Teal Jones, one of Surrey’s biggest manufacturing employers, is battling bankruptcy.
The company filed for creditor protection on Friday under the Companies’ Creditors Arrangement Act (CCAA) and, since it owns mills in the U.S., will also be filing for Chapter 15 protection in the U.S. under the U.S. Bankruptcy Code.
According to documents filed in support of its application for protection under the CCAA, Teal Jones, founded in 1946, is the largest privately held forestry companies operating on the west coast of Canada. It is owned by two brothers — Dick and Tom Jones — who are sons of founder Jack Jones.
It employs roughly 1,000 people, including 400 in Surrey, where it operates three mills that produce lumber, cedar shakes, and shingles and guitar tops.
In the first two months of 2024, the company said costs exceeded sales, resulting in a $4 million loss.
As BIV News noted in a recent story on the outlook for forestry, lumber prices fell below US$400 per thousand board feet in 2023 and remain just slightly above US$400 per thousand board feet -- roughly half the average price in 2022 of $814 per thousand board feet.
Analyst Russ Taylor noted US$400 is the break-even point for many sawmills in both Canada and the U.S.
Taylor said it's unusual for forestry companies to seek CCAA creditor protection.
"I don’t expect any more CCAA situations in B.C.," he told BIV News, "just mill closures from weak financial situations or a lack of timber."
Teal Jones partly blames its current financial crisis on low lumber prices.
“When coupled with inflationary pressures, which increased labour and other input costs and rapidly escalating interest rates which increased debt service costs, the petitioners have been faced with reduced liquidity in their ongoing operations,” Teal Jones CFO Gerrie Kotze says in an affidavit.
The company also noted in a report by its monitor, PwC, that “a costly protracted demonstration at the logging site of one of forest licences" cost the company $40 million.
The reference is likely to the Fairy Creek anti-logging protests on Â鶹´«Ã½Ó³»IsIand between 2020 and 2022. Teal Jones’ Tree Farm Licence 46 was one of the areas targeted by protesters.
Teal Jones notes that it is in the process of selling off assets and seeks an order protecting the company against creditors while it restructures.
"The petitioners require a stay of proceedings to maintain the status quo and protect and preserve the value of it business for the benefit of the creditors and stakeholders while restructuring their affairs,"the company says.
BIV News has asked Teal Jones for comment on the company's plans.
Surrey Board of Trade president Anita Huberman said Teal Jones is a "valuble economic asset" for Surrey.
"The Surrey Board of Trade is aware of the challenges that Teal Jones has face," Huberman said in an email to BIV News.
"We have tried to help them in many ways but rising interest rates, lumber industry challenges and property taxation are challenging elements to battle. We will continue to support them in any way that we can. They are a valuable economic asset to Surrey and to our province."
