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Resolute faces threat of expulsion


MONTREAL—Resolute Forest Products is facing the threat of expulsion from the group that manages a widely-used international forest certification system.

The Forest Stewardship Council said yesterday that its international board will decide in March whether to recommend that its 800 members vote to remove the Quebec-based company—the second-largest holder of FSC certifications in North America.

Director general Kim Carstensen said it was considering the move after verbal attacks by Resolute, which has rejected an FSC proposal for mediation to find peace among producers, First Nations, and environment groups.

“Over the last months, we have repeatedly tried to open the door for constructive engagement from Resolute,” Carstensen said in a news release.

“Instead, Resolute has made derogative comments and attempted to instill public distrust in our system,” Carstensen noted.

“This behaviour is contrary to what is expected from FSC’s members.”

Expulsion would be a first for 22-year-old organization, said FSC Canada president Francois Dufresne.

However, he noted that losing membership doesn’t necessarily mean Resolute’s forests would lose their FSC certifications.

Resolute CEO Richard Garneau said it was disturbing that FSC would consider removing his company’s membership because it has objected to whether the organization should involve itself in a forest system that ultimately is controlled by provincial governments.

“If they decide that they don’t want to have a company that is a leader in sustainability . . . I find it really surprising,” Garneau said in an interview after Resolute posted its worst financial results since restructuring in 2008.

He accused FSC of siding with Greenpeace by including its environmental rival in the proposed mediation process—even though only the Ontario and Quebec governments can resolve issues with First Nations and caribou conservation plans.

Quebec has said it won’t participate in FSC’s mediation process.

In related news, Resolute posted a $214 million (U.S.) net loss in the fourth quarter, as sales fell 15 percent on lower prices and special items took a bigger chunk out of its bottom line.

The Montreal-based forestry company, which keeps its books in U.S. dollars, said yesterday the loss amounted to $2.39 per diluted share compared with a loss of $109 million, or $1.15 per diluted share, a year ago.

Sales dropped to $894 million from $1.055 billion.

Excluding special items, Resolute said it would have lost $26 million, or 29 cents per share, for the quarter compared with an adjusted profit of $35 million, or 37 cents per share, in the fourth quarter of 2014.

The special items grew to $188 million in the fourth quarter of 2015 compared with $144 million a year ago.

The company said they included a $176-million non-cash item to reflect the lower value of a mill in South Carolina.

In the fourth quarter of 2014, Resolute took a $131-million charge related to closures of three paper machines and mills.

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