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Interfor to Acquire Chaleur Forest Products in New Brunswick, Canada

CANADA (News release) -- Interfor Corporation announced that it has reached an agreement with an affiliate of the Kilmer Group ("Kilmer") to acquire 100% of the equity interests in the entities comprising Chaleur Forest Products ("Chaleur").

Chaleur owns two modern and well-capitalized sawmill operations located in Belledune and Bathurst, New Brunswick, with a combined annual lumber production capacity of 350 million board feet. Chaleur also operates a woodlands management division based out of Miramichi that manages approximately 30% of the total Crown forest in New Brunswick. This division provides a secure source of fibre supply for the sawmill operations as well as a stable, long-term stream of cash flow from third-party log sales, licence management fees and silviculture activities.

The purchase price is C$325 million, on a cash and debt free basis, which includes approximately C$31 million of net working capital. In addition, Interfor will assume Chaleur's countervailing ("CV") and anti-dumping ("AD") duty deposits at closing, for consideration equal to 55% of the total deposits on an after-tax basis. As of August 31, 2022, Chaleur had paid cumulative CV and AD duties of approximately US$82 million.

"This acquisition is consistent with Interfor's growth-focused strategy as a pure-play lumber producer and builds upon our recent expansion into Eastern Canada with further geographic diversity" said Ian Fillinger, President & Chief Executive Officer. "New Brunswick has a secure, high quality and competitive log supply, a supportive investment environment and proximity to key eastern markets. These are well-managed and efficient mills with a desirable SPF product mix, which fit extraordinarily well within our existing portfolio. Chaleur's strong management team further bolsters our core lumber strength and we look forward to welcoming the team into our company."

On a proforma basis, Interfor's total annual lumber production capacity will increase to 5.1 billion board feet, of which 44% will be in the US South, 19% in Eastern Canada, 15% in the US Northwest, 15% in British Columbia and 7% in Atlantic Canada.

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