Conifex receives $130 million credit to modernize and restart El Dorado sawmill facility

VANCOUVER (Scrap Monster): Vancouver, B.C-based Conifex Timber Inc. has announced that it will modernize and restart a sawmill complex in El Dorado, Arkansas. The company had earlier announced that it is working towards finalizing capital and financing plans to reconstruct the mill complex.

In a company press release, Conifex stated that it has received a new $130 million secured revolving credit facility, being arranged by a major US bank. The above said credit facility will be utilized to fund the modernization and restart of its sawmill complex in El Dorado, Arkansas. The facility will also be used towards replacing and discharging its existing revolving credit facilities and senior notes. The credit facility, for a period of five years, would be completely secured by all of its assets except bioenergy segment assets. The credit is scheduled to close around January 6, 2017.

According to Ken Shields, Chairman and CEO, Conifex, the financing announced now would be the key to the company’s planned expansion into the US South region. Further, it will help the company to diversify its revenue allocation and reduce cash flow volatility in lumber segment. The completion of the credit facility is subject to customary conditions including finalization of definitive credit documentation.

Canfor Corp., which owns Conifex and its subsidiaries, had announced in September 2015, its decision to purchase the sawmill complex, earlier owned by El Dorado-based Anthony Forest Products for a sum of $93.5 million, which included approximately $15 million of working capital. The purchase deal had included five manufacturing facilities in the US South as well as a 50% joint venture ownership in Anthony Eacom, Inc., which operates a wood I-joist plant in Sault Ste. Marie, Ontario.

In an earlier press release during December last year, Conifex had announced that it has satisfied and discharged in full itsoutstanding $12 million aggregate principal amount of unsecured subordinated convertible notes issued in 2014 in accordance with the terms and conditions of the indenture governing the notes. In addition, its wholly-owned subsidiary Conifex Power received additional property damage and business interruption insurance proceeds in the amount of $5.45 million from its insurance claim related to the previous unexpected outage at its Mackenzie power project.

Conifex and its subsidiaries' primary business currently includes timber harvesting, reforestation, forest management, sawmilling logs into lumber and wood chips, and value added lumber finishing and distribution. Conifex's lumber products are sold in the United States, Chinese, Canadian and Japanese markets. Conifex has expanded its operations to include bioenergy production following the commencement of commercial operations of its power generation facility at Mackenzie, British Columbia.

Anthony Forest Products had operated six facilities producing lumber, engineered wood and wood chips with a combined capacity of 250 mmbf equivalent.