All subjects
Biochemicals & Materials

GreenFirst to acquire Rayonier Advanced Materials’ Canadian assets

US-headed forest industry major Rayonier Advanced Materials Inc.(RYAM) has announced that it has entered into a binding asset agreement to sell all of its lumber and newsprint facilities and related assets located in Ontario (ON) and Québec (QC), Canada to GreenFirst Forest Products Inc. (GreenFirst).

Rayonier Advanced Materials Inc.(RYAM) has entered into a binding asset agreement to sell all of its lumber and newsprint facilities and related assets located in Ontario (ON) and Québec (QC) to GreenFirst Forest Products Inc. Rayonier AM Canada Industries Inc. (RYAM) Temiscaming specialty pulp mill in QC is not included (photo courtesy RYAM).

Headquartered in Jacksonville, Florida (FL), Rayonier Advanced Materials (RYAM) is a leader of cellulose-based technologies, including high purity cellulose specialties, a natural polymer commonly found in filters, food, pharmaceuticals, and other industrial applications.

With manufacturing operations in the United States (US), Canada, and France, the company also manufactures products for lumber, paper, and packaging markets.

According to a statement, RYAM and GreenFirst Forest Products Inc. (GreenFirst), a newly formed Canadian forest products company headquartered in Toronto, Ontario (ON), have entered into a binding asset purchase agreement pursuant to which RYAM 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.

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 CEO of Rayonier Advanced Materials.

The agreement includes inventory on hand at the time of closing which is payable approximately 85 percent in cash, 15 percent 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 CA$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 US Department of Commerce through the closing date. RYAM estimates the duties to be approximately US$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 (≈ 1.43 million m3 ) in 2020 with a combined nameplate capacity of 755 million board feet and (≈ 1.78 million m3) 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.

Fibre supply agreement for RYAM Temiscaming

RYAM and GreenFirst have also agreed to a 20-year residual fiber supply agreement to meet the continued fiber sourcing needs of RYAM’s specialty pulp mill operations in Temiscaming, QC.

The closing of the agreement, which is expected to occur in the second half of 2021, but not prior to July 31, 2021, 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. 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 begin a new chapter with all of Rayonier Advanced Materials’ sawmill and forestry employees in Ontario and Québec, said Paul Rivett, Incoming Chairman of GreenFirst Forest Products and Chairman of NordStar Capital.

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.

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, ended Paul G. Boynton.

Most read on Bioenergy International

Get the latest news about Bioenergy

Subscribe for free to our newsletter
Sending request
I accept that Bioenergy International stores and handles my information.
Read more about our integritypolicy here