A Montreal company announced last week that it will buy two Arkansas sawmills and another in Florida owned by Conifex Timber Inc. for more than $163 million.
Resolute Forest Products Inc. announced the deal on Christmas Eve. It said it agreed to buy mills in El Dorado and Greenwood, as well as another in Cross City, Florida, for for $163 million plus working capital delivered at closing, currently estimated at $7 million.
"This transaction will provide immediate scale in the attractive U.S. South, with quality assets in a rich fiber basket, close to growing end-markets," Yves Laflamme, Resolute's president and CEO, said in a news release. "Scaling our lumber business forms a key part of our stated transformation strategy. This transaction will also diversify our lumber production: when operating to capacity, almost 25% of our production will be in the U.S. South."
The mills produce construction-grade dimensional lumber and decking from locally-sourced southern yellow pine for distribution within the U.S.
Conifex idled the El Dorado mill in August. It has capacity of 180 million board feet. The Glenwood mill, which has capacity of 185 million board feet, is operating on a 1.5-shift basis. The Cross City mill, also at 185 million board feet, is operating on a two-shift basis.
Resolute (NYSE: RFP) said it would build on Conifex's capital investments at the plants, a plan that includes spending about $20 million in upgrades and gradually restarting the El Dorado mill in 2021. It also said it expects most employees, including management, would remain.