Tag Archives: Resolute Forest Products

From ForestEthics:

On the third anniversary of the signing of the historic Canadian Boreal Forest Agreement (CBFA), environmental signatories are suspending further work with Resolute Forest Products. They remain committed to continuing their work with other signatory companies to plan for protection of critical Boreal woodland caribou habitat and sustainable forest management practices.

“We are very pleased with the groundbreaking solutions for conservation we have forged under the CBFA with companies such as Tembec, Alberta Pacific Forest Industries, and Millar Western Forest Products in northeastern Ontario and Alberta respectively,” said Janet Sumner of the Canadian Parks and Wilderness Society (CPAWS).

“We are also optimistic about advancing conservation and sustainable forestry plans through our on-going work with Tolko, Weyerhaeuser, and Corner Brook Pulp and Paper in Manitoba, Saskatchewan and Newfoundland.

“However, despite three years of work we feel we have not been able to make meaningful progress towards science-based conservation and sustainable forestry plans with Resolute Forest Products on its large tenures in Quebec and Northwestern Ontario. After creating and revising numerous conservation analyses, and putting several workable proposals on the table, we have come to the sad conclusion that Resolute will not do the minimum that the science says is required to protect our forests and the threatened caribou that call them home,” adds Sumner.

“We believe that Resolute is not meeting its commitments to ensure caribou survive on the forests it manages. In our opinion, it has so far proven itself unwilling to strike a balance between its economic interests and the local survival of a nationally threatened species,” added Todd Paglia of ForestEthics.

The environmental groups’ assessment, based on federal government science, is that Resolute’s forestry plans would severely diminish the chances that any caribou herds within their tenures will survive after their logging operations. The federal recovery strategy under the Species At Risk Act requires that all caribou herds in Canada be managed to create a minimum likelihood of 60% survival.

All environmental signatories to the CBFA are suspending further work with Resolute until it can commit to scientifically defensible conservation plans that would give caribou a reasonable chance of survival.

“The CBFA has proven itself a workable model with companies that honour their commitments. Last year, signatories announced a joint caribou action plan for northeastern Ontario that proposed an 8,000 km2 logging-free zone to protect critical caribou habitat and an increase of wood supply for local mills,” adds Sumner.

In Northeast Alberta, signatories supported the establishment of the proposed Dillon River Wildland Park and the Gipsy-Gordon Wildland Park, and this month have agreed on an approach for Caribou Action Planning in the Athabasca and Cold Lake regions. They are now commencing outreach to Provincial, Aboriginal, municipal and energy sector leaders to move forward.

The Canadian Boreal Forest Agreement was signed in 2010 by all member companies of the Forest Products Association of Canada and nine environmental groups. Environmental groups continuing to implement the CBFA are the Canadian Boreal Initiative, Canadian Parks and Wilderness Society, David Suzuki Foundation, ForestEthics, Ivey Foundation, The Nature Conservancy and the International Boreal Conservation Campaign.

Resolute Forest Products expressed the company’s disappointment that negotiations under the auspices of the Canadian Boreal Forest Agreement (CBFA) have broken down after three years of collaborative efforts.

Parties were unable to reach mutual agreement on a workable plan to jointly further conservation efforts while balancing environmental, social and economic considerations in the Canadian boreal forest.

The CBFA was signed by members of the Forest Products Association of Canada (FPAC), including Resolute, and a group of environmental organizations to establish a common framework to further support boreal conservation efforts while safeguarding the livelihood of thousands of citizens in communities that depend on healthy working forests.

While it was challenging to find common ground among organizations with such diverse interests, Resolute believes its contributions to CBFA working groups and its overall commitment to sustainable forestry positively impacted the process. Company employees participated in all CBFA activities, offering concrete proposals and committing thousands of work hours to the initiative. Resolute also stepped forward to provide funding and offered significant additional financial support to the process.

Over the past several weeks, intense negotiations took place leading up to the third anniversary of the CBFA. Resolute put forward proposals for Northwestern Ontario that endorsed the setting aside of an additional 504,000 acres (204,000 hectares) of forest for conservation, providing additional protection of caribou and other species. This commitment is on top of the approximately 4,942,000 acres (2,000,000 hectares) of Ontario forests that have already been established as protected spaces, parks and other initiatives over the past 15 years.

