Domtar sells forest products business
June 26, 2007 By Pulp & Paper Canada
Domtar is selling its forest products business to newly created Conifex for roughly $285. The company confirmed the…
Domtar is selling its forest products business to newly created Conifex for roughly $285. The company confirmed the sale will allow it to focus on paper production.
Included in the package are the Ear Falls, Nairn Centre, Timmins and White River sawmills in Ontario and the Grand-Remous, Lebel-sur-Quevillon, Malartic, Matagami, Ste-Marie and Val dOr sawmills in Quebec, as well as the Sullivan manufacturing facility, which is also in Val dOr. Combined, the sawmills have approximately 4.8 million m3 of annual harvesting rights and a production capacity of roughly 1.1 billion board ft.
In May, Domtar warned of possible layoffs after reporting a first quarter profit of US$49 million, which came on the heels of an announcement of a decision to merge with the paper business of Weyerhaeuser earlier this year.
The sale is getting a positive spin from analysts, however. According to a recent report by Forestweb, Stephen Atkinson, an analyst with BMO Capital Markets wrote in a research note that the deal was positive for Domtar, as its forest products business reported an operating loss in the last six months of 2006. A Reuters report confirmed him as saying, we consider the sale positive given that the company receives cash for unprofitable assets.
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