LUMBERYARDS

LP purchased OSB plant in Brazil

BY Brae Canlen

Louisiana-Pacific Corp. has announced that its subsidiary, LP South America (LPSA), has purchased the remaining 25% interest in an oriented strand board (OSB) mill in Ponta Grossa, Parana, Brazil.

In 2008, LPSA entered into a joint venture agreement with Masisa-Brasil in which LPSA bought 75% of the plant, called LP-Brasil OSB Industria e Comercio S.A., and its assets. The purchase agreement included a put/call option for the remaining Masisa ownership. On May 12, 2011, Masisa exercised its option to sell its remaining 25% ownership for $24 million, including working capital. The acquisition was funded with $19.5 million of cash on hand and $4.5 million of borrowings under a short-term credit facility with a Chilean bank. LP-Brasil expects to borrow approximately $10 million under a term loan from a Brazilian bank in the near future to replenish its South American cash balance. 

"The completion of this purchase is an important next step in our strategic focus on growing business in South America," said Rick Olszewski, LP’s executive VP sales and president of LPSA. 

The Ponta Grossa OSB plant was placed in service in 2003 and has an annual production capacity of 390 million sq. ft. LPSA also owns two OSB mills in Chile with a combined annual production capacity of 290 million sq. ft., according to the announcement from the Nashville, Tenn.-based company.

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Remodeling activity up for 18th consecutive month

BY HBSDEALER Staff

Residential remodeling activity continued to rise across the United States, showing a 15% increase in April 2011 in year-over-year comparisons, according to an index compiled by BuildFax, which uses a national database of building permit data. 

The latest BuildFax Remodeling Index (BFRI) indicates that residential remodeling activity registered its eighteenth-straight month gain.

“April traditionally sets a baseline for the rest of the year in residential remodeling activity, and April 2011 is the best we’ve seen since the beginning of the index in April 2004,” said Joe Emison, VP research and development at BuildFax. “The BFRI is indexed to start at 100 in April 2004 and here we are seven years later, after significant drops in housing value, and the index is almost 110. That means there were almost 10% more residential remodels in April 2011 than in April 2004. Given the relatively pessimistic economic news that we heard about in April, including a slowing recovery, this is a nice surprise for the industry."

In April, all regions posted month-over-month gains, and only the Midwest posted a year-over-year loss. The West was up 18% year-over-year and up 5.3 points, or 5%, month-over-month. The Midwest was down 19% year-over-year and up 17% month-over-month, recovering slightly from a lower-than-average March. The Northeast was up 5% year-over-year and 14% month-over-month, and the South was up 11% year-over-year and 12% month-over-month.

Based in Austin, Texas, and Asheville, N.C., BuildFax bases its index on a proprietary property intelligence engine that contains building and permitting information from 4,000-plus cities and counties across the United States. 

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NAHB sees few bright spots in residential construction stats

BY HBSDealer Staff

After housing starts showed modest month-to-month improvement yesterday, rising in May to a seasonally adjusted annual rate of 560,000, the National Association of Home Builders (NAHB) expressed concerned over the pace of economic growth.

"While the upward movement registered in today’s report is somewhat good news, housing production continues to bounce along the bottom near historic lows, and is only running at a level necessary to replace dilapidated or destroyed units," said Bob Nielsen, chairman of the NAHB and a home builder from Reno, Nev. 

Single-family housing starts rose 3.7% to a rate of 419,000 units in May — their strongest pace since this January. Multi-family starts rose 2.9% to a 141,000-unit rate in May.

"Like consumers, builders remain very concerned about the pace of economic growth and are awaiting signs of improvement before moving forward with new projects," noted NAHB chief economist David Crowe. "The relative bright spot in new-home construction is on the multi-family side, where improving demand for rental apartments is spurring gains in that sector. However, access to construction credit remains a limiting factor for new building."

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