Strong Lumber Prices Generate Extra Cash
Thunder Bay – BUSINESS – Resolute Forest Products Inc. (NYSE: RFP) (TSX: RFP) today declared a special cash dividend of $1.00 per share of common stock, payable on July 7 for holders of record at the close of business on June 28. The company also announced additional capital investments of $50 million in its wood products operations to support its continued growth, and it confirmed the repayment of all amounts outstanding under its revolving and term credit facilities, reducing debt by $180 million in the second quarter.
“The cash generated with our lumber platform in these strong lumber markets provides the opportunity to share benefits directly with shareholders,” said Remi G. Lalonde, president and chief executive officer. “We’re also enhancing long-term value by improving our company fundamentals with investments in high-return and quick payback lumber projects in three key regions for Resolute: the Abitibi in Quebec, Northwestern Ontario and the Southeast U.S. What’s more, we’ve removed a material amount of debt from the balance sheet with the further $180 million repayment in Q2, leaving as our only remaining debt the $300 million of unsecured 4.875% senior notes due 2026, and our liquidity stands at around $850 million. As we improve the competitiveness of the strongest parts of our business, today’s announcement will benefit shareholders, employees and a wide range of community and business partners. As demonstrated with this announcement, our intention is to maintain a balanced approach to capital allocation, using our free cash flow to generate value for shareholders and build a stronger company while driving economic activity in the communities where we operate.”
The additional $50 million in wood products investments include:
- $22 million to modernize equipment at the Senneterre (Quebec) sawmill, which will enhance overall efficiency and productivity of the Abitibi regional operations;
- $13 million at the Thunder Bay / Fort William First Nation (Ontario) sawmill to increase capacity by up to 40 million board feet with new equipment and modifications to the fiber flow; and
- $15 million at the Glenwood (Arkansas) and Cross City (Florida) sawmills to support fiber optimization and overall efficiency. The Cross City investment will also increase capacity by up to 20 million board feet.
Each of these projects will serve to generate additional value from Resolute’s wood products segment across market cycles. The improvements at the U.S. sawmills build on the previously announced investments associated with the restart of the El Dorado (Arkansas) sawmill.
The company anticipates completing all the projects by the end of the third quarter of 2022. Accordingly, it is raising its 2021 capital investments guidance from $100 million to $125 million.