Conifex Timber Inc. has updated its credit agreement with PenderFund Capital Management, increasing its secured term loan to $41 million, which will help support a transition to a two-shift operation at their sawmill. This move is in response to rising lumber prices and is expected to improve cash flow by spreading fixed costs and boosting sales. PenderFund will receive warrants and a board appointment in exchange for its financial support.<\/p>\n
The loan continues to have a term of 5 years from original issuance and is substantially on the same terms, including the same annual interest rate. The loan was advanced in lieu of Conifex\u2019s consideration of a working capital facility to fund ongoing working capital requirements.<\/p>\n
In a statement accompanying the announcement, Conifex Chairman and CEO Ken Shields said:<\/p>\n
\n\u201cThe additional borrowings will be used to fund a build-up in sawlog inventories to support our transition to a two-shift operation at our sawmill complex, effective January 6, 2025. \u2026 The benefits of spreading our fixed costs over a larger base coupled with additional product sales are expected to lower our cash costs and boost the operating cash flow we expect to achieve in the first quarter of 2025 from what we presently achieve on a one-shift basis.\u201d<\/p>\n<\/blockquote>\n
The decision to move to a two-shift operation was based on a steadily improving backdrop for lumber prices, as evidenced by the 18% improvement in cash prices for Spruce Pine Fir benchmark lumber prices in 2024Q4 relative to those in 2024Q3.<\/p>","protected":false},"excerpt":{"rendered":"
Conifex Timber Inc. has updated its credit agreement with PenderFund Capital Management, increasing its secured term loan to $41 million, which will help support a transition to a two-shift operation at their sawmill. This move is in response to rising … Continue reading