MONTREAL – The union representing Resolute Forest Products employees isn’t sharing investors’ delight at the company’s decision to share $100 million with its shareholders by repurchasing outstanding shares.
Martin Lavoie, local president of the Communications, Energy and Paperworkers Union in Baie Comeau, Que., called the move “shameless.”
The Montreal-based forestry company announced Tuesday evening that it would purchase up to 10 per cent of its 98.9 million shares for a maximum of $100 million.
Chief executive Richard Garneau stated that its strong financial position presented “an attractive opportunity to make money for shareholders.”
The announcement prompted Resolute’s shares to close at $11.96, up 11.57 per cent or $1.24 in Wednesday trading on the Toronto Stock Exchange.
Lavoie said he was surprised and disappointed by the announcement. He noted that the company hasn’t yet lived up to it commitment during its creditor restructuring in 2009 to invest that amount in the Quebec facility.
Instead, it has closed one machine and cut some 200 unionized jobs over the past two years, he said in an interview.
Companies often repurchase their stock as an alternative to paying dividends.
As part of the corporate restructuring, Resolute agreed to suspend dividends payments until the pension fund of its Quebec workers is at least 80 per cent solvent.
Meanwhile, Resolute said Wednesday that AbitibiBowater shareholders formally agreed to ditch the company’s name and legally replace it with Resolute Forest Products. Approval to change the company’s certificate of incorporation was provided at its annual meeting in Charlotte, N.C.
AbitibiBowater (TSX:ABH) has been the company’s corporate name since the 2007 merger between Montreal-based Abitibi-Consolidated and U.S.-based Bowater Inc.
The company began to use Resolute Forest Products as its operating name last October, but required shareholder approval to change its legal moniker as of Thursday.
Resolute will hold the ticker symbol RFP on both the Toronto and New York stock exchanges.
Shareholders also elected eight directors: Richard Evans, Richard Falconer, CEO Richard Garneau, Jeffrey Hearn, Bradley Martin, Alain Rheaume, Michael Rousseau and former U.S. ambassador to Canada, David Wilkins.
Resolute produces newsprint, commercial printing papers, market pulp and wood products at 18 company owned or operated pulp and paper mills and 24 wood products mills in Canada, the United States and South Korea.
— With files from Sylvain Larocque