Business
Western Forest Products Completes Acquisition of Englewood Logging Division and Enters Long-Term Fibre Supply Agreement
Western Forest Products Completes Acquisition of Englewood Logging Division and Enters Long-Term Fibre Supply Agreement.
About this update from Western Forest Products Inc.
[{"type":"text","content":"\n\n\n\n\nTSX: WEF\n\nDUNCAN, BC, March 17 /CNW/ - Western Forest Products Inc. (TSX: WEF)\ntoday announced that it has closed its previously announced acquisition of the\nEnglewood Logging Division for $45 million plus closing adjustments of\napproximately $2.7 million. In a related transaction Western also executed a\n40 year agreement to supply wood chips and pulp logs to a partnership of\nCanadian Forest Products Ltd. and Oji Paper Canada Ltd. (\"Partnership\").\nThe Englewood Logging Division is located on northern Vancouver Island\nadjacent to Western's main logging operations and comprises Tree Farm License\n37 (\"TFL 37\") which includes approximately 6,800 hectares of private lands.\nThe acquisition also includes timber licenses, existing capital improvements\nand infrastructure, machinery, equipment and railway rolling stock. Western\nhas assumed certain contracts and equipment leases and has offered employment\nto all of the approximately 270 employees currently involved in harvesting\noperations but has not assumed any other material pre-closing liabilities\nrelating to the assets.\nCommenting on the acquisition, Reynold Hert, President and Chief\nExecutive Officer stated that \"The acquisition of TFL 37 represents an\nimportant milestone in the restructuring of the coastal forest industry and\nobtaining a secure source of logs for our lumber mills. With the transaction\nnow closed we can begin to move forward and integrate TFL 37 with our own\noperations. Synergies in excess of $6 million annually are expected to be\nrealized within about 48 months.\"\nAs consideration for entering into the long-term fibre supply agreement,\nWestern will receive a price premium that will be earned as wood chips are\ndelivered under the agreement. A $35 million non-refundable prepayment of the\nprice premium was received today and the $45 million balance of the price\npremium will be set-off against the consideration due on the acquisition of\nthe Englewood Logging Division.\n\nWestern Forest Products\nWestern is an integrated Canadian forest products company and currently\nthe second largest coastal woodland operator in British Columbia. Principal\nactivities conducted by Western and its subsidiaries include timber\nharvesting, reforestation, sawmilling logs into lumber and wood chips, and\nvalue-added remanufacturing. Over 95% of W...