Quebec company awaits Crown wood offer from province

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BY KRIS MCDAVID
Times & Transcript Staff

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MIRAMICHI - Officials with a forestry company currently deep into negotiations to purchase a shuttered Miramichi mill say that as soon as the province coughs up the wood, they'll deliver the goods.

Cristopher Bellaousoff, vice president of development for Quebec-based TAG Enterprises, said his company views the Weyerhaeuser oriented strandboard mill as a positive investment for a number of reasons.

The Weyerhaeuser OSB mill, perched on the banks of the Miramichi River in Chatham, closed permanently in 2007, costing 150 workers their jobs.

Bellaousoff said not only is TAG confident it can help put Miramichiers and private woodlot owners back to work, it can turn a profit in the process.

He said the mill has been exceptionally well-designed and well-maintained by Weyerhaeuser, adding that Miramichi's proximity to the Port of Belledune and the mill's built-in port provides easy access for exporting product to markets overseas.

Bellaousoff said that despite the economic downturn and the hard-hit forestry sector, TAG expects the markets will turn, and when they do, the demand for product will be there.

"It's a costive acquisition in this marketplace, and as you could imagine, the asset is worth substantially more than what we're paying for it because of the economic downturn," he said.

The TAG executive said the company has detailed its overall plans for the mill in recent meetings held with provincial officials, Miramichi city councillors and private woodlot owners.

Bellaousoff said next step is coming to terms on a Crown wood allocation with the Department of Natural Resources.

He said TAG could operate on the roughly 600,000 cubic metres of wood that Weyerhaeuser operated on, of which 200,000 cubic metres was Crown wood.

Comparatively, the last company to express interest in the mill, Arbec Forestry Products, balked at the province's final allocation offer of 300,000 cubic metres, backing away from the deal in May.

Bellaousoff said TAG isn't in the business of playing games, and just wants to strike a deal that makes sense for all parties involved.

"It feels as though we've been welcomed into New Brunswick, specifically into the Miramichi region -- the community leaders, woodlot owners, the people who used to work at the mill, the MLA's have all been very supportive of the project," he said. "We will do whatever we can to make this work."

He said the company would rely on private woodlot owners for the majority of the mill's supply, and New Brunswick Federation of Woodlot Owners manager Ken Hardie said he believed New Brunswick woodsmen will be up to the challenge.

Hardie said it's critical, for the sake of the Miramichi's regional forestry sector, to get the mill up and running.

"The Weyerhaeuser mill wasn't reasonably huge in comparison to the old UPM mill, but they did purchase a reasonably high percentage of wood from the three marketing boards in that area -- it was a good, strong market for poplar," Hardie said. "And as housing starts in the U.S. recover, I would imagine an OSB mill would be in a good situation, and all reports are that mill is in very good condition."

Hardie said that even though a number of woodlot owners left the industry once the demand spiraled downwards, he believes those that remain could handle the demand.

"We do have some concerns, we've lost a lot of qualified people in the industry, but forestry has always been somewhat resilient -- our hope is (a mill sale) will bring some people back in."

If TAG receives a wood allocation from the province, it would take about 90-days to finalize the deal with Weyerhaeuser, with mill production starting somewhere around June 2010.

Bellaousoff said the company has submitted its business case to the Department of Natural Resources for review, and would wait until the province offers a Crown wood allocation before providing specific financial documents.

He says in order for the company to provide accurate financial projections to the province, clear numbers in terms of a wood allotment would need to be on the table.

"This is simply just so we know exactly what we're looking at in terms of private resources and Crown resources ... We've informed (DNR) of our plan, we've explained to them what type of allocation we want, and they were supportive of the project; they've been very progressive meetings."

Montreal-based TAG Enterprises was founded in 2007 by CEO Jean-Yves Cardinal who has been in the forestry business for more than 35 years.

Cardinal teamed up with a group of investors to form TAG (The Assets Group) and integrate his lumber distribution company, Sitka Forest Products.