A Canadian forest products company, Interfor Corporation, announced late Thursday it is buying four sawmills, including mills in Tacoma and Longview, from privately held Simpson Lumber Co.
The sawmills’ sale is the second major sale for Simpson Investment Co., the lumber company’s parent. Simpson Investment last year sold the company’s Tacoma kraft paper mill to Norcross, Georgia’s RockTenn.
The Interfor sale includes two mills in the Southeast, one in Meldrim, Georgia and the other in Georgetown, South Carolina.
Interfor said it paid $94.7 million for the mills plus future contingent payments based on the Tacoma mill’s earnings before interest, taxes and depreciation. Those contingent payments would be a minimum of $10 million.
The sawmills will add 30 percent to Interfor’s capacity and raise the proportion of its U.S. lumber production from 57 percent to 67 percent of the company’s total. The four mills have a combined capacity of 750 million board feet of lumber annually. Their production this year is expected to total 550 million board feet.
The sale does not include a third Simpson Washington sawmill in Shelton. Karen Brandt, a spokeswoman for Interfor, said the Shelton sawmill didn’t fit in Interfor’s strategic plan to increase its U.S. production.
Interfor said in a news release it has plans to improve the productivity of the Tacoma sawmill, built by Simpson 14 years ago. The plant earlier this year employed 142 workers. Simpson has invested $90 million in the mill over the years, and it is in the midst of a $5 million upgrade project at the mill.
Simpson had placed its lumber operations on the sale block earlier this year and was soliciting offers from potential buyers. Simpson did not seek to sell its door plant at McCleary.
Brandt said the company plans to finalize the sale after obtaining regulatory approvals sometime in the first quarter next year. The sale includes a contract for the Simpson mills to provide wood chips to the RockTenn paper mill in Tacoma for seven years.
In the next few weeks, Interfor will be meeting with employees of the existing mills, explaining its intentions and asking them to reapply for their jobs if they intend to continue working at the mills. The company also will be communicating with the union that represents those workers. Brandt says the company operates several union mills in its existing network of sawmills.
The Tacoma mill has considerable potential, said Brandt. The mill produced 400 million board feet of lumber in 2004 and 165 million board feet this year.
“We know what that mill can produce,” said Brandt.
Interfor wants to operate the mills for several months to understand their operations before it drafts plans for changes and enhancements, she said.
Interfor operates a mill in Port Angeles. It closed a mill at Beaver Forks this year and consolidated its operation with Port Angeles.