Boundary Wood looking for capital of $3 - 5 million
By Mona Mattei
Over 100 people from the West Boundary area have said that they are interested in potentially buying a $10,000 share in the newly formed Boundary Wood Products Inc. The company, unveiled by local government representatives last week, is trying to raise between $3 – 5 million to finance the new business. Following the announcement by the West Boundary Communities of the Village of Midway, City of Greenwood and regional district area E about the purchase agreement for the Midway sawmill property, this week’s community meetings provided information on the plan for operations of the mill, securing fibre supplies, infrastructure improvements and costs. “What we are trying to do is to raise (the funds) from the community in order to gain control of that mill. We want the people of the Boundary, Osoyoos and Grand Forks to own the majority of the voting block of shares for the corporation,” said Stephen Hill, financial planner and federal conservative candidate who has been assisting the group to put the deal together. “The question is do we want to make a go of that mill or do we want some outsider to come in and control it for us. I know what the answer to that question is.” On Sept. 27 a deal was negotiated for the purchase of the Midway sawmill from Fox Lumber Sales Inc. (previously owned by Pope and Talbot Inc.) The deal, developed over the past few months with the assistance of community leaders, local governments of Midway, Greenwood and regional district area E, is targeted to close in November and the anticipated mill re-opening will be within six months. The local government has contributed $250,000 towards the company already. Boundary Wood intends to lease the operations of the mill to another company, said Midway Mayor Randy Kappes. They are in discussion with three potential operators who are all interested in investing in the site. Kappes explained that the contracted operator will be responsible for the cost of upgrading the mill for operations which could be close to $20 million. While the actual cost of the property and equipment is only $1.5 million, the additional capital being raised will be used to secure wood sources. A large investor based in Ontario has already committed enough capital for the business to move forward, said Hill. “I’m here to say there’s an opportunity. The mill’s opening. That’s a foregone conclusion. The question is: are the people back east going to own it or are you going to own it?” asked Hill. In addition to the development of this new corporation, there is also a new community forest in the works – the Boundary Community Forest Association. This association is just in the beginning phases, but has received blessing from Minister of Forests Pat Bell and a commitment of 20,000 hectares of fibre which will also supply the mill. Negotiations have taken place with First Nations communities as well and they have indicated an interest in providing wood for the mill should it get operational. Hill also indicated that the mill property will be leased for only $1 per year to the contracted operator, but that the real benefit will come from royalties paid on the sales of lumber products. The royalties will be paid to Boundary Wood and will form their income along with the sale of wood from their owned timber farm licences. A lending proposal has also been offered by the Heritage Credit Union based in Greenwood to provide loans for share purchases based on the qualifications of the applicants. Shares have been approved for venture capital tax credits under the Province of B.C.
More information will be forthcoming in the offering memorandum which is currently being developed. Prior to any commitment to the share purchases this document will answer many of the questions as to who the operator of the mill will be and identify contracts for wood fibre.
