Interfor Corporation announced that it has reached an agreement with The Price Companies, Inc. to acquire Price’s sawmill in Monticello, Arkansas. The Monticello Sawmill is located in Southern Arkansas, approximately 90 miles southeast of Little Rock.
For the last 12 months ended March 31, 2015, the Monticello Sawmill produced approximately 75 million board feet of lumber. In addition, the mill has a number of operational and capital investment initiatives underway, including the construction of a continuous dry kiln that is expected to be completed in the third quarter of 2015. These initiatives should increase the mill’s near-term production to more than 100 million board feet per year and provide for drying capacity of approximately 150 million board feet per year.
As a result of this transaction, Interfor’s total annual lumber capacity will increase to 3.2 billion board feet, reinforcing its position as the fastest growing lumber company in the world. The Company’s lumber capacity in the US Southeast will total 1.3 billion board feet, representing more than 40% of the Company’s total pro forma capacity.
“This transaction is another illustration of our strategy to grow in regions with strong timber baskets and access to important lumber markets,” said Duncan Davies, Interfor’s President and CEO. “The Monticello Sawmill fits these criteria, as well as having significant upside from initiatives that are underway and on the drawing board.” The purchase price parameters are consistent with Interfor’s recent acquisitions in the US South. The transaction is expected to be accretive to Interfor’s results immediately on closing.
The purchase price for the Monticello Sawmill will be US$29.255 million, plus closing log and lumber inventories, and adjustments related to Price’s pre-closing capital expenditure payments for designated capital projects. As of March 31, 2015, Interfor had a Net Debt to Invested Capital ratio of 34%. The Company has additional liquidity under its bank credit facilities in excess of $170 million and will draw on those facilities to fund the transaction. The completion of the transaction is subject to customary conditions and is expected to close in June 2015.