- has an annual production capacity of approximately 550 million board feet (mmfbm) on a continuously operating basis and 465 million mmfbm on a customary three-shift operating basis;
- includes a modern bio-mass fueled cogeneration power plant, built in 2009, with an annual production capacity of approximately 13MW of electricity and 49.5MW of thermal energy. The plant sells electricity pursuant to a long-term fixed price green power tariff that runs to 2029;
- includes two log de-barking and sorting lines, two Linck primary breakdown lines, lumber kilns capable of matching sawmill production, and a two-line planer mill;
- has an experienced workforce of approximately 300 employees; and
- is located approximately 16 kilometers west of our Rosenthal mill and has historically been one of its largest fiber suppliers.
- revenues of approximately $180 million;
- lumber production of approximately 320 mmfbm;
- energy sales of approximately $10 million; and
- EBITDA of approximately $13 million, comprised of approximately $9 million from lumber operations and approximately $4 million from energy sales. See "Non-GAAP Financial Measures" below.
- operating synergies in the range of $4 to $7 million per year, primarily relating to the sharing of wood and bio-mass fuel resources and the optimization of staffing and services with our Rosenthal mill. We currently expect to achieve about one-third of such synergies within 12 months of closing and the balance over the following 6 months;
- the opportunity to materially increase lumber production particularly at the start of 2018; and
- the opportunity to reduce costs and improve sales realizations at the Friesau Facility through targeted capital upgrades.
The transaction is subject to customary closing conditions, including receipt of requisite regulatory approvals, and is expected to complete around the beginning of the second quarter of 2017.Mr. David M. Gandossi, Chief Executive Officer, stated: "We are pleased to enter the European lumber sector, with the acquisition of one of Germany's largest sawmills. The proposed acquisition also expands our existing presence in the bio-mass based electricity market and is in line with our long-term growth objectives. Mr. Gandossi continued: "This acquisition leverages our core competencies of wood procurement, production optimization and green energy production. We believe it presents a natural fit with our existing procurement activities and our expertise in bio-mass based electricity production." Mr. Gandossi concluded: "We look forward to welcoming the Friesau Facility's employees to our team and working with them as we integrate its operations." Mercer International Inc. is a global pulp manufacturing company. To obtain further information on the company, please visit its web site at http://www.mercerint.com. Non-GAAP Financial Measures This press release contains references to EBITDA, which is a non-GAAP metric. EBITDA is defined as operating income plus depreciation and amortization. We believe certain investors and financial analysts use EBITDA to evaluate financial performance. EBITDA is also included to help facilitate comparisons of the historic operating performance of the assets to be acquired with other companies in our industry. EBITDA is not a measure of financial performance under GAAP, and should not be considered as an alternative to operating income or any other measure of financial performance presented in accordance with GAAP. EBITDA excludes some, but not all, items that affect operating income. The following table sets forth a reconciliation of the Friesau mill's average approximate operating income to EBITDA for the three fiscal years ending December 31, 2016 (in millions):
|Annual Average forthe three years ended December 31, 2016|
|Add: Depreciation and amortization||$||4|
APPROVED BY:Jimmy S.H. LeeExecutive Chairman(604) 684-1099 David M. GandossiChief Executive Officer (604) 684-1099