Canfor Pulp Products Inc. has amended its operating loan facility to obtain temporary covenant relief as weak global pulp markets continue to strain the company’s financial position.
The amendment, announced on December 2, provides a waiver of financial covenants for the fiscal quarter ending December 31, 2025, and introduces new liquidity requirements during the relief period.
Under the revised terms, Canfor Pulp granted security to its lenders and is now required to maintain a minimum liquidity level of $10 million through the Covenant Relief Period. This effectively reduces the available operating loan capacity from $160 million to $150 million.
As of September 30, 2025, the company remained fully compliant with all covenants and reported $54 million of available liquidity on a proforma basis, alongside a net debt-to-capitalization ratio of 45.3%. By December 1, available liquidity had declined to approximately $38 million, reflecting ongoing pressure from depressed global pulp prices and reduced cash generation.
Financial Conditions After the Relief Period
Once the Covenant Relief Period expires, Canfor Pulp will again be subject to its standard financial tests. These include:
- a maximum net debt-to-capitalization ratio of 55%, and
- a minimum EBITDA-to-interest coverage ratio of 1.5x, which applies if net debt-to-capitalization exceeds 42.5%.
These covenants will continue to play a central role in lender oversight as the company navigates a challenging market environment.
Global Market Headwinds Persist
The global pulp sector has faced prolonged weakness throughout 2024 and 2025, with pricing pressure and high input costs affecting producers across major markets. Canfor Pulp, which operates two mills in Prince George with capacity for 780,000 tonnes of NBSK pulp and 140,000 tonnes of kraft paper, has not been immune to these conditions.
Canfor Pulp Products Inc. is a leading global supplier of pulp and paper products with operations in northern British Columbia. The company operates two mills in Prince George with a combined capacity of 780,000 tonnes of Premium Reinforcing NBSK pulp and 140,000 tonnes of kraft paper. Its shares trade on the Toronto Stock Exchange under the symbol CFX.
