April 30, 2008 / 10:40 PM / in 9 years

TimberWest hit by poor sales; may have mill buyer

VANCOUVER, British Columbia, April 30 (Reuters) - Weak log sales pushed TimberWest Forest Corp TWF_u.TO into a net loss in the first quarter, and the company warned on Wednesday not to expect an improved market in the near future.

TimberWest also said it is talking to a potential buyer for its Elk Falls sawmill, which it plans to close this month after having been unsuccessful in selling the facility over the past two years.

Catalyst Paper, which operates an adjacent pulp and paper mill, blamed the pending closure of the sawmill on Tuesday for its decision to cut jobs and indefinitely idle a paper machine at its facility.

TimberWest, which operates as a trust, said it had a net loss of C$23.3 million in the quarter. That compared with a profit of C$3.7 million in the same period a year ago.

That equated to a loss of money available for distributable cash of $7 million, or 5 Canadian cents per stapled unit, compared with a gain of C$26.9 million, or 35 Canadian cents per unit, in the first quarter of 2007.

TimberWest has shifted itself in recent years from being a lumber producer to selling just logs and real estate from its private land holdings on Vancouver Island and other islands on the British Columbia coast.

It said its log harvesting was down 71 percent from a year ago and revenues from log sales off 64 percent. Real estate sales were up, but the company said they were still falling short of potential.

Logs sales have been hit by both the collapse of the U.S. housing market and oversupply in other international markets, it said.

TimberWest plans to close its Elk Falls mill on May 9, but said a potential buyer, which it did not identify, has been conducting due diligence on the facility.

The company said it would prefer to sell the mill rather than close it, but warned it was still unclear if the talks would actually result in a deal. ($1=$1.01 Canadian) (Reporting Allan Dowd, editing by Rob Wilson)

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