Stella-Jones to Acquire Tangent Rail Corporation


Montréal, Québec, Canada, 15 December 2009 – Stella-Jones Inc. (TSX: SJ) has signed a nonbinding letter of intent to acquire Tangent Rail Corporation, a provider of wood cross tie supply chain services to the railroad industry. This acquisition will expand Stella-Jones’ capabilities within the U.S. railway tie industry and provide the company with creosote manufacturing operations. Tangent’s sales for the year ended 31 December 2009, are expected to reach approximately USD 175 million.

The transaction is expected to close before the end of the first quarter of 2010 and is subject to antitrust clearance in the United States, as well as customary closing conditions, including entry into a definitive purchase agreement, regulatory approvals, and satisfactory due diligence. Further details on the transaction will be provided once preliminary closing conditions have been satisfied. The letter of intent provides Stella-Jones with the exclusive right to negotiate and execute a definitive purchase agreement during the period leading up to the termination date.

Tangent serves the railroad industry with treated wood products, mainly railway ties, through facilities located in Warrior, Alabama; Terre Haute and Winslow, Indiana; Alexandria, Louisiana; and McAlisterville, Pennsylvania. The wood preservative, creosote, is produced at its distilleries in Terre Haute, Indiana, and Memphis, Tennessee. Lifecycle solutions, consisting of tie pickup and tie disposal, are carried out at three facilities in Alabama, Minnesota, and North Carolina.

“The acquisition of Tangent Rail Corporation would considerably enhance our offerings to the U.S. railroad industry, while also extending our geographical reach,” said Brian McManus, president and chief executive officer of Stella-Jones. “Tangent enjoys a solid market reputation and possesses high-quality assets, which should facilitate its integration into our network if the transaction is completed.”

The company plans to finance the acquisition through a combination of equity and debt, subject to prevailing market conditions.

Stella-Jones Inc. (TSX: SJ) is a leading North American producer and marketer of industrial pressure-treated wood products, specializing in the production of railway ties and timbers, and wood poles supplied to electrical utilities and telecommunications companies. The company also provides treated consumer lumber products and customized services to lumber retailers and wholesalers for outdoor applications. Other products include marine and foundation pilings, construction timbers, highway guardrail posts, and treated wood for bridges. The company’s common shares are listed on the Toronto Stock Exchange.