Domtar Corporation announced that it has entered into an agreement to sell its forest products business to EACOM Timber Corporation for $80 million, plus elements of working capital estimated at $30 to $40 million. Domtar is to receive 19 percent of the proceeds in shares of EACOM. The transaction is expected to close at the end of the second quarter of 2010.
“Our forest products employees have demonstrated tremendous resilience throughout the years. Their sustained efforts to reduce costs and pursue the continuous improvement of operations have positioned the business well for the recovery,” said John D. Williams, CEO of Domtar, in a press release. “EACOM will establish its headquarters in Montreal… and will become one of the largest publicly traded lumber producers in Eastern Canada.”
The transaction includes five operating sawmills: Timmins, Nairn Centre and Gogama in Ontario, and Val-d’Or and Matagami in Quebec; as well as two non-operating sawmills: Ear Falls in Ontario and Ste-Marie in Quebec.
The sawmills have approximately 3.5-million cubic metres of annual harvesting rights and a production capacity of close to 900-million board feet. Also included in the transaction is the Sullivan remanufacturing facility in Quebec and Domtar’s interests in two investments: Anthony-Domtar Inc. and Elk Lake Planing Mill Limited.
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