Domtar sale of forest products business a done deal; update on fire at Tembec's Chetwynd pulp mill

The Domtar sale of its forest products business to EACOM Timber is now officially a done deal, making EACOM a much bigger player on the lumber side of the business.

As previously announced, EACOM acquired the business for $80 million plus working capital of $46.5 million. Domtar received 19% of the proceeds in shares of EACOM, giving Domtar an ownership interest of approximately 11.74% interest in EACOM.

The transaction includes five operating sawmills: Timmins, Nairn Centre and Gogama in Ontario, and Val-d'Or and Matagami in Quebec; as well as two non-operating sawmills: Ear Falls in Ontario and Ste-Marie in Quebec. The sawmills have approximately 3.5 million cubic metres of annual harvesting rights and a production capacity of close to 900 million board feet. Also included in the transaction is the Sullivan remanufacturing facility in Quebec and Domtar's interests in two investments: Anthony-Domtar Inc. and Elk Lake Planing Mill Limited.

On another note, Tembec has provided an update regarding a fire at the company’s high yield pulp mill in Chetwynd, B.C. The fire started on Wednesday June 30, in the late afternoon. Emergency procedures were followed, and thankfully there were no injuries to any employees.

True to the community spirit of small towns, seems like everyone was pitching to fight the fire. In addition to the Chetwynd Volunteer Fire Brigade and employees, fire fighting support from the Fort St. John and Dawson Creek fire departments was received, as well as from the BC Ministry of Forests. Tembec wanted to acknowledge the timely and diligent response of these organizations with gratitude.

The fire and related damage is primarily concentrated in the log storage and chip pile area of the mill site. There was also some damage to the scales, chip receiving and unloading equipment, chip conveyors and related electrical services.

Assessments by mill personnel and outside resources have indicated that damage to the pulp production area of the mill is relatively minor. In terms of direct loss, it is estimated that roughly 40,000 cubic metres of fibre (chips and logs) were destroyed. While the chip and log piles continue to smolder, the situation is considered well under control.

Site personnel and outside resources are already beginning their work at the mill to address electrical and mechanical repairs, with procurement and delivery of necessary materials and equipment already well underway. Current estimates are that the mill will be out of service for between 14 and 18 days from the date of the fire, resulting in lost production of approximately 10,000 tonnes.