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MONTREAL, Dec. 16, 2021 /PRNewswire/ - Resolute Forest
Products Inc. (NYSE: RFP) (TSX: RFP) today announced the
indefinite idling of pulp and paper operations at its Calhoun (Tennessee) mill. Tissue manufacturing
and converting will continue at the site and the adjacent
distribution center will remain in full operation.
The company anticipates that the decision will directly affect
350 hourly and salaried positions at the Calhoun mill. The
facility, which employs a total of 545 people, has an annual
capacity of 147,000 metric tons of pulp and
149,000 metric tons of paper as well as 60,000 metric
tons of premium tissue.
"We have taken the very difficult decision to indefinitely
idle pulp and paper operations at Calhoun knowing how hard this is
for the affected employees and their families," said
Remi G. Lalonde, president and chief
executive officer. "Success has proved elusive at Calhoun's pulp
and paper operations, despite the best efforts of our dedicated
employees and significant investments of time, energy and resources
over the last few years."
The company continues to accumulate significant financial losses
at the mill, even with the current strong market conditions for
both the pulp and uncoated freesheet paper it manufactures. On a
trailing twelve-month basis ending September
30, the pulp and paper operations in Calhoun produced an operating loss of
$62 million before corporate expense allocation, including a
depreciation expense of $10 million. In addition to these
financial losses, the Calhoun mill faced additional significant
production upsets in November and December.
Once the indefinite idling is completed, the company anticipates
an improvement in its overall operating income, of approximately
$35 million to $40 million, which reflects the lost pulp
integration benefit with its tissue manufacturing of approximately
$15 million and approximately $5 million from on-going
costs associated with closed site maintenance.
Pulp and paper operations will continue for up to 60 days to
ensure an orderly shutdown, to accommodate environmental safeguards
and to transition customers. "Our focus now will be to support
our employees through this difficult time, to operate for the
remaining period with the same degree of focus on safety and
quality, and to facilitate a smooth transition for our
customers," added Mr. Lalonde. "As business conditions for
our tissue operations continue to improve after a challenging 2021,
our priorities remain focused on driving performance progress to
leverage the full potential of our converting operations and the
quality of the paper from the machine, together with the right
customer mix, to seize the upside, even as the lost integration
benefit will add to pulp costs."
The company will work with union leadership and will apply the
mill's collective agreement and applicable federal and state laws
as well as provide severance benefits to those directly affected.
Resolute will also engage government officials and other local
authorities in an effort to mitigate the impact of the indefinite
idling.
As a result of today's announcement, the company expects to
record, in the fourth quarter, non-cash impairment and
accelerated depreciation charges of approximately $135 million
to reduce the carrying value of the pulp and paper fixed assets to
their residual value, as well as a write-down of inventory and a
write-off of other assets of approximately $32 million in
total. The company also estimates cash closure costs of
approximately $45 million, mainly related to decommissioning,
severance and other termination benefits, and other
costs. Most cash closure costs will be disbursed in 2022.
Cautionary Statements Regarding Forward-Looking
Information
Statements in this press release that are not reported financial
results or other historical information of Resolute Forest Products
Inc. (with its subsidiaries, "we," "our," "us" or the "company")
are "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. They include, for
example, statements included in this press release and statements
relating to the expected costs and charges relating to the
indefinite idling of the pulp and paper operations at Calhoun, Tennessee, as well as the expected
impact on our future financial condition, results of operations and
performance. Forward-looking statements also may be identified by
the use of forward-looking terminology such as the words "should,"
"would," "could," "will," "may," "expect," "believe," "see,"
"anticipate," "continue," "attempt," "generate," "mitigate,"
"ensure," "accommodate," "provide," "support," "facilitate" and
other terms with similar meaning indicating possible future events
or potential impact on our business or our shareholders.
The reader is cautioned not to place undue reliance on these
forward-looking statements, which are not guarantees of future
performance. These statements are based on management's current
assumptions, beliefs, and expectations, all of which involve a
number of business risks and uncertainties that could cause actual
results to differ materially. The potential risks and uncertainties
include, but are not limited to, our inability to achieve
anticipated cost savings, any additional unexpected charges or
costs, any disruptions to execution in connection with the
indefinite idling of the pulp and paper operations at Calhoun, Tennessee, and those set forth under
Part I, Item 1A, "Risk Factors," of our annual report on Form 10-K
for the year ended December 31, 2020, filed with the U.S.
Securities and Exchange Commission (or, the "SEC")
on March 1, 2021, which have been heightened by the COVID-19
pandemic, including related governmental responses and economic
impacts, market disruptions and resulting changes in consumer
habits.
All forward-looking statements in this press release are
expressly qualified by the cautionary statements contained or
referred above and in the company's other filings with the SEC and
the Canadian securities regulatory authorities. The company
disclaims any obligation to publicly update or revise any
forward-looking information, whether as a result of new
information, future events or otherwise, except as required by
law.
About Resolute Forest Products
Resolute Forest Products is a global leader in the forest
products industry with a diverse range of products, including
market pulp, tissue, wood products and papers, which are marketed
in over 50 countries. The company owns or operates some
40 facilities, as well as power generation assets, in
the United States and Canada. Resolute has third-party certified
100% of its managed woodlands to internationally recognized
sustainable forest management standards. The shares of Resolute
Forest Products trade under the stock symbol RFP on both the New
York Stock Exchange and the Toronto Stock Exchange.
Resolute has received regional, North American and global
recognition for its leadership in corporate social responsibility
and sustainable development, as well as for its business practices.
Visit www.resolutefp.com for more information.
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SOURCE Resolute Forest Products Inc.