In Quebec, Resolute put forward additional candidates for protected areas to move up the total percentage to 12%, equivalent to 1,710,000 acres (692,000 hectares), focusing primarily on best habitats for caribou conservation. The company also specifically addressed concerns related to the Montagnes Blanches and the Broadback Valley. The Resolute proposals were made with full knowledge that further curtailment of the company’s fiber supply is likely in the near future due to revisions of the annual allowable cut by Quebec’s Chief Forester, and by the implementation of a government endorsed caribou conservation plan.

“It is unfortunate the CBFA signatories were ultimately unable to reach alignment on how to strike a balance among environmental, social and economic priorities – the three pillars of sustainability,” stated Richard Garneau, President and Chief Executive Officer. “Rural, northern and First Nations communities have paid a heavy price from the economic and market challenges the industry has faced over the past decade. We believe we have a responsibility to ensure that they understand and have a say in any plans that might affect their futures. Outcomes of the CBFA process that did not involve serious stakeholder consultations would have lacked legitimacy and could not have been considered reasonable proposals,” continued Garneau.

“Resolute will simply not abdicate our responsibility to address regional concerns of the North, including the First Nations’ interests with whom we have a number of business and economic development initiatives already in place or pending. We agree that environmental concerns must be at the forefront, however, the regional social and economic impact must also be part of the equation,” said Garneau.

During the negotiations, Resolute also offered to match funds raised by participating environmental non-governmental organizations (ENGOs) to further research into endangered species management. It was proposed that any such funding would be jointly managed by the company and the ENGO community, and dollars would flow to research efforts using post-secondary institutions and other research resources residing in the North. Such an approach would further support development of economic and institutional capabilities of the northern regions.

Last year, as part of Resolute Forest Products’ involvement in the CBFA, Resolute played an important role in crafting a proposal for Northeastern Ontario, ultimately resulting in joint recommendations to government. One of the key elements of the proposal divided the Abitibi River Forest Management Unit into three zones. The northern most zone represented establishment of a caribou conservation area covering almost 2,063,000 acres (835,000 hectares). Industry agreed to voluntarily and permanently avoid harvesting the area to provide for better caribou habitat. According to recent developments, the Ontario government support for these recommendations will soon evolve into formal implementation. Additionally, Resolute intends to use as reference the methodological frameworks for protected spaces and caribou conservation, produced under the CBFA, in the company’s ongoing work to improve the current network of protected spaces and to enhance existing caribou conservation plans.

Resolute assumes that in the coming days, certain ENGOs will resume their attacks against the company. Resolute will not tolerate falsehoods or inaccuracies about the company’s actions. A few months ago, following their announced exit from the CBFA, Greenpeace issued a series of misleading, deceptive and factually inaccurate allegations. Resolute provided clear proof that Greenpeace’s claims were false. Ultimately, when cautioned that the Company would commence legal proceedings, Greenpeace finally acknowledged that its “evidence” was untrue and issued a formal retraction.

Last week, Greenpeace once again issued a false and misleading report, ignoring Resolute accomplishments and mischaracterizing the company’s ongoing efforts to be a leading force for sustainable forestry. “As we did then, Resolute will continue to take the necessary steps to protect its reputation and that of our employees, as well as the reputations of our valued customers and other business partners,” stated Garneau.

Resolute remains committed to the principles underlying the CBFA and will continue to operate in a manner consistent with a balanced approach to sustainability. In 2012, Resolute achieved the distinction of being the largest manager of forests certified through the Forest Stewardship Council® (FSC®) in the world. The company is also a member of the World Wildlife Fund’s Climate Savers Program, through which it has pledged to reduce absolute greenhouse gas emissions by 65% below 2000 levels by 2015. Recently, Resolute launched Forum Boréal, a new online forum where users can discuss and exchange information about the challenges of sustainable development in the boreal regions of Quebec.

“By continuously striving to improve our sustainability performance, Resolute creates value for our customers, our employees, our operating communities and our shareholders,” concluded Garneau.

Source: Resolute Forest Producs

Resolute Forest Products has officially inaugurated a major power island producing green energy at its pulp and paper operation located in Thunder Bay, Ontario.

