Interfor Corp T.IFP

Asia Pulp and Paper

[Apaulson]

Asia Pulp and Paper who owns Paper Excellence which a little while ago bought Domtar and just recently bought Resolute Forestry Products is diversifying away from just paper. Their objective is to be a North American forestry conglomerate. They have the buyers in China and Indonesia all locked up.

They'll take out Interfor next unless West Fraser or Canfor acts quick. Interior's fibre complements all of of Asia Pulp and Paper/Paper Excellence's facilities. Mercer International in B.C. would lose Interfor's cheap fibre. West Fraser's OSB facilities in Ontario and Quebec would also see a rise in their fibre costs.

[Apaulson]

Furthermore, if Asia Pulp and Paper buys Interfor, they will have a lock on Ontario and Quebec's lumber.  They'll own Resolute, Eacom and ~16% of Greenfirst.  Then Prem Watsa's guys who own Greenfirst along with Rick Doman will partner up with Asia Pulp and Paper to dominate.

[Apaulson]

At the end of q1, Canfor had ~1.1 billion in cash and will likely generate another 400-500 million from q2. They have no debt essentially. They can easily raise and afford the extra cash needed to acquire Interfor. They will need to replace their BC lumber which will be the least profitable in North America going forward for the immediate future. Acquiring Interfor while it's cheap would be a