GreenFirst declares reduction in lumber duty deposit rate
August 1, 2023 By CFI Staff
GreenFirst Forest Products has announced the reduction in its softwood lumber duty deposit rate from 20.23 per cent to 7.99 per cent, which is expected to take effect on or about August 2.
This official change by the United States Department of Commerce (DoC) results from the final determination of the fourth administrative review of softwood lumber imports from Canada to the U.S. for the year 2021.
Since August 28, 2021, upon the acquisition by GreenFirst of the Rayonier sawmills, the DoC assessed GreenFirst’s duty deposit rate on softwood lumber imports to the U.S. at a significantly higher rate than its Canadian peers. The net effect of the DoC’s decision has resulted in a reduction in GreenFirst’s earnings and a corresponding overpayment of softwood lumber duties in relation to other Canadian exporters.
“We believe the amount of the overpayment up to the end of June is approximately US$21 million; however, at this time we are not certain when this reimbursement may occur. Beyond this overpayment, GreenFirst has an additional $51 million of duties on deposit pending a broader industry settlement,” the company said in a statement.
The impact of this reduction in duties, both with respect to the potential release of funds on deposit and on GreenFirst’s future earnings, will be discussed in greater detail on GreenFirst’s forthcoming second quarter earnings call.
“[The] announcement is welcome news for GreenFirst, as the reduced softwood lumber duty rate will significantly improve our earnings and cash flow profile,” said Paul Rivett, chair of the board. “We will continue to advocate for our shareholders to see a timely return of the duties overpayment and for a settlement of all remaining duty deposits.”
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