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Rayonier to sell Ont. newsprint mill, six lumber facilities to GreenFirst

Rayonier Advanced Materials (RYAM) has agreed to sell its newsprint and lumber facilities in Ontario and Quebec to GreenFirst Forest Products, a Canadian lumber company.

The assets include the newsprint mill in Kapuskasing, Ont., as well as six lumber mills located in Chapleau, Cochrane, Hearst and Kapuskasing in Ontario, and in Béarn and La Sarre in Quebec.

Also included are certain real property, machinery, inventory, permits, licenses and other related assets. The agreement excludes accounts receivable and accounts payable.

The lumber mills produced 604 million board feet in 2020 with a combined nameplate capacity of 755 million board feet, and manufacture forest products used in residential and commercial construction, including dimensional lumber, wood chips and by-products.

The purchase price is approximately US$214 million including inventory on hand at the time of closing, which will translate to about 85 per cent in cash and 15 per cent in common shares of the capital of GreenFirst.

In addition, a chip offset credit note will be issued to RYAM by GreenFirst in the amount of CDN$7.9 million, which may be set off against amounts owing to GreenFirst for chip purchases, equally over the next five years.

“The sale of the lumber and newsprint businesses allows us to divest non-core assets at an attractive valuation and positions Rayonier Advanced Materials to further invest in the earnings growth of our core high-purity cellulose assets and its biofuture while also reducing overall debt. Through our ongoing ownership in GreenFirst, we expect to participate in further upside while maintaining optionality to monetize at an appropriate time,” says Paul G. Boynton, president and chief executive officer of Rayonier Advanced Materials, in a statement.

“I want to personally thank the lumber and newsprint management team and employees for their dedicated work for Rayonier Advanced Materials. We wish them well as they begin a new chapter with GreenFirst.”

RYAM and GreenFirst will also enter a 20-year residual fibre supply agreement to meet the continued fibre sourcing needs of RYAM’s high-purity cellulose, high-yield and paperboard operations in Temiscaming, Que.

“This is a tremendous opportunity,” says Paul Rivett, incoming chair of GreenFirst Forest Products and chair of NordStar Capital. “This represents a large step forward to our previously announced strategy of building GreenFirst as focused on lumber, newsprint and forestry investments. We are excited to be expanding our manufacturing footprint through this investment and to beginning a new chapter with all of Rayonier Advanced Materials’ sawmill and forestry employees in Ontario and Quebec.”

RYAM will retain all of the cash generated by the purchased assets plus all softwood lumber duties, including earned interest on the duties, paid to the U.S. Department of Commerce through the closing date. RYAM estimates the duties to be approximately $110 million at the time of closing.

The transaction is expected to close in the second half of 2021, after Jul. 31.