On March 10, 2001, Canfor Corporation and Oji Paper Co., Ltd. of Japan completed the reorganization of their pulp and newsprint joint venture, Howe Sound Pulp and Paper Limited, as a limited partnership. The reorganization was undertaken by Canfor and Oji in order to enhance the joint venture’s economic viability.
Under the reorganization, Canfor has strengthened its fibre supply commitments and agreed to make payments and contributions to the partnership to a maximum of approximately $120 million. These payments, including an initial payment of $60 million made at closing, will be used to reduce the long-term debt of Howe Sound assumed by the partnership. As part of the reorganization, Howe Sound, with approximately $630 million of tax losses, was merged with Canadian Forest Products Ltd., Canfor’s primary operating subsidiary. These losses will be available to reduce Canadian Forest Products’ future taxable income.
Acting for Canfor were Bill Dickson, Paul Bradley (banking), David Allard, Reinhold Krahn (tax) and Tracy Berretta of Lawson Lundell Lawson & McIntosh. Acting for Oji were Doug Buchanan, Don Bell and John Saunders (tax) of Davis & Company.