The power island includes a refurbished and upgraded woodwaste boiler and a new 65-megawatt condensing turbine. Approved by Resolute in early 2011, the C$65 million project took just over 21 months to complete.

“The power island is a strategic addition to Resolute’s Thunder Bay facility,” stated Richard Garneau, President and Chief Executive Officer. “It will reduce the mill’s energy costs as well as maximize our local woodlands, sawmill, pulp and paper, and energy operations by fully utilizing forest-based biomass to produce green electricity.”

The green power produced will be sold to the Ontario grid under a power purchase agreement between Resolute and the Ontario Power Authority.

To mark the inauguration, a ceremonial “throwing of the switch” was held earlier today involving key company and government representatives.

“This project is consistent with Resolute’s focus on optimizing our network to reduce costs as well as investing in projects that improve our competitive position and are aligned with a sustainable future,” added Garneau.

Source: Resolute Forest Products

Resolute Forest Products (formerly known as AbitibiBowater) closed its Gatineau, Quebec operation in August 2010, laying off 330 employees.

The mill will reopen in June as a lower cost operation with just 1 paper machine and a co-generation power plant. Only 130 workers will be employed.

The newsprint will be sold in North American and overseas.

In 2011, with the hope their mill could reopen, the workers of the Gatineau mill (and the Dolbeau mill) agreed to reopen their contracts and change some elements of the contract with regards to the sub-contracting of mechanics and workshop functions.

No severance was paid to the workers in 2010 when the mill closed because the company was restructuring and under creditor protection.

Outlook for Resolute Forest Products other mills

At this time, President and CEO Richard Garneau does not foresee the reopening of any other of its closed mills.

Resolute Forest Products’ Thunder Bay, Ontario mill is said to be at the greatest risk for mroe downtime because its access is only to the North American market. As newsprint demand continues to fall, the uncertainty of the Thunder Bay’s paper mill grows.

Read more:
Gatineau paper mill reopens (Ottawa Business Journal)

Resolute Forest Products is reporting a net loss of $5 million in its first quarter of 2013.

This result can be compared to a net income of $23 million in the same quarter last year.

Excluding $33 million of special items, net income for the quarter was $28 million. Excluding special items of $16 million, net income in the first quarter of 2012 was $7 million.

“Our efforts to restructure mills and machines during the last two years will lower our manufacturing costs, which will help to mitigate the challenges facing the North American forest products industry,” said Richard Garneau, president and chief executive officer.

Pensions

Concerning the status of the funding relief measures related to the material Canadian registered pension plans, he added: “On April 26, we reached an agreement in principle with Company stakeholders in Quebec, the provincial government, and its pension regulator to replace the significant uncertainty associated with potentially material corrective measures in favor of more stable, predictable and balanced pension funding we need to run our business. Under this agreement, we would make reasonable incremental contributions in order to secure longer-term funding stability. With this significant progress in Quebec, we look forward to meeting very soon with the provincial government of Ontario and its pension regulator, and our Ontario stakeholders.”

Operating Loss

In the first quarter of 2013, Resolute Forest Products recorded an operating loss of $50 million, compared to $46 million in the fourth quarter of 2012. The $4 million unfavorable change reflects a $54 million reduction in sales, due to lower shipments of newsprint and specialty papers due to seasonality and market conditions, and capacity reduction initiatives. Overall pricing contributed $4 million, as higher transaction prices in wood products more than offset declines in newsprint. Cost of sales was down $19 million, due mainly to the lower volume, offset in part by costs associated with the annual outage at the Catawba, South Carolina, mill, higher mill start-up costs and increases in certain other manufacturing costs. The change in operating results was also favorably affected by a $42 million reduction in closure costs.

Outlook

Concerning the outlook, Garneau said, “While we are encouraged with the incremental progress we are seeing on newsprint export markets, we expect domestic pricing to remain under pressure until more tonnes produced in North America are shipped offshore. With markets for specialty papers strongly influenced by advertising spending, demand may remain sluggish as customers are cautious based on recent U.S. economic data. Recent demand and pricing trends in the pulp market are giving us reason for cautious optimism that it is gaining momentum after its prolonged slump. Finally, lumber pricing has been strong, and we expect it to remain at or near current levels, as shipments from Canadian producers continue to be limited by strained supply chains from the increase in demand.”

