Resolute Forest Products buys Boralex co-generation plant in Dolbeau, Que.
MONTREAL - Resolute Forest Products has purchased the idled co-generation operation at Dolbeau, Que., from Boralex for $5 million.
The deal could allow Resolute to reopen one paper machine at the mill.
Boralex (TSX:BLX) permanently closed the facility and announced plans in November to sell the co-generation operation which produced electricity that was sold to Hydro-Quebec from wood waste and steam used in the paper making process.
The 28-megawatt plant has operated only four months a year since 2009 in order to receive higher winter energy rates. It has been on indefinite shutdown since April, affecting 30 to 40 workers.
The closure of Resolute, formerly AbitibiBowater's (TSX:ABH) adjoining mill disrupted the supply of wood and sale of steam, forcing Boralex to look for alternatives.
Boralex (TSX:BLX) took a $6.5-million writeoff in the third quarter ($4.3 million after taxes) and ended its electricity supply deal with the public utility.
During the last quarter, it accounted for a couple hundred thousand dollars of Hydro-Quebec penalties for the year.
Resolute is trying to convince Hydro-Quebec to restart the electricity purchase agreement for Dolbeau.
Last month, the company asked the provincial energy regulator to intervene as Hydro-Quebec added a new criteria that disqualified the Dolbeau facility. Resolute and Hydro said Monday they are discussing a possible solution.
Boralex's remaining Canadian biomass asset in Seneterre, Que., is running smoothly and remains part of the company's core portfolio.
Boralex sold its five U.S. wood-residue plants in Maine to private energy company ReEnergy Holdings for about US$88 million.
The sale follows Boralex's desire to cope with what it called in its last earnings report "difficult business conditions" in the U.S. thermal power market.
Boralex said it expects to book an after-tax gain of about US$81 million from the sale and will use the money to invest in other clean power projects in North America and Europe.
On the Toronto Stock Exchange, Boralex shares closed up 11 cents at $8.45 in Monday trading. Resolute shares gained seven cents to $15.83.
— With files from Sylvain Larocque.