TimberWest borrowed C$33 million in 2009; CFO says one-time items partially to blame

By Jennifer Lanning Drey

Portland, Ore., March 18 - TimberWest Forest Corp. added C$33 million of debt in 2009, but about half of the amount was related to one-time items, Bev Park, TimberWest's chief financial officer in 2009, said during the company's year-end earnings conference call.

"As we go forward with our intention to really focus on preserving cash, I just want to make the point that last year we had a lot of one-time items that caused our debt to go up," Park said.

TimberWest ended 2009 with net term bank debt of C$150.8 million.

The company said it borrowed the C$33 million to meet interest obligations on its syndicated credit facility, two cash interest payments on its convertible debentures and remaining fixed costs, including the costs associated with its refinancing earlier in the year.

At the same time, TimberWest said it took steps to conserve cash in 2009 by deferring the interest obligations on its stapled units, paying the interest in-kind on its convertibles beginning in October and reducing overhead.

Park also noted during the call that TimberWest had one remaining EBITDA covenant test under its term facility to meet for the end of 2009, which required it to achieve EBITDA of at least negative C$16 million. The company achieved EBTIDA of C$700,000 for purposes of the calculation, she said.

TimberWest generated negative distributable cash for the fourth quarter of C$10.2 million.

"While log sales continued to improve through the quarter, low real estate sales resulted in a weaker overall result," Paul McElligott, chief executive officer of TimberWest, said during the call.

The company ended 2009 with negative distributable cash of C$34.7 million, almost C$10 million lower than 2008.

Given the record low log prices and margins realized during the industry downturn, TimberWest has been pursuing a deferred harvest strategy since the fourth quarter of 2007.

As previously reported, in February, TimberWest completed a refinancing package by raising C$150 million through a 9% five-year convertible debenture issue and finalizing a C$250 million revolving loan agreement.

Net proceeds of the convertible debenture issue were used to repay C$75 million under the company's bank credit facilities.

TimberWest is a Vancouver-based owner of private forest lands.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.