There are few forestry companies in Northern Ontario that have not changed hands, said Bob Fleet, vice-president of woodland operations for Earlton-based Grant Forest Products.
In fact, he went as far as to say that every mill that draws wood from the Timiskaming Forest has turned over at least once since the standard forest license (SFL) has been issued. It is a metamorphosis unfolding and yes, he says, there is a load of rumours running rampant in the northeast on who the prospective new owners of the Grant Forest Products are. And that is all it is right now, rumours, Fleet says.
Talk of Atlanta based-Georgia Pacific looking to purchase Grant or certain operations of the company has been unsubstantiated by Fleet, although others in the industry and MP Charlie Angus (NDP-Timmins-James Bay) himself have publicly expressed concern over the possible takeover.
“I cannot comment on this,” Fleet says. “They are just rumours. There is a court process that a variety of partners are following and until the process ends and an announcement has been made public, it is all just rumours.”
Ernst and Young is the firm overseeing the restructuring process. In the Fourth Report of the Monitor, it was stated that Grant received “certain expressions of interest” from parties who were shortlisted and invited to conduct due diligence in Phase 2.
They had until Oct. 2 to submit revised proposals. Grant extended the date further to file a plan to the affected creditors or complete an asset purchase agreement. An independent committee is now reviewing the party submissions and a selected bidder will move onto Phase 3.
The northeastern fibre company fell into Companies' Creditor Arrangement Act (CCAA) after General Electric Canada's leasing service attempted to force it into bankruptcy, according to Bloomberg.
Since then, Grant officials have recognized their financial affairs to regain a stronger position in the marketplace, Fleet says. Their business should conclude by early December after spending approximately six month under court protection.
When they filed back in June 25, Grant's cash position was estimated to be worth $27 million as stated in the first monitor's report. The current liquidity decreased substantially as a result of oriented strand board prices (OSB). Grant's annual consolidated sales slid from $506 million in 2004 to $184 million in 2008 with consolidated losses of $36 million and $216 million respectively. At the same time, Grant and their subsidiaries incurred $650 million in capital expenditures from 2005 to 2008, due mostly to the construction of the Allendale and Clarendon mills in South Carolina. Updates were also undertaken at the Englehart and Timmins mills. The demand for OSB softened as a result of the United States housing market.
There will not likely be closures to any operations since Grant has done a huge chunk of the downsizing before seeking CCAA protection.
“We probably laid off 50 per cent of the Earlton staff a year before we filed for CCAA. We had made some of these painful cuts before the recession caught up to us.”
Hypothetically, if the company was sold, its portion of the wood basket would would stay with the mill, Fleet says. In that corner of the world, by and large the SFLs are owned by a multitude of shareholders.
