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Richmond drug firm to buy Domtar paper mills

A Richmond-based company with roots in the pharmaceutical industry has agreed to buy the forest products business of one of North America's biggest producers of office paper.

EACOM Timber Corp., a newcomer in the forestry sector, has agreed to buy Montreal-based Domtar’s forest products business, a division that includes five operating sawmills. EACOM has agreed to take on all the unit’s employees. The deal is reported to be worth $80-million plus working capital.

“With this acquisition we pursue our vision of becoming a major softwood lumber producer and we look forward to integrating Domtar's leading wood products management team to ensure a smooth transition,” EACOM president and CEO Rick Doman said.

EACOM will pay about one-fifth of the purchase price, which includes $30-million to $40-million in working capital, with shares. It has recently raised $145-million from investors. The transaction is expected to close at the end of the second quarter, pending the usual closing conditions.

Domtar is a major paper and pulp producer that has been selling some of its divisions as it continues to face a number of challenges such as slumping demand for paper products.

“Our forest products employees have demonstrated tremendous resilience throughout the years,” Domtar president and CEO John Williams said in a release. “Their sustained efforts to reduce costs and pursue the continuous improvement of operations have positioned the business well for the recovery as a standalone company.”

EACOM was formerly known as Inflazyme Pharmaceuticals Ltd. The group's principal activities were to discover, develop and commercialize novel therapeutics to treat respiratory and inflammatory diseases. In 2007, the group reportredly completed a sale of substantially all of its business and undertaking to Orexo AB.

EACOM owns an idle mill in Big River, Sask., which it acquired earlier this year.

The purchase agreement will give EACOM ownership of the five operating sawmills – which also include mills in Nairn Centre and Gogama, Ont. – as well as two non-operating mills in Ear Falls, Ont. and Ste-Marie, Que. All together, the sawmills represent 3.5 million cubic metres of annual logging rights and a production capacity of close to 900 million board feet, the companies said.

EACOM will also take ownership of the Sullivan remanufacturing facility in Val-d'Or, as well as interests in Arkansas-based Anthony-Domtar Inc. and Elk Lake Planing Mill Ltd. in Elk Lake, Ont.

Reported by The Canadian Press.

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