Interfor continues to grow with the acquisition of Four US
BURNABY, British Columbia, May 27, 2021 (GLOBE NEWSWIRE) – INTERFOR COMPANY (“Interfor” or the “Company”) (TSX: IFP) announced today that it has entered into an agreement with Georgia-Pacific Wood Products LLC and GP Wood Products LLC (collectively “Georgia-Pacific”) for the acquisition of four of its sawmills located in Bay Springs, MS, Fayette, AL, DeQuincy, LA and Philomath, OR (collectively the “Sawmill Operations”). The total purchase price of US $ 375 million, which includes working capital, will be fully funded from available cash.
The sawmill operations are highly complementary to Interfor’s existing platforms in the southern and northwestern United States, and the acquisition will support accelerated growth and improve the company’s position to benefit from robust market conditions. . The acquisition will immediately increase Interfor’s earnings and should generate attractive returns in the short and long term.
“This acquisition reinforces Interfor’s strategy of growth as an outright lumber producer and offers significant economies of scale given the geographic complementarity with our existing US operations,” said Ian Fillinger, President and Chief Executive Officer. “We are delighted to acquire these high quality assets as part of our balanced approach to allocating capital to generate shareholder value. “
Sawmill operations have a combined annual lumber production capacity of 720 million board feet. The Bay Springs, Fayette and Philomath sawmills are currently operating at full capacity. The DeQuincy sawmill, which was shut down in May 2020 during the COVID-19 pandemic, has an annual capacity of 200 million board feet. Interfor is currently evaluating its strategy and options for the site, including restart plans.
On a pro forma basis, Interfor’s total annual lumber production capacity will increase to 3.9 billion board feet, of which 3.0 billion board feet or 77% will be based in the United States and will not be subject to softwood lumber duties. Interfor’s production capacity in the southern United States will increase by 500 million board feet, or 29%, to 2.2 billion, while production capacity in the northwestern United States will increase by 220 million, or 40%, to reach 770 million board feet. As a result of the transaction, 57% of Interfor’s production capacity will be in the southern United States, 20% in the northwestern United States and the remaining 23% in British Columbia.
Sawmill operations, excluding DeQuincy sawmill, generated EBITDA of US $ 53 million1 in the first quarter of 2021, reflecting an EBITDA1 margin of US $ 508 or $ 643 per thousand board feet. This compares favorably with Interfor’s EBITDA margin of $ 589 per thousand board feet for the same period.
Following the completion of this transaction, Interfor will continue to have significant financial flexibility to consider additional options for deploying value-creating capital. As of April 30, 2021, Interfor had net cash of approximately $ 380 million. Proforma from this acquisition and the exceptional dividend announced on May 12, 2021, Interfor’s net debt / invested capital ratio as of April 30, 2021 would rise to 13%. Likewise, proforma liquidity as at April 30, 2021 would be approximately $ 500 million, before taking into account the significant additional borrowing capacity available under existing credit limits and continuing strong operating cash flow. short term.
Completion of the acquisition is subject to customary conditions and regulatory approvals for such a transaction and is expected to be finalized in the third quarter of 2021.
1 Reflects EBITDA at the plant level as prepared in accordance with Georgia-Pacific financial practices.
This press release contains forward-looking information about the business prospects, objectives, plans, strategic priorities and other information of the Company which are not historical facts. A statement contains forward-looking information when the Company uses what it knows and expects today to make a statement about the future. Statements containing forward-looking information in this press release include, but are not limited to, statements regarding production capacity, facility restart plans and ramp-up schedules, pro forma capacity, expected earnings and returns, pro forma debt ratios, liquidity, borrowing capacity, regulatory approvals and expected closing date, as well as other relevant factors. Readers are cautioned that actual results may differ from the forward-looking information contained in this press release, and that such forward-looking information should not be relied on unduly. The risk factors which could cause actual results to differ materially from the forward-looking information contained in this press release are described in Interfor’s annual management report under the heading “Risks and Uncertainties”, which is available at www.interfor. com and under the Interfor profile. at www.sedar.com. Important factors and assumptions used in developing forward-looking information in this report include the volatility of selling prices of lumber, logs and wood chips; the Company’s ability to compete globally; the availability and cost of log supply; natural or man-made disasters; exchange rate; changes in government regulations; the availability of the Company’s annual harvest opportunity (“ACA”); claims of indigenous peoples and treaty agreements with them; the Company’s ability to export its products; the softwood lumber trade dispute between Canada and the United States; stumpage fees payable to the Province of British Columbia (“BC”); the environmental impacts of the company’s activities; work interruptions; information systems security; and the existence of a public health crisis (such as the current COVID-19 pandemic). Unless otherwise indicated, the forward-looking statements contained in this press release are based on the Company’s expectations as of the date of this press release. Interfor assumes no obligation to update such forward-looking information or statements, except as required by law. The Company’s independent auditor, KPMG LLP, has not audited, reviewed or performed any proceedings relating to the interim financial results and other data included in this press release and, therefore, does not express an opinion or in any other way. insurance against them.
Interfor is a growth-oriented forest products company with operations in Canada and the United States. The company has an annual production capacity of approximately 3.2 billion board feet and offers a diverse line of lumber products to customers around the world. For more information about Interfor, visit our website at www.interfor.com.
Investor contact and additional information:
Rick Pozzebon, Senior Vice President and Chief Financial Officer
Mike Mackay, Vice President of Corporate Development and Strategy