GreenFirst completes acquisition of RYAM assets
By GreenFirst Forest Products
By GreenFirst Forest Products
GreenFirst Forest Products Inc. is pleased to announce that on Aug. 28, 2021 it closed the previously announced purchase of a portfolio of forest and paper product assets from Rayonier A.M. Canada G.P. (RYAM GP), Rayonier A.M. Canada Industries Inc. (RYAM Industries) and Rayonier A.M. Canada Enterprises Inc. (collectively with RYAM GP and RYAM Industries, “RYAM”), each a subsidiary of Rayonier Advanced Materials Inc.
GreenFirst acquired the purchased assets for an aggregate purchase price of approximately US$235 million which was comprised of a base amount of US$140 million plus approximately US$87.5 million which reflected the value of the inventory on-hand at the time of closing and other adjustments. Approximately US$193 million of the purchase price was paid in cash, approximately US$34 million was paid in common shares in the capital of GreenFirst and C$7.9 million was paid through the issuance of a chip offset credit note.
Strategic benefits to GreenFirst
The acquisition of the purchased assets establishes GreenFirst as a significant player in the Canadian forest products industry. The purchased assets include six lumber mills which are located in Chapleau, Cochrane, Hearst and Kapuskasing in Ontario and in Béarn and La Sarre in Québec as well as one newsprint mill located in Kapuskasing, Ont. The purchased assets have an annual production capacity of 755 mmbf and are capable of producing a wide range of forest products used in residential and commercial construction, including SPF lumber, wood chips and by-products. The newsprint mill has an annual production capacity of 205,000 MT/year. Collectively, the purchased assets rank as a top ten producer of lumber in Canada, based on recent publicly available industry rankings.
GreenFirst believes that there are significant operational efficiencies to be gained by optimizing operations and making capital investments, in the future, in the purchased assets. The purchased assets also include the rights to access approximately 3.29 million m3 of guaranteed fibre supply in Ontario and Québec and include a twenty year chip supply agreement with RYAM and established chip supply agreements which will provide steady support and demand for the chips produced by the lumber operations.
“We are excited to announce the closing of this transaction and to begin working to invest in and optimize the lumber mills,” said Rick Doman, chief executive officer of GreenFirst. “Our experienced management team has developed a plan which we believe will allow us to significantly reduce cash operating costs and potentially increase lumber capacity. We also intend to make improvements to the mills’ management structure, sales processes and supply chains which we expect will generate meaningful operational improvements.”
Paul Rivett, chairman of GreenFirst, commented that, “The closing of this transaction is a significant milestone for GreenFirst, representing the culmination of a year of hard work and tremendous effort by all those involved. GreenFirst is now well capitalized to begin the first chapter of its plan to become a premier lumber producer in North America. We would also like to thank our financial partners, Senvest and Blue Torch, and our external advisors, KPMG, Norton Rose Fulbright, NordStar Capital and RBC, for supporting us in this transformative acquisition.”
Environmental, Social, and Governance (ESG) is central to everything GreenFirst does.
GreenFirst makes environmental stewardship a priority through leading sustainable forest management practices, while promoting energy efficiency and carbon reduction through the production of lumber. GreenFirst is also committed to sustainable forest management and to maximizing biodiversity and forest health as part of its operations. GreenFirst’s operations are certified by the Forest Stewardship Council (FSC) (FSC-C167905).
Doman added, “GreenFirst is focused on being a responsible steward of forests and on playing a positive role in the communities that we operate in, through our commitments to sustainability.”