TSX: WEF
DUNCAN, BC, March 17 /CNW/ - Western Forest Products Inc. (TSX: WEF)
today announced that it has closed its previously announced acquisition of the
Englewood Logging Division for $45 million plus closing adjustments of
approximately $2.7 million. In a related transaction Western also executed a
40 year agreement to supply wood chips and pulp logs to a partnership of
Canadian Forest Products Ltd. and Oji Paper Canada Ltd. ("Partnership").
The Englewood Logging Division is located on northern Vancouver Island
adjacent to Western's main logging operations and comprises Tree Farm License
37 ("TFL 37") which includes approximately 6,800 hectares of private lands.
The acquisition also includes timber licenses, existing capital improvements
and infrastructure, machinery, equipment and railway rolling stock. Western
has assumed certain contracts and equipment leases and has offered employment
to all of the approximately 270 employees currently involved in harvesting
operations but has not assumed any other material pre-closing liabilities
relating to the assets.
Commenting on the acquisition, Reynold Hert, President and Chief
Executive Officer stated that "The acquisition of TFL 37 represents an
important milestone in the restructuring of the coastal forest industry and
obtaining a secure source of logs for our lumber mills. With the transaction
now closed we can begin to move forward and integrate TFL 37 with our own
operations. Synergies in excess of $6 million annually are expected to be
realized within about 48 months."
As consideration for entering into the long-term fibre supply agreement,
Western will receive a price premium that will be earned as wood chips are
delivered under the agreement. A $35 million non-refundable prepayment of the
price premium was received today and the $45 million balance of the price
premium will be set-off against the consideration due on the acquisition of
the Englewood Logging Division.
Western Forest Products
Western is an integrated Canadian forest products company and currently
the second largest coastal woodland operator in British Columbia. Principal
activities conducted by Western and its subsidiaries include timber
harvesting, reforestation, sawmilling logs into lumber and wood chips, and
value-added remanufacturing. Over 95% of Western's logging is conducted on
government owned timberlands in British Columbia. All of Western's operations,
employees and corporate facilities are located in the coastal region of
British Columbia and its products are sold in over 20 countries worldwide.
Following the acquisition of Tree Farm License 37 and Western's previously
announced acquisition of Cascadia Forest Products Ltd. which is subject to
regulatory approval and expected to close in the first quarter of 2006,
Western expects to be the largest Coastal woodland operator and lumber
producer with an AAC of approximately 7.7 million cubic meters and lumber
capacity in excess of 1.5 billion board feet. The closure of the Squamish pulp
mill on March 9, 2006 also resulted in the Company exiting the pulp business.
Forward Looking Statements and Information
This press release contains forward-looking statements and
forward-looking information within the meaning of applicable securities law.
Those statements and information would include statements or information
regarding the intent, belief or current expectations of Western, primarily
with respect to market and general economic conditions, future costs,
expenditures, available harvest levels and future operating performance of
Western. Such statements or information may be indicated by words such as
"estimate", "expect", "anticipate", "plan", "intend", "believe", "will",
"should", "may" and similar words and phrases. Readers are cautioned that any
such forward-looking statements or information are not guarantees and may
involve known and unknown risks and uncertainties, and that actual results may
differ from those expressed or implied in the forward-looking statements or
information as a result of various factors, including general economic and
business conditions, product selling prices, raw material and operating costs,
changes in foreign-currency exchange rates, changes in government regulation,
fluctuations in demand and supply for Western's products, industry production
levels, the ability of Western to execute its business plan and misjudgments
in the course of preparing forward-looking statements or information. The
information contained under the "Risk Factors" section of Western's Annual
Information Form, under the "Risk Factors" section of Western's Form 20-F/A
and under the "Risk Factors" section of the final prospectus dated January 31,
2006 identifies important factors that could cause such differences. All
written and oral forward-looking statements or information attributable to
Western or persons acting on behalf of Western are expressly qualified in
their entirety by the foregoing cautionary statements. Western does not expect
to update forward-looking statements or information as conditions change.
