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Western Forest Products to take downtime, defer bond interest payment to maintain liquidity
By Caroline Salls
Pittsburgh, June 8 - Western Forest Products Inc. will take downtime at some operations during the summer and defer payment of 50% of the interest due on its 15% secured bonds to maintain liquidity, according to a company news release.
In response to lower-than-expected sales and to reduce the amount of cash tied up in its log and lumber inventories, the company said it will take downtime at both its logging and sawmilling operations over the summer.
Logging operations will be down from various points in July to the end of August. Critical road and bridge building programs may continue throughout this period.
The Duke Point sawmill will take downtime from June 30 to Aug. 2 to coincide with the installation of new equipment.
The Ladysmith sawmill will take downtime from July 18 to Aug. 15, the Saltair sawmill from July 4 to Aug. 2 and the Cowichan Bay sawmill from Aug. 8 to Sept. 2.
The Nanaimo sawmill will continue to operate on two shifts and the Silvertree mill on one shift.
"Taking this downtime should enable us to reduce our log and lumber inventories by approximately $40 million to $50 million," president and chief executive officer Reynold Hert said in the release.
The company has also rescheduled the annual Squamish pulp mill maintenance shutdown to mid-August to spread out the timing of significant cash expenditures.
In addition, the company will defer payment of 50% of the interest due on June 30 as permitted under the terms of the bond indenture.
The C$10.3 million in unpaid interest carries interest at 15% and can be repaid at anytime during the life of the bonds, but no later than July 28, 2009.
Western is a Duncan, B.C.-based integrated Canadian forest products company and coastal woodland operator.
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