Monday, December 28, 2015
Boise Cascade Company announced that it has reached an agreement to purchase Georgia-Pacific LLC’s engineered lumber production facilities located at Thorsby, Alabama, and Roxboro, North Carolina, for $215 million, including a closing date working capital target of $25 million. The Company currently plans to use approximately $90 million of its cash and $130 million in new borrowing to pay for the transaction and closing-related expenses. The transaction is expected to close in the first half of 2016, subject to standard regulatory review and other customary closing conditions.
The Thorsby facility produces laminated veneer lumber (LVL). The Roxboro facility currently produces I-joists. Roxboro’s LVL production assets are currently idled. Boise Cascade expects to invest capital and hire additional employees to increase production at these mills in 2016 and beyond to obtain significant logistics benefits as well as to meet expected growth in new residential construction. The Company believes the addition of Thorsby and Roxboro will increase LVL billet capacity by 9 million cubic feet and I-joist capacity by 80 million lineal feet.
“We are pleased to be expanding our engineered wood products business and positioning ourselves to support customers as the U.S. housing recovery continues in the years ahead. The additional engineered lumber capacity at Thorsby and Roxboro fit very well with our existing production facilities and will help us cost effectively deliver products to our customers,” stated Tom Corrick, CEO of Boise Cascade. “There are tremendous opportunities to optimize our mill system, and realize freight and other cost synergies. The acquired mills are located in attractive wood baskets with competitive fiber costs and improve our ability to support high growth housing demand. We expect the acquisition of Georgia-Pacific’s engineered lumber business to add $40 million to our mid-cycle EBITDA.” He added further.
Boise Cascade’s senior management team and board of directors remain committed to efficiently allocating capital to opportunities that generate shareholder value, including capital projects that accelerate organic growth, acquisitions, as well as additional share repurchases.