Canfor Pulp announces asset write-down and impairment charge

Core Viewpoint - Canfor Pulp Products Inc. will incur a non-cash asset write-down and impairment charge of approximately $106 million in Q4 2025 due to declining global pulp prices and challenges in securing economically viable fiber [1]. Financial Performance - The estimated net debt to total capitalization ratio is 116% as of December 31, 2025, with an EBITDA interest coverage ratio of (0.1) times [2]. - Management forecasts continued declines in financial performance in Q1 2026, indicating a high probability of non-compliance with financial covenants by March 31, 2026 [5]. Loan Facility and Covenants - The company renegotiated its operating loan facility, granting security to lenders and obtaining a waiver of financial covenants for Q4 2025 [3]. - Post-Covenant Relief Period, the company is subject to a maximum net debt to total capitalization ratio of 55% and a minimum EBITDA interest coverage ratio of 1.5 times, effective if the net debt to capitalization ratio exceeds 42.5% [4]. Proposed Transaction - Management is pursuing an Arrangement Agreement with Canfor Corporation, but the success of this initiative is uncertain [6]. - Discussions with lenders regarding future financial covenant relief are currently on hold, pending the outcome of the Proposed Transaction [6]. - The company does not expect the news release to adversely affect the completion of the Proposed Transaction [7]. Company Overview - Canfor Pulp is a leading global supplier of pulp and paper products, operating two mills in Prince George, British Columbia, with a total capacity of 480,000 tonnes of Premium Reinforcing Northern Bleached Softwood Kraft pulp and 140,000 tonnes of kraft paper [13].