Domtar to permanently shut down one pulp machine at Kamloops mill

On December 13, Domtar Corporation announced that it will permanently shut down one pulp machine at its Kamloops, British Columbia pulp mill. Prevailing economic conditions in the global pulp markets and the deteriorated competitiveness of this small pulp manufacturing line, coupled with unforeseen boiler repair costs, have forced the company to proceed with the shutdown. This decision will result in a permanent curtailment of the company’s annual pulp production by approximately 120,000 air-dried metric tons of sawdust softwood pulp, and will affect approximately 125 employees. These measures are expected to be in place by the end of March 2013. The total pre-tax charge to earnings in connection with these changes is estimated to be $32M of which an estimated $24M represent non-cash charges relating to the write-off and the accelerated depreciation of the carrying amounts of the manufacturing equipment, related spare parts and supplies inventory. Of the estimated pre-tax cash charges of $8M, $5M relates to severance and employee benefits and $3M relates to other items such as training. Of the estimated total pre-tax charge of $32M, $16M is expected to be recognized in 4Q12 and $16M is expected to be incurred during 2013.

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