LP to Buy Canfor’s share in OSB joint venture

Louisiana-Pacific Corp. has entered into an agreement with Canfor Corp. to acquire Canfor’s 50% share in the Peace Valley Oriented Strand Board (OSB) joint venture in Fort St. John, British Columbia. By completing this acquisition, LP will become the sole owner of the Peace Valley OSB mill.

“The Peace Valley mill has been a safe, productive and important part of our OSB strategy for the past seven years,” LP CEO Curt Stevens said. “The mill will continue to play an important role in LP as the housing market rebounds.”

The purchase price is estimated at C$75 million, including working capital. In addition, Canfor may receive additional annual consideration over a three-year period based on Peace Valley OSB’s annual EBITDA.

LP and Canfor currently jointly run the mill, with LP providing operational support while Canfor provides labor, fiber resource management and administrative services. LP already sells 100% of the product made there under the LP brand, so customers will see no change in product quality or service.

Once the agreement closes, Canfor will continue to provide fiber resource management and temporarily provide administrative services during the transition.

The completion of this transaction is expected to occur by the end of this year, but is subject to the parties agreeing to final terms and conditions, the completion of due diligence, obtaining necessary regulatory approvals and the execution of definitive agreements.

The Peace Valley mill has an annual production capacity of 820 million sq. ft. of OSB. It currently operates three shifts with plans to add a fourth shift in the first quarter of 2013 depending on market conditions.