May 2, 2008 / 4:43 PM / in 10 years

CORRECTED - Tembec results dogged by weak lumber market

(In second paragraph, corrects year-earlier loss to C$45 million from C$49 million)

VANCOUVER, British Columbia, May 2 (Reuters) - Tembec Inc TMB.TO, the Canadian forest products company, reported a bigger loss for the first three months of the year on Friday, a period in which it restructured its balance sheet.

Tembec said it had a net loss of C$59 million ($57.8 million) in the quarter. That compared with a loss of C$45 million during the equivalent quarter a year earlier.

The Quebec-headquartered firm completed a recapitalization at the end of February under which it converted about US$1.2 billion in debt into equity, a move that left its former shareholders with only about a 5 percent stake.

Tembec’s net loss for the two months of 2008 before the restructuring was C$42 million, or 49 Canadian cents a share. For the final month of the quarter, it had a loss of C$17 million, or 17 Canadian cents a share.

Tembec continued to struggle in the quarter with weak lumber prices, which offset improved market conditions in the pulp sector. Its operations were also hit with higher fuel costs.

Its shares were up 6 Canadian cents at C$4.15 on the Toronto Stock Exchange at midday on Friday.

$1=$1.02 Canadian Reporting Allan Dowd, Editing by Peter Galloway

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