Interfor Continues to Grow with Acquisition of Four US Sawmills from Georgia-Pacific

Interfor Corporation (“Interfor” or the “Company”) (TSX: IFP) announced today that it has reached an agreement with Georgia-Pacific Wood Products LLC and GP Wood Products LLC (collectively “Georgia-Pacific”) to acquire four of its sawmill operations located in Bay Springs, MS, Fayette, AL, DeQuincy, LA and Philomath, OR (collectively the “Sawmill Operations”). The total purchase price of US$375 MM, which includes working capital, will be funded entirely from cash on hand.

The Sawmill Operations are highly complementary to Interfor’s existing platforms in the US South and the US Northwest, and the acquisition will support accelerated growth and enhance the Company’s position to benefit from robust market conditions. The acquisition will be immediately accretive to Interfor’s earnings and is expected to provide attractive returns in both the near-term and over the long-term.

“This acquisition enhances Interfor’s growth-focused strategy as a pure-play lumber producer, and provides significant economies of scale given the complementary geographic fit with our existing US operations” said Ian Fillinger, President and Chief Executive Officer. “We’re excited to acquire these high-quality assets as part of our balanced approach to capital allocation to drive shareholder value.”

The Sawmill Operations have a combined annual lumber production capacity of 720 million board feet. The Bay Springs, Fayette and Philomath sawmills are currently operating on a full-shifting basis. The DeQuincy sawmill, which was idled in May 2020 during the COVID-19 pandemic, has an annual capacity of 200 million board feet. Interfor is currently evaluating its strategy and options for the site, including re-start plans.

On a pro-forma basis, Interfor’s total annual lumber production capacity will increase to 3.9 billion board feet, of which 3.0 billion board feet or 77% will be US-based and not subject to softwood lumber duties. Interfor’s US South production capacity will grow by 500 million board feet, or 29%, to 2.2 billion, while production capacity in the US Northwest will grow by 220 million, or 40%, to 770 million board feet. Following the transaction, 57% of Interfor’s production capacity will be in the US South, 20% will be in the US Northwest and the remaining 23% will be in British Columbia.

The Sawmill Operations, excluding the DeQuincy sawmill, generated US$53 million of EBITDA1 in the first quarter of 2021, reflecting an EBITDA1 margin of US$508 or $643 per thousand board feet. This compares favorably with Interfor’s EBITDA margin of $589 per thousand board feet for the same period.

Following the completion of this transaction Interfor will continue to have significant financial flexibility to consider additional value-creating capital deployment options. As of April 30, 2021 Interfor was in a net cash position of approximately $380 million. Proforma this acquisition and the special dividend announced on May 12, 2021, Interfor’s Net Debt to Invested Capital ratio as of April 30, 2021 would increase to 13%. Similarly, proforma liquidity as of April 30, 2021 would be approximately $500 million, before consideration of significant additional borrowing capacity available under existing credit limits and continued strong near-term operating cash flows.

The completion of the acquisition is subject to customary conditions and regulatory approvals for a transaction of this kind and is expected to close in the third quarter of 2021.
https://interfor.com/wp-content/uploads/2021/05/Interfor-Continues-to-Grow-with-Acquisition-of-Four-US-Sawmills-from-Georgia-Pacific.pdf

Related Posts

Metsä Group’s comparable operating result in January–September 2017 was EUR 381 million

January–September 2017 (1–9/2016) • Sales were EUR 3,712 million (3,483). • Operating result was EUR 397 million (333). Comparable operating result was EUR 381 million (332). • Result before tax was EUR 345 million (275). Comparable result before tax was EUR 330 million (275). • Comparable return on capital employed was 11.2 per cent (10.5). Comparable return on capital employed excluding investments related to the bioproduct mill was 14.0 per cent (11.9). • Cash flow from operations was EUR 611 million (298). July–September 2017 (7–9/2016) • Sales were EUR 1,260 million (1,143). • Operating result was EUR 143 million (107). Comparable operating result was EUR 134 million (103). • Result before tax was EUR 109 million (89). Comparable result before tax was EUR 100 million (85). • Comparable return on capital employed was 10.8 per cent (9.8). Comparable return on capital employed excluding investments related to the bioproduct mill was 13.7 per cent (11.1). • Cash flow from operations was EUR 420 million (177). Click Read More below for additional information.

Interfor Resumes Operations at Grand Forks Sawmill

Interfor Corporation announced that it has resumed operations at its sawmill in Grand Forks, BC following severe flooding in the area over the past two weeks. The sawmill was temporarily curtailed on May 10, 2018 as a precautionary measure due to the escalating flooding in the region. Even though the sawmill was not operating during this time, a series of measures were taken by mill personnel to protect the operation against potential damage. Fortunately, such actions limited the risk to the mill’s infrastructure and equipment and has allowed the mill to resume operations now that the water level has receded. There are ongoing issues in the region related to rail line damage and the Company will be working with its carriers and customers to manage through the related logistics issues. Click Read More below for additional information.

The groundwood line in Rottneros Mill to be closed down, CTMP production planned to increase significantly.

Following an extensive and long-term strategic analysis, Rottneros' Board of Directors has decided to discontinue the production of groundwood pulp in Rottneros Mill as there are no prospects for long-term sustainable profitability. The decision means that about 40 people will be made redundant. The cost of the closure is expected to amount to approximately 60 MSEK. Production is expected to cease at the end of 2022, following the conclusion of trade union negotiations which are now beginning. The Group plans to invest 160 - 200 MSEK to significantly increase capacity and production in the mill's CTMP line. In 2021, the Group's production of groundwood pulp amounted to 64 000 tons, corresponding to 16 percent of Rottneros' total production of 395 300 tons. During the same year, the groundwood line's share of the Group's net sales amounted to just over 10 percent, while the contribution, including electricity hedges, to the Group's net profit was marginal. The costs for the closure, approximately 60 MSEK, consist mainly of redundancy costs and will be charged in the Group's earnings for the third quarter. Only a minor part is write-downs of fixed assets.
Back To Top
×Close search
Search