Conifex Timber Inc. will be selling its Fort St. James sawmill and related timber rights to Oregon-based Hampton Lumber, the companies said in a statement jointly issued Tuesday.
The deal, worth $39 million plus the market value of finished lumber and log inventory at closing, remains subject to approval by the Minister of Forests, Lands, Natural Resource Operations, and Rural Development.
However, Hampton CEO Steve Zika said the company intends to build a new sawmill in Fort St. James.
It will be operated in partnership with area First Nations and community partners, "similar to a successful joint venture we have with the Burns Lake Native Development Corporation in the Burns Lake area," he added.
Conifex's existing Fort St. James mill was shut down on May 13. It is not expected to resume normal operations prior to the closing of the transaction.
"We have known for some time that lumber industry rationalization is inevitable because too little sawlog supply is available to maintain the existing manufacturing base in the Interior region of B.C.," Conifex chair and CEO Ken Shields said.
"The decision we have taken to sell the mill was extremely difficult; however, we are encouraged by Hampton's plans for the site.
"We believe this transaction supports the province's objectives for industry rationalization that is mindful of the impacts on people, communities and First Nations."
Conifex will use the proceeds from the sale to retire debt and to provide additional liquidity.
Hampton Lumber operates nine sawmills in Oregon, Washington and British Columbia.
"While economic conditions are extremely challenging right now for the lumber industry in British Columbia, we believe the long-term outlook for Canadian lumber is promising," Zika said.