Conifex Timber Inc announced on 24 December that it has entered into a share purchase agreement with an affiliate of Resolute Forest Products Inc. for the sale by Conifex of its U.S. sawmill business, consisting of its El Dorado, Cross City and Glenwood sawmills and related operations. The purchase price, payable in cash, is US$163 million plus net working capital at closing. The net proceeds from the sale will be used by Conifex to repay in full its outstanding lumber segment credit facility and for working capital and general corporate purposes.
Ken Shields, Conifex’s President and CEO, stated, “Successful completion of the transaction positions us to retire our entire lumber segment borrowings and strengthens our balance sheet. With greater financial stability, we will be focused on enhancing the performance of our lumber manufacturing and power generation businesses in Mackenzie, BC.”
Mr. Shields added, “We are pleased that our U.S. employees will have the opportunity to become part of an organisation that has demonstrated expertise in lumber manufacturing and an objective of growing the scope and scale of its lumber business in the U.S. South.”
CIBC Capital Markets and Raymond James Ltd. acted as financial advisors to Conifex on the transaction. Sangra Moller LLP acted as legal advisor to Conifex.
Closing of the transaction is expected to occur in or about the first quarter of 2020 and is subject to customary closing conditions.