A3

by Derwin Gowan, CandaEast News Service

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A Sicilian immigrant who started making cheese in Montreal in 1954 apparently sees an opportunity in forestry on the Miramichi.

Jolina Capital Inc., the personal holding company of Lino Saputo Sr., bought the shares Saputo did not already own of Arbec Forest Products Inc. in 2006. Arbec operates three sawmills in Quebec. Its executives were present at a meeting in Miramichi last week. Executives of Arbec Forest Products Inc. from Saint-Léonard, Que., met for an hour and a half with politicians and others in Miramichi city hall last week. Nobody would say much afterwards, except that it concerned a possible economic development on the river.

Jolina Capital Inc., the personal holding company of Lino Saputo Sr., bought the shares he did not already own of Arbec in 2006.

Saputo and other members of his family started Saputo Inc., (TSX:SAP) in 1954. Today the company employs 9,200 people at 47 plants in dairy and grocery divisions in Canada, the United States, Argentina, Germany and the United Kingdom. In New Brunswick Saputo Inc. owns Baxter Dairies. The company completed its initial public offering of shares in 1997.

Today, Lino Jr. acts as president and chief executive officer, and other family members serve as directors.

Arbec, which started as a private company in Montreal in 1993, operates three sawmills at Lac St-Jean, Port-Cartier and Labriville, plus an oriented strand board (OSB) mill at St-Georges near Shawinigan, all in Quebec. These operations, plus the head office in St-Léonard, employ 600 people directly and another 600 indirectly, said Serge Mercier, Arbec's vice-president finance, on Thursday.

Weyerhaeuser Co., owns an OSB mill in Miramichi that it does not intend to reopen, but nobody will confirm publicly that the parties talked about this mill last week.

"It was a confidential meeting with Miramichi representatives," Mercier said on Thursday. "We have nothing to say on that meeting for the moment."

"I will not comment one way or the other," said Wayne Roznowsky in Alberta, spokesman for Weyerhaeuser Canada. "I can't comment on anything that's speculation."

The provincial government cancelled Weyerhaeuser's licence to Crown forests last winter - so anyone who wants to restart the Miramichi OSB mill will have to negotiate with the Department of Natural Resources as well as the woodlot marketing board to secure raw material.

Natural Resources was represented at the meeting last week, but nobody has submitted a formal proposal for an allocation of wood, a spokesperson said on Thursday.

Besides the Weyerhaeuser mill, the Finnish company UPM-Kymmene owns a groundwood pulp mill and coated paper mill in Miramichi, along with a sawmill in Blackville, it does not intend to restart. UPM-Kymmene, which operates a sawmill in Bathurst, still manages three Crown licences.

Jolina Capital first bought shares in Uniforêt, renamed Arbec in 2005, in 1998, the year after Saputo Inc. went public.

Saputo Inc. built its new headquarters, production facilities, national distribution centre and regional sales offices in St-Léonard in greater Montreal in 1989.

Uniforêt later established its corporate headquarters in St-Léonard. The company listed its shares on the Toronto Stock Exchange in 1995.

By 1998 Jolina Capital held four per cent of Uniforêt stock. That year Jolina acquired more than 15 million shares in two separate transactions at $2 per share, bringing its stake in Uniforêt to 41 per cent.

Uniforêt filed for court protection in 2001. The company got back on its feet by 2003, and changed its name in 2005.

On March 1, 2006, Arbec directors recommended that other shareholders accept Jolina's offer to buy them out at 35 cents per share. Jolina owned 30.5 per cent of the company by this point. Jolina made its offer on Feb. 3. Arbec shares closed at 28 cents in Toronto on Feb. 2. The shareholders took the money.

Jolina Capital already has a minor stake in New Brunswick's forestry sector through the shares it owns in the Quebec company Tembec Inc. Jolina did own 19.35 per cent of Tembec shares, but this was diluted as a result of recapitalization of Tembec this year. Tembec holds a five per cent interest in partnerships with Aditya Birla in the dissolving pulp mills in Atholville and Nackawic.