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Canfor Corp T.CFP

Alternate Symbol(s):  CFPZF

Canfor Corporation is engaged in the manufacturing of high-value low-carbon forest products, including dimension and specialty lumber, engineered wood products, pulp and paper, wood pellets, and green energy. The Company’s segments include lumber and pulp and paper. It produces renewable products from sustainably managed forests at more than 50 facilities across its diversified operating platform in Canada, the United States, and Europe. Its dimension lumber includes Spruce Pine Fir (SPF), Southern Yellow Pine (SYP), Douglas Fir Larch (DFL), and Canfor Red. Its specialty lumber includes Balfour Boards, WynnWood Boards, Decking/Fascia, Lamstock, Long Lengths, Shop/Clears, and Access Mat Lumber. Its engineered wood products include Glulam, and Power Joist. Its pulp products are Bleached Softwood Kraft Pulp, and Unbleached Softwood Kraft Pulp. Its paper products are Bleached Kraft, Coloured Kraft, and Unbleached Kraft. It also has a biomass cogeneration facility in Grande Prairie.


TSX:CFP - Post by User

Post by Apaulsonon Oct 29, 2024 7:52am
160 Views
Post# 36286343

Upcoming Large Acquisition

Upcoming Large Acquisition

The duty receivable loan was raised to generate liquidity for an upcoming large acquisition.  They don't need cash sitting on the balance sheet to do nothing.  Why would you take on a loan at a higher interest rate than what you're paying on your undrawn operating line?  At the end of 3Q, Canfor had consolidated cash and cash equivalents of $525mm and available undrawn operating line facilities of $1.3bn.


Sean Steuart: Thanks. Good morning, everyone. A couple of questions. Pat, I'll start with the loan against the duty receivable hoping you can give us some of your rationale there given you already have a strong balance sheet, and it looks like the borrowing costs, depending on the time frame here could be reasonably high. I guess the read-through is either you're expecting this is going to be a very drawn out process towards any sort of resolution on the trade file or do you feel the need to bolster an already strong balance sheet ahead of maybe a difficult market environment or ahead of potential M&A opportunities. Can you give us some more context on the rationale, Pat or Don, on that front?

Pat Elliott: Yes, sure, Sean. I mean you're right, there's a timing call in there for sure. I think on both sides of the equation. I can't tell you when this will settle. We're not -- we're on the record as sort of identifying. We don't see a near-term settlement. Canfor has over $725 million on deposit. And with the rates increasing here at 16% and then probably doubling or more again next year, we're going to have a lot more on deposits. So for us, the opportunity to take some of the money off the table even at a discount seem to make some sense. There's no specific use of funds we have in mind, but just the flexibility and these opportunities maybe don't come along all the time. It took us a while to do it. And so while it was there, we thought it was sort of prudent to take sort of 40% of our current exposure off the table. And that's how we came to do it now, Sean.

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