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TORONTO (Reuters) - Forest products firm Tembec Inc TBC.TO tumbled to a loss in the first quarter, hurt by lower lumber prices, declining demand and the appreciation of the loonie, it said on Tuesday.
The company reported a loss of $60 million, or 70 cents a share in the quarter, compared to net earnings of $138 million, or $1.62 a share, a year earlier.
Sales in the period ended December 29 were $545 million, down from $649 million.
Following a trend in the tight forest products industry, Tembec said on Tuesday it will produce less lower-grade lumber from its sawmills in a bid to reduce excess capacity.
The company said there were lower shipments of spruce, pine and fir lumber in the quarter.
It logged 26,900 tonnes of maintenance downtime in the quarter, partly due to mill equipment failures, compared with 1,300 tonnes of planned maintenance downtime in the prior quarter.
Last month, Montreal-based Tembec rejected an alternative recapitalization plan proposed by Jolina Capital, an investment firm controlled by a major Tembec shareholder.
It will instead deliver 95 percent of the recapitalized company to debt holders by converting $1.2 billion of debt into new equity in a transaction that includes a loan of up to $300 million for additional liquidity.
The company said on Tuesday noteholders representing about 66 percent of outstanding notes have agreed to vote in favor of the plan.
Looking ahead, "lumber will continue to be challenging as producers will need to adapt to relatively weak demand fundamentals," Tembec said.
Reporting by Jonathan Spicer; Editing by Bernadette Baum