US $
MONTREAL, Dec. 24, 2019 /CNW Telbec/ - 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:
- complementing the mills' workers and staff with Resolute's deep
sawmilling expertise to improve asset reliability, productivity and
safety performance;
- completing the necessary capital upgrades of approximately
$20 million to gradually restart the
El Dorado mill in 2021;
- using the company's strong financial position to support the
contemplated improvement initiatives and capital projects, to
improve fiber procurement and to ensure the appropriate level of
working capital;
- integrating corporate functions along with nearby pulp, paper
and tissue assets in Florida,
Tennessee, Alabama and Mississippi to generate synergies in fiber
procurement, environmental management, human resources management
and procurement; and
- leveraging Resolute's existing surplus tax attributes.
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.
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SOURCE Resolute Forest Products Inc.