Timberwest posts loss

Jul 27, 2009. /Lesprom Network/. In spite of depressed business conditions, TimberWest continues to manage its business to reduce costs and preserve value for the long run, ForestTalk reports. Very weak timberland markets at home and abroad have resulted in record low harvest levels and sales realizations. Log sales volumes were down 41% in Q2, 2009 compared to the equivalent prior year period and logging production was down 56%, this combined with pricing at all time lows resulted in log sales revenues tracking at about a third of normal levels. Consequently, the Company generated a distributable cash loss for the quarter ended June 30, 2009 of $5.4 million, or $0.07 per Stapled Unit, compared to a distributable cash loss of $3.2 million, or $0.04 per Stapled Unit in Q2, 2008. On a year-to-date basis, the distributable cash loss was $20.7 million which includes $9 million of financing costs in the first quarter. This compares to a distributable cash loss of $7.1 million, or $0.09 per Stapled Unit, for the first half of 2008. On the positive side, real estate revenues were $6.7 million for the quarter higher than this time last year and higher than the first quarter of the year. With respect to subdivision of harvesting contracts in our timberlands division, the Company continues to award new contracts which are expected to result in significant cost savings to the Company when harvest levels return to normal levels. The Company continues to show outstanding results with regards to safety performance. Finally, third party surveillance audits were successfully completed of the Company's environmental certifications, IS14001, SFGI and PEFC Annex (4) with no nonconformance "We have not changed our outlook for the remainder of the year, given that extremely difficult economic conditions are expected to remain essentially unchanged," said Paul McElligott, President and Chief Executive Officer, TimberWest. Given the Company's lack of visibility on the recovery, it is prudent to conserve cash and protect the balance sheet wherever possible. As such the Company has made the decision to pay the interest on the convertible debentures with convertible debentures (in kind) beginning on October 15, 2009. The Company has approval from its unitholders to pay the convertible debentures interest in kind for four quarters at which point, if the Company still requires the ability to pay the interest in kind, it will require further unitholder approval to do so. "TimberWest has lowered its harvesting plans on its public and private lands to 1.2 million m(3) for the year and will continue to do whatever it can to manage costs down in this environment while continuing with its deferred harvest strategy. Leaving trees to grow on the stump today preserves value and in the long run our trees will increase in size and value," added McElligott. "While our short term outlook has not changed, we also have not changed our bullish views on the mid- and long-term potential of both our timberland and real estate businesses. We own a superb asset base in a very desirable part of the world."