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Rubber and Wood November 02, 2016 12:30:00 PM

Tembec announces closing of sale of its Quebec sawmill

Carolina Curiel
ScrapMonster Author
According to Tembec press release, the deal covered the sawmill facility and related forestry assets. The sale also included certain working capital items.

Tembec announces closing of sale of its Quebec sawmill

MONTREAL (Scrap Monster): Tembec announced that it has closed the sale of its Senneterre, Quebec sawmill to Resolute Forest Products. The two companies had signed a binding agreement in September this year towards sale of the sawmill facility. Tembec had acquired the Senneterre, Quebec sawmill from Nexfor Inc. and Norbord Industries Inc. in 2003.

According to Tembec press release, the deal covered the sawmill facility and related forestry assets. The sale also included certain working capital items. The total receipt of proceedings amounted to nearly $9 million, subject to potential working capital adjustments. The sale also included transfer of all 124 employees at the facility. Incidentally, the Tembec facility had employed 103 unionized and 21 non-unionized employees.

Tembec had been restructuring its operations to adjust to existing market conditions. In late 2011, Tembec had sold its hardwood flooring assets and in May 2013 had closed the sale of its B.C.-based NBSK pulp mill. In addition, the company had invested $190-million to upgrade its specialty cellulose manufacturing facility in Temiscaming, Québec. The capital investment was aimed at increasing production capacity and reducing costs.

Earlier in February this year, Tembec has announced indefinite suspension of operations at its Senneterre, Quebec sawmill. The company has cited prolonged weakness in the North American softwood lumber market and extremely high wood costs as the key reasons for idling the operations at the sawmill located in Temiscaming region, northwestern Quebec. While announcing the decision, James Lopez, CEO, Tembec had stated that the company will carefully analyze the changes in market conditions and may take suitable decision at appropriate time with regards to restarting mill operations.

According to latest results announced by Tembec for the third fiscal quarter ended June 2016, the consolidated sales totaled $376 million, as compared to $365 million in the same quarter a year ago. It generated net earnings of $9 million during the quarter as compared to a net loss of $16 million during June 2015 quarter. Operating earnings before depreciation, amortization and other items (adjusted EBITDA) was $26 million for the three-month period ended June 25, 2016, as compared to adjusted EBITDA of $2 million a year ago and adjusted EBITDA of $36 million in the prior quarter.

The Specialty Cellulose Pulp segment generated adjusted EBITDA of $10 million on sales of $111 million for the quarter ended June 25, 2016. The Forest Products segment generated adjusted EBITDA of $4 million on sales of $102 million for the quarter. The Paper Pulp segment generated adjusted EBITDA of $1 million on sales of $86 million. The Paper segment generated adjusted EBITDA of $16 million on sales of $99 million for the quarter ended June 25, 2016, compared to adjusted EBITDA of $21 million on sales of $102 million in the March 2016 quarter.

Tembec is a manufacturer of forest products – lumber, paper pulp, paper and specialty cellulose pulp – and a global leader in sustainable forest management practices. Tembec has operations in North America and France with some 3,250 employees and has annual sales of approximately $1.5 billion.

Resolute Forest Products is a global leader in the forest products industry with a diverse range of products, including market pulp, wood products, tissue, newsprint and specialty papers. The company owns or operates over 40 pulp, paper, tissue and wood products facilities in the United States, Canada and South Korea, as well as power generation assets in Canada and the United States.

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