Borrower by not later than April 28, 2008. The Bank shall then instruct its solicitors to prepare the Additional Security Documents. 

 

							
	Yours very truly,	 		 	
	HSBC BANK CANADA	 		 	
				
	By:	 	/s/ Cory M. Bailey	 	By:	 	/s/ Wayne Berg
		 	Cory M. Bailey,	 		 	Wayne Berg,
		 	 Assistant Vice President

Commercial Financial Services
	 		 	 Vice President
 Commercial
Financial Services

  
 — — — — —
— — 
 AGREED TO AND ACCEPTED THIS 1 DAY OF
MAY, 2008. 
  

			
	THE BORROWER:
	
	MILLAR WESTERN FOREST PRODUCTS LTD.
		
	Per:	 	 /s/ Kevin Edgson

		 	Kevin Edgson
		 	 Vice President Finance
 and
Chief Financial Officer

  
 Page 8

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