Vaagen Brothers Lumber of Colville, Washington, identified as potential operator of Midway Forest Products in Midway, British Columbia
GRAND FORKS, British Columbia
December 31, 2011
(Grand Forks Gazette)
– The Memorandum of Offering has been released for the Midway Mill. The details within it were discussed with potential investors this week in Midway, Rock Creek and Greenwood.
Federal Conservative candidate Stephen Hill, Midway Mayor Randy Kappes, Doug McMynn and Reid Hedlund were in Midway on Dec. 30 for the third of the meetings, to outline the document.
The Memorandum gives details on the operator that has been chosen - Vaagen Brothers Lumber from Colville, Wash. - and the shares that can now be purchased by locals.
Stephen Hill said that they had gone through many possibilities for operator and went with Vaagen Brothers for a number of reasons.
“The primary reason is that Vaagen’s is not Bay Street in Toronto or Howe Street in Vancouver, they’re Main Street,” Hill said. “We feel that the values Vaagen’s brings to the table are very similar to the values that we share here in the Boundary.”
Hill said another reason is that Vaagen’s will be investing millions of dollars of their own money into the Midway Mill to take it from the technology of 1980s to the present.
Vaagen’s is also interested in going after species of trees that are not in high demand, and so would not be competing with Interfor, Hill said.
The company is also used to operating on an open market and did not require the long-term tenure that the other companies they talked to wanted, he added.
Hill also outlined the terms of the Class A shares which they are first giving locals of the Boundary area a chance to purchase first.
Hill said that Boundary Sawmill Inc. (BSI) has been approved for $5 million in Venture Capital Credits, which will give eligible British Columbia residents a guaranteed 30 per cent tax credit, worth $3,000 on the $10,000 minimum investment.
Hill added that if the shares were not bought up, they would release them to be purchased by any resident of British Columbia on Jan. 15, since after March 1 they would expire.
Midway Mayor Randy Kappes added that though the shares are non-voting, owners of the shares do have a say through council and the annual general meeting.
“We’re going to listen to what the community wants to do,” Kappes said.
The document states BSI intends to use the investments to buy the mill and lease it for a ten year term to Vaagen for $5,000 a month, though this lease rate could be driven up to $38,000. This, because of a royalty agreement that depends on production volume and wood prices on the US lumber exchange.
To buy the 43-acre Midway Mill site, BSI will be investing $2 million, though Hill states that $500,000 of that will be repaid to the Village of Midway through taxes owing on the land.
If BSI raises the total $5 million that they would like to raise, the leftover $3 million will be used to buy wood fibre and any other needs that arise, Kappes said.
He added that the Villages of Midways and Greenwood have been looking into forming a community forest.
“In the last month, Midway council and Greenwood council have sent a letter to the Ministry of Forests,” Kappes said. “Which we hope to make a venue to provide fibre.”
Kappes added that the community forest is completely separate from the mill and that it was at the least a year away.
People interested in investing can contact Mayor Randy Kappes at 250-449-8252.