Louisiana-Pacific has signed a $75 million agreement to buy out its 50 percent partner in an oriented strand board mill in British Columbia.
LP executives hope to close on the purchase of Canfor Corp.'s share of Peace Valley OSB before the end of the year. The facility pressed its first board in November of 2005 and has an annual production capacity of 820 million square feet of OSB. It is now run and staffed by Canfor with LP providing operational support. Officials could add a fourth shift at the facility early next year, depending on market conditions.
“The Peace Valley mill has been a safe, productive and important part of our OSB strategy for the past seven years,” LP CEO Curt Stevens said. “The mill will continue to play an important role in LP as the housing market rebounds.”
Stevens recently told investors his team also is looking at restarting a large mill in Alabama that was idled in 2008. A good bit of the company's 3.3 billion square feet of OSB production capacity — which accounts for more than a fifth of the North American market — has gone unused in recent years. The industry as a whole is expected to run at about 60 percent of total capacity this year.
For their part, Canfor officials say they are selling their stake in Peace Valley to narrow their focus on lumber, pulp and paper businesses. Canfor could receive more money from LP in the next three years based on the profitability of the plant.
Shares of LP (Ticker: LPX) closed Wednesday trading up 1.3 percent at $17.25. So far this year, they're up 115 percent and are changing hands at their highest levels since October of 2007.