TimberWest to defer distributions, talk to lenders
VANCOUVER, British Columbia, Nov 13 (Reuters) - Weak log markets will cause TimberWest (TWF_u.TO) to defer distributions to unitholders next year as it works with its lenders, the lumber company said on Thursday.
The company said it recorded a loss of C$6.3 million ($5.2 million) in distributable cash, or 8 Canadian cents per stapled unit, in the third quarter. That compares with a loss of C$5.6 million, or 7 Canadian cents a unit, in the year-ago quarter.
TimberWest has been deferring tree harvesting in the face of weak lumber markets that show no sign of improving. It will have to defer its distributions starting in January to preserve liquidity, it said.
The logging company, which owns extensive private timberlands in coastal British Columbia, ended the quarter with a net debt of C$234.4 million and C$17.3 million in letters of credit.
It was in compliance with its debt covenants at the end of the quarter, but cautioned that it did not expect to be in compliance at the end of the fourth quarter and was talking with lenders about modifying its credit terms.
It will also ask unitholders next month to approve a change in the rate structure of the series A subordinate notes portion of its stapled units.
TimberWest announced on Wednesday it was cutting its salaried workforce by 10 percent.
The company said the only bright spot in its log markets last quarter was in sales to Japan, which has been improving, and its harvesting has been directed at supporting those customers.
TimberWest said it is also picking up new customers in Japan's plywood industry, which has traditionally purchased Russian wood, which will soon be the subject of increased export taxes. (Reporting Allan Dowd, editing by Rob Wilson)
