West Fraser Timber Co. Ltd. (NYSE: WFG) and Mercer International Inc. (NASDAQ: MERC) have mutually agreed to dissolve their joint venture in Cariboo Pulp and Paper. Following the dissolution, West Fraser will emerge as the sole owner and operator of the mill, now known as Cariboo Pulp and Paper Company.
The Cariboo Pulp and Paper mill, a longstanding establishment in Quesnel, British Columbia, boasts an impressive production capacity of 340,000 tonnes of Northern Bleached Softwood Kraft (NBSK) pulp per year and provides employment to nearly 300 individuals.
Sean McLaren, President & CEO of West Fraser, expressed confidence in the decision, stating, “Cariboo Pulp is an integral part of the West Fraser family of mills. This agreement fortifies our commitment to the mill’s success and ensures stability for our skilled workforce.”
On the other side of the agreement, Mercer’s CEO, Juan Carlos Bueno, reflected on the strategic move, remarking, “The divestment of our interest in Cariboo Pulp aligns with our strategic review and allows us to concentrate our efforts and resources on core areas that support our long-term objectives.”
The termination of the joint venture comes without any financial penalties for either company. Mercer is set to retain a portion of the finished product inventory post-dissolution. Additionally, Mercer anticipates a non-cash impairment charge in the first quarter due to the joint venture’s dissolution, based on the net carrying value of the interest.
Cariboo Pulp and Paper has been a cornerstone of the Quesnel forestry sector since its inception in 1972, and this new chapter promises to uphold its legacy as a key industry player.
