Conifex to Transition to Two Shifts at Its BC Sawmill

On Thursday, Conifex Timber Inc. announced that it has amended and restated its existing credit agreement with PenderFund Capital Management Ltd.

The restated agreement increases the aggregate principal amount of the secured term loan provided thereunder to up to $41 million, of which $5 million is available immediately, and the remaining $11 million is subject to completion of financial diligence.

The loan continues to have a term of 5 years from original issuance and is substantially on the same terms, including the same annual interest rate. The loan was advanced in lieu of Conifex’s consideration of a working capital facility to fund ongoing working capital requirements.

In a statement accompanying the announcement, Conifex Chairman and CEO Ken Shields said:

“The additional borrowings will be used to fund a build-up in sawlog inventories to support our transition to a two-shift operation at our sawmill complex, effective January 6, 2025. … The benefits of spreading our fixed costs over a larger base coupled with additional product sales are expected to lower our cash costs and boost the operating cash flow we expect to achieve in the first quarter of 2025 from what we presently achieve on a one-shift basis.”

The decision to move to a two-shift operation was based on a steadily improving backdrop for lumber prices, as evidenced by the 18% improvement in cash prices for Spruce Pine Fir benchmark lumber prices in 2024Q4 relative to those in 2024Q3.