West Fraser to Announces Purchase of Georgia Pacific’s Allendale, South Carolina OSB Mill

West Fraser Timber Co. Ltd. Announced today (10-26-21) that it has entered into agreement to acquire Georgia Pacific’s oriented strand board (OSB) mill located near Allendale, South Carolina for approximately $280 million (USD). The transaction is expected to close following the successful completion of U.S. regulatory review and satisfaction of customary conditions.

The Allendale facility, which initially began producing OSB in 2007, has been idle since late 2019 and has an estimated stated capacity of approximately 760 million square feet (3/8-inch basis). West Fraser intends to invest an estimated $70 million of additional capital to upgrade and optimize the facility in preparation for its restart and this upgrade is anticipated to take approximately nine months to complete.

The mill is expected to directly employ approximately 135 people and be one of the lowest cost mills in the Company’s OSB portfolio after the optimization is complete and the mill has ramped up to full production, a process that typically takes 18-24 months after restart.

In a statement prepared for the announcement West Fraser’s President and CEO, Ray Ferris said, “We look forward to acquiring and upgrading the Allendale mill to make it another component of West Fraser’s low-cost production portfolio. Further, the additional production capability will provide greater operational flexibility across our OSB mill portfolio to meet demand growth for our engineered wood products, including for our specialty and value-added products.”

Mr. Ferris added, “We have the leadership, people, and know-how to execute on the capital and upgrade plan for this mill and expect to be ready for a restart within nine months of the acquisition closing based on current demand conditions.”

West Fraser intends to finance the acquisition with cash on hand. Management will provide an update and further details about the transaction on West Fraser’s third quarter earnings call on October 28, 2021.