Desktop – Leaderboard

Home » Jemi Fibre purchased by CanWel

Posted: March 16, 2016

Jemi Fibre purchased by CanWel

A company holding a large volume of land and timber rights in the East Kootenay, that has been conducting private land logging operations, has been purchased.

Jemi Fibre Corp. (Jemi), a hot topic in the Elk Valley, with some local leaders worried about ‘cut and run’ operations near communities, has been purchased by CanWel Building Materials Group Ltd. (CanWel).

The two companies recently announced that they have entered into a definitive agreement (Arrangement Agreement) whereby CanWel will acquire all of the issued and outstanding common shares of Jemi Fibre (the Transaction), a press release outlined.

Jemi MF27“Pursuant to the Transaction, all of Jemi Fibre’s issued and outstanding common shares will be exchanged for CanWel shares on the basis of 31.13 Jemi Fibre shares for one CanWel share (the Exchange Ratio) and approximately 2.53 million common shares of CanWel will be issued to shareholders of Jemi Fibre.

‘The Exchange Ratio implies consideration of $0.136 per Jemi Fibre common share, based on the closing price of CanWel’s common shares on the Toronto Stock Exchange (TSX) on March 8, representing a 29% premium to the closing price of Jemi Fibre on March 8. The implied equity value of Jemi Fibre is approximately $11 million. CanWel also expects to assume total indebtedness of approximately $25 million and refinance approximately $50 million of Jemi Fibre’s senior loans through the ‘Offering’ and new senior term loans committed by CanWel’s existing lenders,” the press release stated.

Jemi Fibre is a vertically-integrated forest products company that operates primarily in British Columbia and Saskatchewan. Jemi Fibre owns approximately 136,000 acres of private timberlands, strategic crown licenses and tenures, log harvesting and trucking operations, several post and pole peeling facilities, two pressure-treated specialty wood production plants, and one specialty saw mill. The transaction will result in Jemi Fibre becoming a wholly-owned subsidiary of CanWel and will combine Jemi Fibre’s operations with CanWel’s well-established Canadian platform.

“The transaction further solidifies our position in Canada as a leading manufacturer and distributor of building material and related products. The acquisition of vast timberland holdings and experienced operators strengthens our supply chain, guaranteeing access to raw material supply for our company. We also forge stronger relationships with our existing suppliers, who are customers of Jemi Fibre,” stated Amar Doman, Chair and CEO of CanWel in a press release.

“We are very pleased to deepen our presence in Western Canada, and look forward to welcoming our new colleagues to the CanWel family and accelerating our offerings, presence and overall growth together. We are also very pleased to announce that The Futura Corporation will be participating on the Offering in the amount of $6 million, alongside other insiders.”

Jemi’s Mike Jenks added: “We are extremely pleased to be joining the CanWel organization to establish a more stable operating platform. Joining CanWel allows us to be part of a larger entity with deep and effective sales and distribution channels, operating expertise and a strong balance sheet. We have worked hard building a highly strategic, valuable and integrated collection of assets, and look forward to continuing our company’s vision as part of CanWel.”

The existing management team will remain in place, with Jenks, current Chair and CEO of Jemi Fibre, entering into a long-term agreement with CanWel and leading the division going forward.

The refinancing of Jemi Fibre’s senior loans is expected to reduce its interest costs by approximately $7 million per annum. Jemi Fibre also has substantial tax losses that could be available to reduce taxable income in future periods.

Jemi purchased 49,500 ha of East Kootenay land and timber rights from Tembec for $35 million in 2014.

The company also purchased WoodEx Industries Ltd. of Edgewater, Kootenay Wood Preservers Ltd./Prairie Holdings Inc. of Cranbrook at that time. That land purchase followed a Sept. 30, 2013 purchase of approximately 1,875 hectares of land for a price of $4.2 million from Tembec.

For more:

Jemi Fibre Corp.

CanWel Building Materials Group Ltd.


Article Share