Resolute to Acquire Conifex’s Three U.S. Sawmills
MONTREAL, Dec. 24, 2019 /PRNewswire/ - Resolute Forest Products Inc. (NYSE: RFP) (TSX: RFP) today announced it has entered into an agreement to acquire Conifex Timber Inc.’s three sawmills in the U.S. South for $163 million plus working capital delivered at closing, which is currently estimated at $7 million. The three sawmills, with combined production capacity of 550 million board feet, are located in Cross City (Florida), and Glenwood and El Dorado (Arkansas).
“This transaction will provide immediate scale in the attractive U.S. South, with quality assets in a rich fiber basket, close to growing end-markets,” said Yves Laflamme, president and chief executive officer. “Scaling our lumber business forms a key part of our stated transformation strategy. This transaction will also diversify our lumber production: when operating to capacity, almost 25% of our production will be in the U.S. South.”
The sawmills produce construction-grade dimensional lumber and decking products from locally-sourced southern yellow pine for distribution within the U.S. Production capacity for Cross City is 185 million board feet and it is currently operating on a two-shift basis. Glenwood’s capacity is also 185 million board feet and it is operating on a 1.5 shift basis. The El Dorado mill, with capacity of 180 million board feet, was recently idled. Resolute intends 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.
Resolute is well-positioned to generate synergies and related benefits with this acquisition by:
Resolute expects that most employees currently associated with the three assets, including management, will remain with the organization and that they will be offered terms of employment on substantially similar terms, effective upon closing of the transaction.
Resolute intends to finance the acquisition with its existing credit facilities. The transaction, which is subject to regulatory approvals and customary conditions, is expected to close in the first quarter of 2020. The transaction is subject to termination if closing conditions are not met or waived by May 29, 2020.
TD Securities Inc. acted as financial advisor to Resolute on the transaction. Akerman LLP acted as Resolute’s U.S. transaction counsel, Rose Law Firm as local Arkansas counsel and Stikeman Elliott LLP as Canadian transaction counsel.
Cautionary Statements Regarding Forward-Looking Information
Statements in this press release that are not reported financial results or other historical information of Resolute Forest Products Inc. and its subsidiaries (collectively, the “company,” “we,” “our,” or “us”) are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. They include, for example, statements relating to the expected timetable for closing the transaction, the satisfaction or waiver of closing conditions and the anticipated synergies and benefits of the acquisition. Forward-looking statements may be identified by the use of forward-looking terminology such as the words “should,” “would,” “could,” “will,” “may,” “expect,” “believe,” “anticipate,” “attempt,” “project,” “intend” and other terms with similar meaning indicating possible future events or potential impact on the company’s business or its shareholders.
The reader is cautioned not to place undue reliance on these forward-looking statements, which are not guarantees of future performance. These statements are based on management’s current assumptions, beliefs and expectations, all of which involve a number of business risks and uncertainties that could cause actual results to differ materially. Such risks and uncertainties include, among other things, any delays in receiving required regulatory approvals or satisfying other closing conditions, which could have a negative impact on the completion of the transaction, or the risks of not successfully integrating the acquired business or assets with the company’s business or not realizing some or all of the anticipated synergies and benefits of the acquisition which could adversely affect the company’s results of operations and cash flows. Additional information regarding factors that may cause actual results to differ materially from these forward-looking statements is available in the company’s filings with the SEC, including the risks and uncertainties identified in Part I, Item 1A – Risk Factors of the company’s Annual Report on Form 10-K for the year ended December 31, 2018.
All forward-looking statements in this press release are expressly qualified by the cautionary statements set out or referred to above and in the company’s other filings with the U.S. Securities and Exchange Commission and the Canadian securities regulatory authorities. The company disclaims any obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.
About Resolute Forest Products
Resolute Forest Products is a global leader in the forest products industry with a diverse range of products, including market pulp, tissue, wood products, newsprint and specialty papers, which are marketed in close to 70 countries. The company owns or operates some 40 facilities, as well as power generation assets, in the United States and Canada. Resolute has third-party certified 100% of its managed woodlands to internationally recognized sustainable forest management standards. The shares of Resolute Forest Products trade under the stock symbol RFP on both the New York Stock Exchange and the Toronto Stock Exchange.
Resolute has received regional, North American and global recognition for its leadership in corporate social responsibility and sustainable development, as well as for its business practices. Visit www.resolutefp.com for more information.
SOURCE Resolute Forest Products Inc.