For more, including results by segment, visit:
Resolute reports preliminary first quarter 2013 reuslts (Resolute Forest Products)

Resolute Forest Products Inc.  has priced its offer of senior notes due in 2023 that was announced on April 24 .

The offering of $600 million aggregate principal amount of its senior notes due 2023 are priced at 5.875% and 99.062% of par value.

The notes will be unsecured and guaranteed by substantially all of Resolute’s U.S. subsidiaries.

The offering of the 2023 notes is expected to close on May 8, subject to customary closing conditions.

The net proceeds will be used by Resolute Forest Products to repurchase, repay or otherwise discharge all, or substantially all, of its $501.2 million outstanding aggregate principal amount 10.25% senior secured notes due 2018. The company is currently conducting a tender offer for the 2018 notes, which offer is scheduled to expire at 12:00 midnight, New York City time, on May 21, 2013, unless extended by the company.

The 2023 notes are being sold in a private offering to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons in reliance on Regulation S under the Securities Act. The notes have not been registered under the Securities Act or any state securities laws. Therefore, the notes may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.

Source: Resolute Forest Products

Two press releases from Resolute Forest Products this morning:

Resolute Launches Tender Offer and Consent Solicitation for its 10.25% Senior Secured Notes

Resolute Forest Products Inc. has launched a cash tender offer for any and all of its $501 million outstanding aggregate principal amount of 10.25% senior secured notes due 2018 (CUSIP No. 003687AB6) (the “2018 notes”).  In connection with the tender offer, Resolute is soliciting consents to amend the 2018 notes and the indenture that governs them to eliminate substantially all the restrictive covenants and certain events of default, and to release all the collateral securing the 2018 notes.  The tender offer and consent solicitation are being made pursuant to an offer to purchase and consent solicitation statement, dated April 24, 2013 (the “offer to purchase”), which more fully sets out the terms and conditions of the tender offer and consent solicitation.

The tender offer and consent solicitation will expire at 12:00 midnight, New York City time, on May 21, 2013, unless extended or earlier terminated.  We refer to that date and time, as extended or earlier terminated, as the “expiration time”.

The “total consideration” for each $1,000 principal amount of 2018 notes validly tendered and the related consents delivered at or before 5:00 p.m., New York City time, on May 7, 2013, (which date and time, as the same may be extended, we refer to as the “early tender deadline”) and accepted for purchase will be $1,166.94 per $1,000 principal amount of those notes, which includes an early tender premium of $30.00 per $1,000 principal amount of those notes.

The total consideration was calculated based on a settlement date of May 8, 2013 (the “initial settlement date”), using a weighted average that assumes: (i) $416.2 million of the 2018 notes would be repurchased at a price based on the present value of the 2018 notes’ remaining cash flows through the redemption date of October 15, 2014 (the “first call date”), including the applicable redemption price of $1,051.25, minus accrued interest through, but not including, the initial settlement date; and (ii) $85.0 million of the 2018 notes would be repurchased at a price based on the 2018 notes’ remaining cash flows through the redemption date of October 4, 2013 (the “special redemption date”), including the applicable redemption price of $1,030.00, minus accrued interest through, but not including, the initial settlement date; in each case discounted using a rate equal to the U.S. Treasury rate to the first call date or the special redemption date, as applicable, plus 50 basis points.

Holders who validly tender, and do not withdraw, their 2018 notes and validly deliver their consents at or before the early tender deadline, and whose notes are accepted for purchase, will be eligible to receive the total consideration.  Holders who validly tender, and do not withdraw, their 2018 notes after the early tender deadline but at or before the expiration time, and whose notes are accepted for purchase, will be eligible to receive the “tender offer consideration,” which is the total consideration less the early tender premium. In addition, holders whose 2018 notes are purchased in the tender offer will receive accrued and unpaid interest on their purchased notes up to, but not including, the applicable settlement date.

We currently expect the settlement date for 2018 notes tendered before the early tender deadline to be May 8, 2013(and will not be before such date). The settlement date for 2018 notes tendered after the early tender deadline and before the expiration time will occur promptly after the expiration time.

