Canadian Timber Firm Buys Family-Owned Anthony Forest Of El Dorado For $93.5 Million
Canadian timberland company Canfor Corp. on Monday (Sept. 28) announced it has agreed to buy family-owned Anthony Forest Products Co. (AFP) of El Dorado for $93.5 million, a deal which includes $15 million of working capital. The transaction is expected to close in the fourth quarter of 2015 and is subject to customary closing conditions, Canfor officials said in a news release.
The privately-held South Arkansas timber company, which has been headquartered in El Dorado for nearly a century, operates 6 manufacturing facilities producing lumber, engineered wood and wood chips with a combined capacity of 250 million board feet of timber (mmbf) equivalent.
According to a news release by publicly-traded Canfor, which is based in Vancouver, Canada, AFP’s trailing 12 month net income before taxes through August 2015 was nearly $16 million. The Arkansas timber firm also closed out the fiscal year ended April 30, 2015 with approximately $19 million in profits.
“We are proud to add AFP to our family of Canfor Operations in the U.S. South,” said Canfor President and CEO Don Kayne. “AFP has a reputation for quality products and excellent customer service and with facilities located in abundant and high quality fiber supply areas in Arkansas, Louisiana and Georgia, this partnership adds exceptional value to our growing U.S. South presence.”
Today, AFP operates a southern pine lumber producing mill in Urbana, Arkansas; and wood chip mills in Plain Dealing, Louisiana, and Troup, Texas. The company also operates an engineered wood laminating plant in El Dorado, a laminating plant in Washington, Georgia, and a joint venture I-Joist plant, Anthony Eacom Inc. in Ontario, Canada.
The company’s sawmill and El Dorado laminating plant have undergone massive modernization phases over the years. Due to computerization of all machine centers and two new continuous dry kilns, the sawmill is now producing 30% more lumber out of the same size logs milled previously, company officials said.
Still, AFP and other Arkansas timber and lumber companies have struggled in recent years as the post-recession industry downturn has dramatically impacted payrolls for loggers and sawmills across the state since 2008.
For instance, the number of construction jobs across Arkansas between 2006 and 2013 declined by 20.2% from 56,960 to 45,477. In the all-important residential building sector, employment levels fell even more dramatically from 4,691 workers in 2006 to 2,761 in 2013, a slide of 41% over seven years.
And with fewer homes being built across the state, Arkansas loggers and sawmills also saw post-recession payrolls fall to record lows. For example, the number of Arkansas workers employed in the forestry and logging sector and supporting activities peaked at 3,843 jobs in 2006, statistics from the Arkansas Department of Workforce Services show. By 2013, that number had dropped 21% to just over 3,000 workers.
In the fall of 2010, however, Anthony announced that it was closing one of its plants following a fire at the company’s sawmill facility in Atlanta, Texas.
“After extensive due diligence, there were two major problems,” AFP President and CEO Aubra Anthony Jr. said of the sawmill closing. “First, the exceptional risk of the continuing weak demand for lumber for homebuilding, and second, the daunting financial risk of proposed new Environmental Protection Agency regulations related to industry boilers using wood waste for fuel.”
In a company news release at the time, Anthony expressed how difficult the decision was to cut those 78 jobs from the El Dorado sawmill operator’s payroll for the first time in the company’s storied history – which goes back to 1916.
“This [was] a sad day for us, our family of employees, our business partners and the community of Atlanta, Texas,” Anthony said.
As part of the AFP deal, Canfor said it has priced a $100 million long term debt financing package with Prudential Capital Group, which will carry an interest rate of 4.4% and have an average maturity in 2024. That financing deal will close on Oct. 2, officials said.