Thursday, January 1, 2015
INTERFOR CORPORATION has recently announced today that it has reached agreement with Simpson Lumber Company, LLC (“Simpson”) to acquire Simpson’s sawmill operations in Meldrim, GA, Georgetown, SC, Longview, WA and Commencement Bay, WA (collectively the “Sawmill Operations”). The Sawmill Operations are located within geographic proximity of Interfor’s sawmills in both the US Southeast and Pacific Northwest and will fit within the Company’s existing operating infrastructure.
The Sawmill Operations have a combined annual lumber capacity of 750 million board feet and are expected to produce 555 million board feet in 2014. As a result of this transaction, Interfor’s total capacity will increase by 30% to 3.1 billion board feet, reinforcing its position as the fastest growing lumber company in the world. The Company’s lumber capacity in the US Southeast and Pacific Northwest will total 1.2 billion board feet and 900 million board feet, respectively, representing 67% of the Company’s total pro forma capacity.
For the nine months ended September 30, 2014, the Meldrim, Georgetown and Longview
sawmills generated combined EBITDA2 of US$16 million. In addition, these sawmills have
significant upside potential from capital projects that are currently underway as well as from other operational initiatives.
For the nine months ended September 30, 2014, the Commencement Bay operation
generated EBITDA2 of US$(3) million. The Commencement Bay sawmill is located at the
Port of Tacoma and is a modern sawmill that was built in 2001. The total invested capital for the sawmill is approximately US$90 million. In 2004, the sawmill produced almost 400
million board feet, but is expected to produce approximately 165 million board feet in 2014.
Simpson is in the final stages of a US$5 million capital project at Commencement Bay that
will enhance the sawmill’s log processing flexibility and operating efficiency. Interfor
believes there are additional non-capital initiatives that could materially improve the
financial performance of the sawmill and further enhance the financial returns from the
“This transaction is another important milestone for Interfor,” said Duncan Davies, Interfor’s President and CEO. “The Simpson operations are a great strategic fit with our platforms in the US Southeast and Pacific Northwest, with significant operational and financial upside.
Equally important is the deal structure that has two distinct components: (i) the acquisition
of three profitable sawmills at values that will create immediate accretion; and (ii) the
acquisition of a fourth sawmill using a contingent payment structure that ties the ultimate
purchase price of that sawmill to its future results.”