Under the terms of the indenture governing the 2018 notes, before October 15, 2013, Resolute may at its option, during each 12-month period commencing with October 4, 2010, redeem up to 10% of the original aggregate principal amount of 2018 notes (i.e., $85 million principal amount) at a redemption price of 103% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to the redemption date. Accordingly, if a holder does not tender its 2018 notes in the tender offer, up to all of their 2018 notes may be subject to redemption at 103%, plus accrued and unpaid interest.

Concurrently with the tender offer, Resolute is soliciting from holders of the 2018 notes consents to proposed amendments to the indenture and security documents governing the 2018 notes that would: (i) eliminate most of the restrictive covenants, eliminate certain events of default (the “proposed amendments”); and (ii) release all of the collateral securing the obligations under the 2018 notes (the “collateral release”).  Consents in respect of at least a majority in aggregate principal amount of the outstanding 2018 notes are required to approve the proposed amendments and at least 66 2/3% in aggregate principal amount of the outstanding 2018 notes are required to approve the collateral release.

Holders are required to consent to the proposed amendments in order to tender their 2018 notes, and are not permitted to validly revoke a consent without validly withdrawing the previously tendered notes to which the consent relates. 2018 notes tendered can only be withdrawn, and related consents revoked, before 5:00 p.m., New York Citytime, on May 7, 2013, unless extended, except in certain limited circumstances where additional withdrawal rights are required by law.

The tender offer and the consent solicitation are conditioned upon, among other things, (a) the receipt of tendered 2018 notes from the holders of at least two-thirds of the aggregate principal amount of the outstanding 2018 notes (excluding any 2018 notes owned by Resolute or any of its affiliates), (b) receipt of funds from certain refinancing transactions, on terms and conditions acceptable to Resolute, in an amount sufficient to enable Resolute to purchase the tendered 2018 notes, pay the early tender premium and pay related costs and expenses, and (c) certain other general conditions, each of which is described in more detail in the Offer to Purchase.

Source

Resolute Announces Proposed Offering of Senior Notes

Resolute Forest Products Inc. has launched a private offering for $600 million aggregate principal amount of senior notes due 2023. The notes will be unsecured and guaranteed by substantially all of Resolute’s U.S. subsidiaries. The net proceeds from the sale of the 2023 notes will be used in connection with the repurchase, repayment or other discharge of all, or substantially all, of the $501.2 million outstanding aggregate principal amount of the Company’s 10.25% senior secured notes due 2018. The Company has contemporaneously launched a tender offer for the 2018 notes, which offer is scheduled to expire at 12:00 midnight, New York City time, on May 21, 2013, unless extended by the Company.

The 2018 notes are being sold to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons in reliance on Regulation S under the Securities Act. The 2023 notes have not been registered under the Securities Act or any state securities laws. Therefore, the notes may not be offered or sold in the U.S. absent registration or an applicable exemption from such registration requirements.

Source

Resolute Forest Products is shutting down its newsprint mill in Thunder Bay, Ontario for 2 weeks.

110 workers will be affected by the downtime that starts on Wednesday.

The shut down is being blamed on market conditions and high costs.

Contracting Out

There is a growing concern at the Thunder Bay mill concerning the contracting out of union jobs.

Resolute Forest Products wants to contract out 42 jobs to control costs at the mill.  The CEP union has filed a grievance over the contracting out proposal and expects an arbitration hearing will be called.

The 42 positions are in newsprint shipping, kraft pulp shipping, garage maintenance, bark inventory and handling.

Read more:
Layoffs ahead at Resolute pulp mill (The Chronicle Journal)

Resolute Forest Products is appealing the assessed value of its pulp and paper mill in Thunder Bay, Ontario.

The mill is currently assessed for $72 million. Resolute wants a reduction of 60% in the value, retroactive to 2009.

This would result in a $7 million refund from the City of Thunder Bay for the previous years combined, and a loss of $1.8 million for each year in the future.

Thunder Bay’s mayor, Keith Hobbs, said if MPAC (the Municipal Property Assessment Corporation) reduces the mill’s value by 60%, Resolute Forest Products would pay less taxes than Thunder Bay’s shopping mall, the Intercity Mall. “Big business, industry, has to pay their share,” Hobbs said.

