Canfor's C$60M acquisition of Tembec's Canal Flats, Elko sawmills in British Columbia is 'huge symbol of prosperity for region' says Canfor official, attributes deal to 'superb' fiber base
INVERMERE, British Columbia
December 1, 2011
(The Valley Echo)
– There will be a changing of the guard at the two largest sawmills in the East Kootenay.
On November 28, Canfor announced its acquisition of the Canal Flats and Elko sawmills and associated Crown tenures, which consists of approximately 1.1 million cubic meters of combined Crown, private land and contract annual allowable cut from Tembec for $60 million. The transaction will also include a long-term agreement to provide residual fiber supply for Tembec’s NBSK pulp mill located in Skookumchuck.
"I think this is a huge symbol of prosperity for the region," Christine Kennedy, Director, Public Affairs and Corporate Communications for Canfor said. "Canfor is a big and very stable company, and putting our vote in the area says that we see pretty bright economic times ahead."
“This transaction is an important step in the ongoing reshaping of our business portfolio and geographical footprint to maximize shareholder value, while remaining committed to the lumber business,” stated Tembec President and Chief Executive Officer James Lopez. “We continue to seek opportunities to participate in the consolidation that is changing the forest products industry for the better, creating stronger and more focused companies."
About 450 employees are also included in the sale, as each the Elko and Canal Flats mills employs about 165 people on site and a number of other office staff. Kennedy attributed the acquisition to the, "superb" fibre base in the areas in question, and cited increasing demand from the Asia-Pacific region as well as forecasted growing demands from the US and other parts of the world.
"We see a huge growing need for green environmentally sustainable building products," Kennedy said. "This is part of Canfor's positioning itself ahead of that demand curve."
Also announced is a more than $50 million investment into Canfor facilities in southeastern B.C. to enhance production of high quality products, efficiently and sustainably.
Radium's sawmill, which is owned by Canfor and has been closed since 2009, appears unaffected by the deal. When asked, Kennedy responded that the acquisition does not mean anything in the immediate term.
"There's work to be done to get Radium reopened, in terms of both market development and capital projects in the sawmill," Kennedy said. "It will likely be a demand thing—Canfor staff will be in the area over the months to come, assessing where to put the capital and what the operational arrangements will be going forward."
The sale is expected to be finalized in the first quarter of 2012.