Rayonier Advanced Materials vows to ‘come to bat’ for Tembec
MONTREAL — Rayonier Advanced Materials will “come to bat” to protect the interests of Tembec in the cross-border battle over softwood lumber, the head of the Florida-based company said Thursday after announcing a friendly takeover of the Quebec forestry firm.
The deal, valued at $807 million US including debt, would see the merged entity keep a Canadian headquarters in Montreal, with the main corporate office in Jacksonville, Fla.
“We’ll be supportive of whatever works best for Quebec, Ontario and our position here,” Paul Boynton, chairman and CEO of Rayonier Advanced Materials, told a news conference in Montreal after the transaction was announced.
The transaction comes as Tembec, like other Canadian forestry companies, finds itself in the crosshairs of the U.S. over softwood lumber. Last month, it and other firms were slapped with a 19.88 per cent retroactive preliminary duty on softwood shipments south of the border.
The takeover won’t affect that countervailing duty. But Tembec CEO James Lopez said the size and liquidity of Rayonier Advanced Materials will help cover the costs of paying it while also forging ahead with planned capital investments, including $136 million over four years in Quebec.
Tembec is less exposed to the U.S. softwood battle than it was a decade ago the last time the dispute erupted after selling its two mills in B.C. and three in Quebec.
Still, it’s not expected to emerge from this latest standoff completely unscathed. Earlier this month, Lopez said he didn’t think job losses were in the offing — at least in the short term — though that could change if prices for lumber fall during the seasonal end to the home construction season.
Forest products would account for about 16 per cent of the combined company’s $2 billion US in annual sales and 3.2 per cent of its operating profit, Tembec and Rayonier Advanced Materials said. Tembec’s 755 million board feet of production capacity accounts for less than three per cent of total Canadian output of softwood lumber.
Boynton said Tembec made for an attractive acquisition because it complements Rayonier Advanced Materials’ specialty cellulose business and it allows it to enter new operations like packaging, forest products, newsprint and pulp.
He repeatedly vowed to maintain Tembec’s existing operations and jobs despite seeking to cut $50 million US in costs over three years.