Resolute Forest acquires three US sawmills for Conifex timber
Resolute Forest Products announced that it will acquire Conifex Lumber's three US sawmills for $ 163 million, plus the net working capital at the close, which is currently estimated at $ 7 million. The three sawmills have a total production capacity of 550 million board feet and are located in Cross, Florida and Glenwood and Eldorado, Arkansas.
The news of the acquisition was announced on December 24. The transaction is subject to regulatory approval and customary conditions and is expected to be completed in the first quarter of 2020. Resolute Forest said it intends to use existing credit facilities to finance the acquisition.
The sawmill produces building-sized timber and deck products and distributes them to the United States from locally sourced southern pine. According to information provided by Resolute, Cross City has a production capacity of 185 million feet and currently operates on a two-shift basis. Glenwood also has a production capacity of 185 million board feet and operates on 1.5 shifts. The recently idled El Dorado plant has a capacity of 180 million boards.
SolResolute said it plans to invest about $ 20 million to complete the necessary capital upgrades to gradually restart the Eldorado plant in 2021. The company added that it "plans 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. .
"This transaction will provide immediate scale in the attractive southern United States, with quality assets in a rich fiber basket, close to the growing end market," said Yves Laflamme, President and CEO of Resolute Forest. ). "Expanding our lumber business is a key part of our established transformation strategy. This transaction will also diversify our lumber production: When production reaches capacity, nearly 25% of our production will be in the southern United States.
IfeConifex said the net proceeds from the sale will be used to fully repay its outstanding timber sector credit arrangements, as well as for working capital and general corporate purposes.