Conifex Timber Inc. of Vancouver, Canada, said Thursday that it is buying the former George-Pacific sawmill south of El Dorado.
The statement said Conifex has completed the purchase of the outstanding shares and shareholder loans of a private Delaware company. The consideration consisted of 100,000 common shares of the company at a deemed price of $6.75 Canadian dollars, as well as the reimbursement of certain costs previously incurred by the vendor.
The Delaware company had the exclusive rights to acquire the sawmill and related facilities and equipment, including approximately 186 acres of land.
Along with the closing of the purchase, the Delaware company exercised its right to acquire the El Dorado mill for total consideration of $21 million United States dollars, comprised of $12.36 million in cash and an $8.64 million vendor mortgage.
Ken Shields, chief executive officer of Conifex commented, “It’s important to Conifex to secure this ideal site and high quality infrastructure in one of the most advantaged softwood supply regions in North America.”
“The uncertainties flowing from the expiry and renegotiation of the Softwood Lumber Agreement could potentially impact the timing of the modernization and upgrade of our Canadian sawmills, while we expect the SLA will have less impact on capital expenditure decisions for mills located in the U.S.,” he said.
The El Dorado mill is situated in an area well regarded for its availability of high quality sawlogs within cost effective proximity and a skilled labor pool. Conifex is currently completing its review to evaluate the optimal capital upgrade for the El Dorado site, following which management expects to determine the priority in which to rebuild its currently idled Mackenzie Site I mill or the El Dorado mill.
Over the longer term, the company expects to undertake capital upgrades to rebuild both of these mills.
The common shares issued pursuant to the purchase agreement will be subject to a hold period expiring four months and one day following closing.
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.