MPAC will hold a hearing on the reassessment in June.

Read more:
Resolute seeks tax cut (The Chronicle Journal)
Resolute asks Thunder Bay for ‘ridiculous’ tax break (CBC)

Resolute Forest Products’ Board of Directors has nominated Michel P. Desbiens and Jennifer C. Dolan to stand for election as new board members.

Desbiens and Dolan will join 7 other current members of the board standing for re-election at Resolute’s upcoming annual meeting of stockholders on May 16, 2013 in Thunder Bay, Ontario.

Richard B. Evans, currently the company’s non-executive chairman, has determined that he would retire, and would not stand for re-election. The board has recommended Bradley P. Martin, a current member, to serve as Resolute’s new [non-executive] chairman, and Alain Rhéaume, also a current member, as lead director.

Michel P. Desbiens

Michel Desbiens is a forest products industry veteran and an accomplished business leader. He has been an independent consultant since 2000, advising a number of clients in the forest products industry, during which time he served briefly as Quebecor World Inc.’s chief executive officer (international) and chief executive officer for part of 2002 and 2003. He had been president and chief executive officer of Donohue Inc. since 1994 when it was acquired by Abitibi-Consolidated Inc. (a predecessor entity of Resolute) in 2000, after which he served briefly as its chairman and a special advisor. Before then, he held a number of executive positions with Donohue Inc., Domtar Inc., Chapelle d’Arblay paper mill and Abitibi-Price Inc. (a predecessor entity of Resolute). Mr. Desbiens is a mechanical engineer. He currently serves on the board of Rogers Sugar Inc.

Jennifer C. Dolan

Jennifer Dolan retired from The New York Times Company in 2012 after a 33-year career, the last ten of which she spent as vice president of forest products, where she managed paper procurement and oversaw its equity investments in two paper mills, including as a member of the board of Donohue Malbaie Inc., a joint venture with the Company. Before then, she held a number of executive and senior finance roles. Ms. Dolan is a certified public accountant, and a member of the American Institute of Certified Public Accountants.

Bradley P. Martin

Bradley Martin currently serves as vice president for strategic investments with Fairfax Financial Holdings Limited. He previously served as its vice president and chief operating officer and corporate secretary. Before joining Fairfax, he was a partner with Torys LLP, a leading Canadian business law firm, specializing in mergers and acquisitions and securities laws. Mr. Martin currently serves as chairman of Ridley Inc. and Imvescor Restaurant Group Inc., and as a member of the board of The Brick Ltd.

Alain Rhéaume

Alain Rhéaume is founder and managing partner of Trio Capital Inc. Before then, he was executive vice president and president of Fido, a subsidiary of Rogers Wireless Communications Inc., a role he assumed when Microcell Telecommunications Inc. was acquired by Rogers. Mr. Rhéaume was president and chief operating officer and previously served as chief financial officer of Microcell. He has served as associate deputy minister of finance and deputy minister of finance in the provincial government of Quebec. Mr. Rhéaume currently serves as a board member of the Canadian Public Accountability Board, the Canadian Investors Protection Fund, Boralex Inc. and Redline Communications Group Inc.

“We are very pleased that Michel Desbiens and Jennifer Dolan have agreed to stand for election to Resolute’s board. They represent an extraordinary range of talent, with deep institutional knowledge of our industry and a proven track record of success,” stated Resolute’s president and chief executive officer, Richard Garneau. “We look forward to Bradley Martin’s leadership and corporate governance experience, and likewise express our deepest gratitude to Dick Evans for his unwavering support, and steady and determined guidance. Dick’s contribution to this Company simply cannot be overstated.”

“My affiliation with Resolute and its predecessor companies has been a tremendously rewarding experience for me, both professionally and personally. We have been through a great deal together, and I firmly believe that we have set a foundation for excellence. We have taken the necessary steps to ensure Resolute’s long-term profitability and competitiveness, optimizing our asset base and strengthening our financial position. We have demonstrated sustainability leadership and invested in growth opportunities. I am so very proud of what the board and the dedicated employees have accomplished. This has been a journey in partnership and I look forward to your future,” stated Richard Evans.

Source: Resolute Forest Products