Interfor Announces Agreement to Purchase New Brunswick-Based Chaleur Forest Products

Interfor Corporation announced today (10-3-22) that it has reached an agreement with an affiliate of the Kilmer Group to acquire 100% of the equity interests in the entities comprising Chaleur Forest Products.

Chaleur owns two modern sawmill operations located in Belledune and Bathurst, New Brunswick, with a combined annual lumber production of 350 million board feet. Chaleur also operates a woodlands management division based out of Miramichi that manages approximately 30% of the total Crown forestlands in New Brunswick. The Miramichi division provides a secure source of fiber supply for the sawmill operation as well as a stable, long-term stream of cash flow from third-party log sales, license management fees, and silviculture activities. None of Chaleur’s facilities were impacted in any way by Post-tropical Cyclone Fiona.

According to the press release, the purchase price is $325 million (CAD) on a cash and debt-free basis, which includes approximately $31 million of new working capital. In addition, Interfor will assuming Chaleur’s countervailing (“CV”) and antidumping (“AD”) duty deposits at closing, for consideration equal to 55% of the total deposit on an after-tax basis. As of August 31, 2022, Chaleur had paid cumulative CV and AD duties of approximately $82 million (USD).

Interfor intends to finance the acquisition with a combination of cash on hand and its existing credit facilities. The completion of the acquisition is subject to Canadian and US regulatory reviews and customary conditions for a transaction of this kind, and it is expected to close in 2022Q4.