All for Joomla All for Webmasters
Friday, 03 January 2020 09:57

Resolute to Acquire Conifex's Three U.S. Sawmills

Written by
Rate this item
(0 votes)

Resolute Forest Products Inc. (NYSE: RFP) (TSX: RFP) has just announced it has entered into an agreement to acquire Conifex Timber Inc.'s three sawmills in the U.S. South for $163 million plus working capital delivered at closing, which is currently estimated at $7 million. The three sawmills, with combined production capacity of 550 million board feet, are located in Cross City (Florida), and Glenwood and El Dorado (Arkansas).

"This transaction will provide immediate scale in the attractive U.S. South, with quality assets in a rich fiber basket, close to growing end-markets," said Yves Laflamme, president and chief executive officer. "Scaling our lumber business forms a key part of our stated transformation strategy. This transaction will also diversify our lumber production: when operating to capacity, almost 25% of our production will be in the U.S. South."

2020 01 03 105629The sawmills produce construction-grade dimensional lumber and decking products from locally-sourced southern yellow pine for distribution within the U.S. Production capacity for Cross City is 185 million board feet and it is currently operating on a two-shift basis. Glenwood's capacity is also 185 million board feet and it is operating on a 1.5 shift basis. The El Dorado mill, with capacity of 180 million board feet, was recently idled. Resolute intends to build on Conifex's significant capital investments in recent years, including $55 million previously invested in El Dorado, $23 million in Glenwood and $12 million in Cross City. 

Resolute is well-positioned to generate synergies and related benefits with this acquisition by:

  • complementing the mills' workers and staff with Resolute's deep sawmilling expertise to improve asset reliability, productivity and safety performance;
  • completing the necessary capital upgrades of approximately $20 million to gradually restart the El Dorado mill in 2021;
  • using the company's strong financial position to support the contemplated improvement initiatives and capital projects, to improve fiber procurement and to ensure the appropriate level of working capital;
  • integrating corporate functions along with nearby pulp, paper and tissue assets in Florida, Tennessee, Alabama and Mississippi to generate synergies in fiber procurement, environmental management, human resources management and procurement; and
  • leveraging Resolute's existing surplus tax attributes.

Resolute expects that most employees currently associated with the three assets, including management, will remain with the organization and that they will be offered terms of employment on substantially similar terms, effective upon closing of the transaction.

Resolute intends to finance the acquisition with its existing credit facilities. The transaction, which is subject to regulatory approvals and customary conditions, is expected to close in the first quarter of 2020. The transaction is subject to termination if closing conditions are not met or waived by May 29, 2020. 

TD Securities Inc. acted as financial advisor to Resolute on the transaction. Akerman LLP acted as Resolute's U.S. transaction counsel, Rose Law Firm as local Arkansas counsel and Stikeman Elliott LLP as Canadian transaction counsel. 

About Resolute Forest Products

Resolute Forest Products is a global leader in the forest products industry with a diverse range of products, including market pulp, tissue, wood products, newsprint and specialty papers, which are marketed in close to 70 countries. The company owns or operates some 40 facilities, as well as power generation assets, in the United States and Canada. Resolute has third-party certified 100% of its managed woodlands to internationally recognized sustainable forest management standards. The shares of Resolute Forest Products trade under the stock symbol RFP on both the New York Stock Exchange and the Toronto Stock Exchange.

Resolute has received regional, North American and global recognition for its leadership in corporate social responsibility and sustainable development, as well as for its business practices. Visit www.resolutefp.com for more information.

SOURCE Resolute Forest Products Inc.

Read 223 times

By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage. Site Terms and conditions