Business
Western Forest Products Announces Closure of Squamish Pulp Mill & the Acquisition of Canfor's Englewood Logging Division
Western Forest Products Announces Closure of Squamish Pulp Mill & the Acquisition of Canfor's Englewood Logging Division.
About this update from Western Forest Products Inc.
[{"type":"text","content":"\n\n\n\n\nTSX: WEF \n\nDUNCAN, BC, Dec. 15 /CNW/ - Western Forest Products today announced the\nclosure of its pulp mill located in Squamish, BC effective March 9, 2006. The\nmill, which has an annual capacity of 275,000 tonnes of NBSK pulp, will\ncontinue production until the week of January 23, 2006 after which time\nshutdown activities would commence. The closure affects 323 employees in\nvarious locations.\n\"Financial results from the pulp segment of our business have been\nunacceptable for many years,\" said Reynold Hert, President and Chief Executive\nOfficer. \"Having considered the long-term market outlook, the impact of rising\nfibre and energy costs and the high capital requirements, we determined that\nthe best long-term decision for Western was to exit the pulp segment and\nnarrow our focus to our lumber business. We pursued the sale of the mill for\nan extensive period but were ultimately unsuccessful and, as a result we are\nproceeding with the closure plans announced today.\"\n\"This is a difficult decision as many long-term employees are affected,\"\ncontinued Hert. \"Our team at Squamish have worked hard to improve operations\nbut it is a relatively small mill by industry standards with outdated\ntechnology and high costs. We met with employees this afternoon and assured\nthem that people will be treated fairly and according to the terms of the\ncollective agreement and statutory requirements.\"\nPreliminary estimates indicate the closure of the Squamish pulp mill will\nresult in a pre-tax restructuring charge in the fourth quarter of\napproximately $80 million, including a non-cash charge of approximately\n$46 million relating to the write-down of fixed assets and supplies\ninventories.\n\nReplacement Fibre Supply Arrangements\n\nWood chips from Western's four Vancouver Island sawmills previously\nconsumed at the Squamish pulp mill and surplus to the Company's other \nlong-term commitments will be sold under a new agreement with a partnership of\nCanadian Forest Products Ltd. and Oji Paper Canada Ltd. for consumption at the\nHowe Sound Pulp and Paper mill. As consideration for entering the fibre supply\nagreement, Western will receive a non-refundable payment of $35 million in\ncash on closing in the form of a pre-payment against future deliveries of\nchips. Cash proceeds from the transaction will be used by W...