Ainsworth Lumber Co Ltd has announced a recapitalisation transaction that will reduce its debt burden and enhance its liquidity.

The agreement with creditors will see the OSB, plywood and veneer producer transfer C$823.5m in unsecured notes for equity and generate C$150m in new unsecured notes.

As part of the capital restructuring, the existing board will also be replaced.

In May, Ainsworth said that support from its creditors and suppliers would be essential to keeping the company as a going concern and “achieving profitable operations”.

“The management and board of directors of the company believe that, in view of the challenges and risks to the company’s ongoing viability created by the current OSB market and the company’s existing capital structure, the recapitalisation is the best alternative available,” Ainsworth said.

“The company’s board of directors…is unanimously recommending that all shareholders and noteholders support the recapitalisation.”

The recapitalisation is to take place on July 30 providing the company receives support from two-thirds of the company’s common shareholders.