Resolute Forest Products Inc. 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 2Q.
“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 CEO. “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 2Q, 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.
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 3Q 2022. Accordingly, it is raising its 2021 capital investments guidance from $100 million to $125 million.
Resolute Forest Products is a global leader in the forest products industry with a diverse range of products.