Canada's Conifex lumber expands in U.S. with multiple sawmill acquisitions
May 18, 2018 | 12:08 pm CDT
FLORIDA and ARKANSAS - As part of a major expansion in the U.S., British-Columbia-based Conifex Timber announced an agreement with investors Blue Wolf Capital (BW) to purchase sawmills in Florida and Arkansas - representing a combined dimension lumber capacity of 370 million board feet.
Florida's Suwannee sawmill and Arkansas' Caddo River sawmill - the acquired operations - both primarily produce Southern Yellow Pine softwood lumber and specialty products like decking. Each has an annual dimension lumber capacity of around 185 million board feet.
The agreement will increase Conifex's annual capacity by 50 percent - reaching upwards of 1.1 billion board feet of lumber produced per year. Its dimension lumber platform in the Southern U.S. will effectively double, reaching around 550 million board feet. That represents about 50 percent of the company's total lumber output.
The acquired mills also add premium SYP decking products to the Conifex arsenal, along with long-standing customer relationships in Florida and the southern and eastern U.S.
"This is a highly strategic and transformative transaction for Conifex," said Conifex president and CEO Ken Shields. "It brings together two successful growth-oriented companies to create a leading SYP lumber producer. The Suwannee and Caddo River mills significantly increase our presence in the U.S. South, which we have identified as an important strategic area with proximity to high-quality and abundant fibre supply in addition to some of North America's fastest growing population centers and housing markets.
Both the Suwannee Mill and Caddo River Mill have had significant modernization projects completed in recent years. A $12 million modernization and optimization project was completed at the Suwannee Mill in 2017 and approximately $14 million of capital expenditures were completed at the Caddo River Mill in connection with its restart in May 2017.
The transaction is expected to close in the second quarter of 2018.
In early 2017, Conifex announced it would restart a state-of-the-art sawmill complex in El Dorado, Arkansas, the first of the company's facilities in the Southern U.S. The $80 million investment created 120 jobs.
Headquartered in Vancouver, Canada, Conifex Timber Inc. was established in 2008 when it acquired its first idled sawmill in British Columbia. A second mill followed two years later as well as a biomass power plant that has been in operation since 2015. The company has invested about $80 million in two Canadian sawmill complexes and related businesses as well as $100 million in its green power generation business, creating over 500 jobs.
Conifex saw record results second quarter of 2017, with sales $116.4 million, and income of $14.8 million - 39 percent ahead of the 2016 period. And that's despite the $4.6 million the firm set aside for countervailing duties imposed by the U.S. on softwood lumber imports.
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