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Domtar to sell lumber business to EACOM


March 29, 2010
By Pulp & Paper Canada

Domtar Corporation has agreed to sell its forest products business to EACOM Timber Corporation for $80 million…

Domtar Corporation has agreed 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 will receive 19% of the proceeds in shares of EACOM. The transaction is expected to close at the end of the second quarter of 2010, subject to material consents and customary closing conditions.
All Domtar forest products employees, and its management team — currently led by Jean-François Mérette — will be transitioning to EACOM. EACOM will establish its headquarters in Montreal, Que.
EACOM is a new entrant in the forest products sector, but with this acquisition 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 meters 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.
“We recognize that customers have choices in wood products suppliers, and we will work hard to secure their business, notably through our continued commitment to FSC-certification,” stated Rick Doman, president and CEO of EACOM Timber Corporation.
Domtar president and CEO John D. Williams says, “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.
EACOM also owns one idle mill in Big River, Saskatchewan, which it acquired at the beginning of 2010.
Domtar Corporation is an integrated manufacturer and marketer of uncoated freesheet paper, and is also a manufacturer of papergrade, fluff and specialty pulp.

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