NASDAQ,
PUBLISHED
OCT 26, 2021 9:13AM EDT,
(RTTNews) – West Fraser Timber Co. Ltd. (WFG, WFG.TO), a Canadian forestry company, announced on Tuesday that it would acquire Georgia Pacific owned oriented strand board or OSB mill, located near Allendale, South Carolina for about $280 million in cash.
The total investment for the Allendale acquisition is expected to be at a significant discount to the costs of an equivalent greenfield OSB mill while requiring a shorter time to initial production. Based on West Fraser’s latest internal analysis, the returns of this mill acquisition and investment are expected to be commensurate with those for other capital projects of similar magnitude.
The Quesnel-headquartered West Fraser intends to invest an estimated $70 million of additional capital to upgrade and optimize the facility in preparation for its restart. The upgradation process is anticipated to take approximately nine months to complete, the acquirer said in a statement.
The 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.
The site, which is currently under the ownership of the Atlanta-based pulp and paper manufacturer Georgia Pacific, is expected to directly employ around 135 people.
West Fraser sees the site as one of the lowest cost mills in its 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.
The Allendale acquisition allows the acquirer to create a value by deploying its expertise at successfully reinvesting in and restarting idled OSB mills. After modernization, the Allendale facility will enhance the firm’s OSB portfolio with its attractive location in the U.S. South where fibre is abundant and low-cost, West Fraser noted.