EACOM Timber to Acquire Domtar's Forest Products Business

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EACOM Timber Corp., Vancouver, B.C., Canada, this week said it will acquire the Forest Products business of Domtar Corp., Montreal, Que., Canada. The purchase will be funded out of a $145 million private placement that has closed in escrow pending completion of the acquisition. EACOM will acquire seven sawmills and an equity interest in an eighth sawmill, all located in Eastern Canada. The mills are Timmins, Nairn Centre, Gogama, and Ear Falls in Ontario and Val-d'Or, Ste-Marie, and Matagami in Quebec. The equity interest is in the Elk Lake sawmill located in Ontario. The assets will include the transfer or grant of tenures to enable production at the mills. The sawmills in Ear Falls, Ontario, and Ste-Marie, Quebec, are currently idled.

The acquisition price is set at $80 million plus the value of working capital acquired, estimated to be between $30 million to $40 million. Some 19% of the purchase price will be paid to Domtar as shares of EACOM. The acquisition is expected to be finalized at the end of June, at which time Domtar will appoint a director to EACOM's board. The transfer is subject to obtaining certain consents, including the transfer of timber allocations and other standard conditions. The sawmills transferred as part of the transaction represent approximately 3.5 million cubic meters of annual logging rights and a production capacity of close to 900 million board feet. Also included in the transaction are the Sullivan remanufacturing facility in Quebec and Domtar's investment in Anthony-Domtar Inc.