Canfor shareholders are to vote next month on a proposal that would place the company, and the Houston area’s largest employer, entirely in the hands of a Jimmy Pattison-owned company and remove it from public trading on the stock market.
Great Pacific Capital Corporation already owns 51 per cent of Canfor and the $980 million deal, if approved, would give it the remaining shares.
A Canfor release Oct. 28 indicated that an evaluation committee and the company’s board of directors concluded the sale, in the words of committee chair Conrad Pinette, was “the correct path forward for Canfor, Canfor employees, communities and shareholders.”
The company made no direct statement to its employees regarding the sale.
An evaluation determined the fair market value of Canfor’s shares was between $14.24 to $19.38 per share and the offer to purchase is $16 a share.
Canfor, as with other forest companies operating in B.C. has put its plants through temporary closures over the past year in response to market conditions and operating costs.
In Houston, its sawmill is closed each Friday and that will continue into the foreseeable future, a company official said last week.
“Ongoing industry headwind in the forestry sector, including high log costs due to supply constraints and significant declines in benchmark price for both lumber and pulp, have had negative impacts on Canfor’s current financial results,” the Oct. 28 release stated.
“It is unknown how long the challenging industry conditions may persist and uncertain when financial results may improve as a result of capacity rationalization in British Columbia.”
The effect is a “volatility in the trading price of Canfor shares” with the proposal providing “immediate and certain value,” the release continued.
Canfor has undertaken moves to diversify its financial base, including buying a majority 70 per cent stake in the Vida Group, a Swedish forestry company, in a deal that concluded early this year.
Vida has nine sawmills in southern Sweden and is that country’s largest privately-owned sawmill company with an annual production of 1.1 billion board feet.