CPE News (4/12/2021) – Rayonier Advanced Materials Inc. (NYSE: RYAM) and GreenFirst Forest Products Inc. (TSX-V: GFP) have entered into a binding asset purchase agreement pursuant to which Rayonier has agreed to sell all of its lumber and newsprint facilities and related assets located in Ontario and Québec to GreenFirst for an expected purchase price of approximately US $214 million, including inventory on hand at the time of closing, which is payable approximately 85% in cash, 15% common shares of the capital of GreenFirst.
Rayonier will retain all of the cash generated by the purchased assets plus all softwood lumber duties, including earned interest on the duties, paid to the U.S. Department of Commerce through the closing date. Rayonier estimates the duties to be approximately US $110 million at the time of closing.
GreenFirst Forest Products Inc., formerly Itasca Capital Ltd., currently has one main asset, being the Kenora sawmill in Kenora, Ontario, which Itasca Capital acquired for CDN $11.5 million in October 2020.
With total assets of CDN $13.4 million (as of September 30, 2020), GreenFirst intends to fund the acquisition in equity and debt, consisting of a backstopped rights offering for CDN $148 million or US $75 million, and a US $120 million senior secured term credit facility from a New York-based investment fund.
Senvest has, pursuant to a binding commitment, agreed to purchase, all subscription receipts that are not otherwise subscribed for under the rights offering such that at least U S$75 million of subscription receipts are issued.
NordStar Capital is serving as transactional advisor. Paul Rivett, Incoming Chairman of GreenFirst Forest Products and Chairman of NordStar Capital, invested in Itasca Capital’s CDN $5 million private placement in October 2020.
The purchased assets consist of six lumber mills which are located in Chapleau, Cochrane, Hearst and Kapuskasing in Ontario and in Béarn and La Sarre in Québec as well as one newsprint mill located in Kapuskasing, Ontario. The assets were part of Tember Inc. which Rayonier acquired in November 2017 for approximately US $390 million in a combination of cash and Rayonier stock.
Since then Raynoier has sold the resins business for US $17 million in September 2018 and Matane, Quebec pulp mill to Sappi Limited for US $175 million in November 2019.
photo credit: Rayonier
News Release
Rayonier Advanced Materials Announces Strategic Sale of its Lumber and Newsprint Businesses to GreenFirst Forest Products for approximately $214 million
April 12, 2021 08:30 AM Eastern Daylight Time
JACKSONVILLE, Fla. & VANCOUVER, British Columbia–(BUSINESS WIRE)–Rayonier Advanced Materials Inc. (NYSE: RYAM) (“RYAM”), a global leader in high purity cellulose pulp, and GreenFirst Forest Products Inc. (TSXV: GFP) (“GreenFirst”), a Canadian lumber company, announced today that the parties have entered into a binding asset purchase agreement (the “Agreement”) pursuant to which RYAM has agreed to sell all of its lumber and newsprint facilities and related assets located in Ontario and Québec. (the “Purchased Assets”) to GreenFirst for an expected purchase price of approximately US$214 million including inventory on hand at the time of closing (the “Purchase Price”) which is payable approximately 85% in cash, 15% common shares of the capital of GreenFirst. In addition, a chip offset credit note will be issued to RYAM by GreenFirst in the amount of CDN$7.9 million, which may be set off against amounts owing to GreenFirst for chip purchases, equally over the next 5 years. Notably, RYAM will retain all of the cash generated by the Purchased Assets plus all softwood lumber duties, including earned interest on the duties, paid to the U.S. Department of Commerce through the closing date. RYAM estimates the duties to be approximately $110 million at the time of closing.
The Purchased Assets:
include six lumber mills which are located in Chapleau, Cochrane, Hearst and Kapuskasing in Ontario and in Béarn and La Sarre in Québec as well as one newsprint mill located in Kapuskasing, Ontario.
produced 604 million board feet in 2020 with a combined nameplate capacity of 755 million board feet and are capable of producing a wide range of forest products used in residential and commercial construction, including dimensional lumber, wood chips and by-products.
include the lumber and newsprint mills as well as certain real property, machinery, inventory, permits, licenses and other related assets.
exclude accounts receivable and accounts payable.
RYAM and GreenFirst have also agreed to a 20-year residual fiber supply agreement to meet the continued fiber sourcing needs of RYAM’s High Purity Cellulose, High Yield and Paperboard operations in Temiscaming, Québec. The closing of the Agreement, which is expected to occur in the second half of 2021, but not prior to July 31, is subject to customary closing conditions, including receipt of regulatory approvals, the transfer of forestry licenses and the approval of the TSX Venture Exchange.
“This is a tremendous opportunity,” said Paul Rivett, Incoming Chairman of GreenFirst Forest Products and Chairman of NordStar Capital. “This represents a large step forward to our previously announced strategy of building GreenFirst as focused on lumber, newsprint and forestry investments. We are excited to be expanding our manufacturing footprint through this investment and to beginning a new chapter with all of Rayonier Advanced Materials’ sawmill and forestry employees in Ontario and Québec.”
“The sale of the lumber and newsprint businesses allows us to divest non-core assets at an attractive valuation and positions Rayonier Advanced Materials to further invest in the earnings growth of our core High Purity Cellulose assets and its biofuture while also reducing overall debt. Through our ongoing ownership in GreenFirst, we expect to participate in further upside while maintaining optionality to monetize at an appropriate time,” said Paul G. Boynton, President and Chief Executive Officer of Rayonier Advanced Materials. “I want to personally thank the lumber and newsprint management team and employees for their dedicated work for Rayonier Advanced Materials. We wish them well as they begin a new chapter with GreenFirst.”
For Rayonier Advanced Materials, BofA Securities is serving as financial advisor and McCarthy Tétrault LLP is serving as legal counsel. For GreenFirst, RBC Capital Markets is serving as financial advisor, NordStar Capital is serving as transactional advisor, Norton Rose Fulbright Canada LLP is serving as legal counsel and KPMG Transaction Services assisted with due diligence.
GreenFirst shareholders are directed to GreenFirst’s standalone press release issued today, which provides additional operational and financial information concerning the transaction.
About Rayonier Advanced Materials
Rayonier Advanced Materials is a global leader of cellulose-based technologies, including high purity cellulose specialties, a natural polymer commonly found in filters, food, pharmaceuticals and other industrial applications. The Company also manufactures products for lumber, paper and packaging markets. With manufacturing operations in the U.S., Canada and France, Rayonier Advanced Materials employs approximately 4,000 people and generates approximately $1.7 billion of revenues. More information is available at www.rayonieram.com.
About GreenFirst Forest Products
GreenFirst is a forest-first business, focused on environmentally sustainable forest management and lumber production. We believe that sustainable forest planting and harvesting, coupled with the long-term green advantage of lumber, provide GreenFirst with significant cyclical and secular advantages in building products. GreenFirst’s long-term pursuit is to be a global leader in environmentally sustainable lumber. For more information, please visit: www.gffp.ca
Neither TSXV nor its Regulation Services Provider (as that term is defined in policies of the TSXV) accepts responsibility for the adequacy or accuracy of this news release.
Contacts
RYAM Media
Ryan Houck
904-357-9134
RYAM Investors
Mickey Walsh
904-357-9162
GFP Media & Investors
Jonathan Lowenstein
416-642-6430