February 7, 2008 / 9:18 PM / 10 years ago

UPDATE 1-TimberWest to close Elk Falls sawmill

(Adds fourth-quarter results)

VANCOUVER, British Columbia, Feb 7 (Reuters) - TimberWest Forest Corp TWF_u.TO will close its Elk Falls sawmill after failing to sell the facility on Vancouver Island, the company said on Thursday.

TimberWest made the announcement shortly before the trust reported a jump in fourth-quarter distributable cash, which was due to a land sale that offset weak wood markets in the United States and Japan.

The shutdown in early May of the Elk Falls mill and a related wharf operation will affect 257 jobs. The mill has an annual capacity of 115 million board feet, much of which was sold in the Japanese market.

The mill, in the town of Campbell River, British Columbia, has been up for sale since late 2005, but TimberWest said none of the prospective buyers stepped forward with formal bids. The closure resulted in a C$18.4 million ($18.2 million) writedown.

The company said on Thursday the mill had a history of financial losses, although it described it in 2005 as one of the best performing mills in the troubled forestry industry on British Columbia’s Pacific Coast.

It was TimberWest’s only sawmill.

The company has reorganized itself in recent years to focus on log sales, and has been selling former logging operations in the picturesque coastal region for housing development.

TimberWest said on Thursday it generated C$55.4 million in distributable cash in the last quarter, or 71 Canadian cents per unit. That compared with C$27.5 million, or 35 Canadian cents a unit, a year ago.

The fourth quarter 2007 results included C$64.7 million from a land sale.

It’s net loss in the quarter was C$100,000, compared with a net profit of C$14.8 million a year ago.

$1=$1.01 Canadian Reporting Allan Dowd, Editing by Peter Galloway

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