Gap in softwood lumber dispute appears to be narrowing, says Tembec CEO
Tembec softwood lumber plant in operation on Nov 13, 2008 in Senneterre Que. (Jacques Boissinot/The Canadian Press)
MONTREAL -- Concluding a Canada-U.S. softwood lumber agreement in the coming weeks remains uncertain but there is headway on the thorny trade dispute, the head of lumber producer Tembec suggested Wednesday.
"We understand that some progress is being made and that the differences of the gap between the two countries has narrowed," CEO James Lopez said during a conference call to discuss its third-quarter results.
The Montreal-based company (TSX:TMB) said its net income nearly doubled to $17 million in the period ended June 24.
Lopez didn't explain what his outlook is based on but said it's difficult to predict the timing and structure of a new agreement.
"Hopefully we can get that outcome in short order but we all know, those of us have been around this for a long time, it's very unpredictable."
Foreign Affairs Minister Chrystia Freeland remains in close contact with Commerce Secretary Wilbur Ross, but a spokesman downplayed that a deal is in the offing.
"I don't have any real indication that there has been any meaningful narrowing, if you will," Adam Austen said from Ottawa.
The two sides are under pressure to strike an agreement before NAFTA negotiations begin Aug. 16.
"We are obviously running up against quite a tight timeline with respect to NAFTA but we are still hopeful," Austen said.
Tembec paid $4 million in duties in the quarter and expects to incur about $10 million every three months based on preliminary countervailing and anti-dumping duties it faces of around 27 per cent.
The company expects to remit up to $14 million next quarter for retroactive tariffs which it anticipates will be returned early next year once the final determination is made.
It said it earned 17 cents per share in the quarter compared with a profit of nine cents per share in the same period last year.
Consolidated sales for the three-month period totalled $419 million, up from $376 million.
Shareholders are expected to vote Thursday on a friendly takeover offer for Tembec by Rayonier Advanced Materials Inc., which could close by year-end.
The U.S. chemical company raised its offer on Sunday in order to win support of two of Tembec's largest shareholders who threatened to vote against the agreement.
Oaktree Capital Management LP and Restructuring Capital Associates LP had raised concerns the offer was too low but agreed to support the deal after the offer was raised.