Arizona Forest Restoration and Lumber Company Secures $200 Million Bond Financing
BELLEMONT, Ariz., Feb. 28, 2022
NewLife Forest Restoration LLC, the leading sustainable forest products business in the Southwest United States, has raised new funding to scale its forest restoration activities and reduce the incidence of catastrophic wildfires.
The company closed a $200 million “sustainability-linked” bond financing to fund the expansion of NewLife’s wood products manufacturing facilities and forest restoration capacity, enabling a significant increase in annual acreage restored. Goldman Sachs acted as underwriter and placement agent on the financing. The “sustainability-linked” bond issued by the Arizona Industrial Development Authority is one of the first of its kind in the U.S. “green bond” market and mandates specific forest restoration targets.
“These funds transform our company’s ability to lift Arizona’s forest restoration efforts to the much-needed level of scale,” said NewLife CEO Ted Dergousoff. “Not only will we accomplish our core mission, which is to restore the health of the forests and prevent wildfires, but we will make the whole industry sustainable and profitable.”
Dergousoff added, “The high value wood products we manufacture serve customers in some of the largest home building markets in the United States with the highest quality soft wood products in the region.”
NewLife is the largest vertically integrated forest products business in the Southwest region with next-generation manufacturing facilities currently producing value-added wood products. NewLife works closely with an ecosystem of local industry partners including mechanical thinning crews and smaller forest products manufacturing facilities.
NewLife has developed a manufacturing system to extract value from the low-quality fiber removed from the forest as part of its restoration initiatives. The expansion program will dramatically increase the total industry processing capacity within the Four Forests Restoration Initiative (4FRI) operating area, enabling large-scale forest restoration efforts across Arizona. The company will restore 25,000 acres of forestland per year, dramatically expanding the capacity to proactively address the rising concerns of wildfire.
Through its subsidiary, NewLife is contracted by the U.S. Forest Service (USFS) as part of the 4FRI. The landscape scale restoration project was designed to combat the impact of climate change and reduce the risk of catastrophic wildfire by restoring the forests to a more natural state while protecting large healthy trees, wildlife and the watershed. Wildfires have devastated the western forests, endangering local towns, causing severe damage and unleashing huge quantities of greenhouse gases.
NewLife has managed Phase 1 of the 4FRI contract, the nation’s largest forest stewardship contract, since 2017 and partners with the USFS on mechanical thinning initiatives throughout Arizona, with plans to expand to neighboring states.
The company will use the proceeds of the bond to complete the build-out of its 425,000-square-foot industrial facility in Bellemont, Ariz., which will include a new high-speed sawmill, planer mill, and dry kilns. NewLife will also double the capacity of its Engineered Wood Products (EWP) plant and significantly expand the capacity of NewLife’s Lumberjack sawmill located near Heber, Ariz.
Production from the new sawmill will commence in the next six months and scale to full capacity in 2023, in a multi-phase roll-out that will create hundreds of new jobs with opportunities in the sawmill, remanufacturing facilities, forest operations, and hauling operations.
NewLife is majority owned by Lateral Investment Management, a San Mateo, California-based private equity investment firm focused on transformational growth companies in the US middle market. Lateral has invested more than $100MM in NewLife and was a participant in the bond offering.
“NewLife has reshaped the challenging economics of forest restoration,” said Lateral’s Managing Partner Richard de Silva. “We believe that NewLife can become the engine behind a sustainable forest products industry in Arizona at the forefront of combating climate change.”
NewLife’s long term strategy is to expand to address the scourge of catastrophic wildfires in other states and regions by actively managing forest health while producing high quality lumber products and revitalizing the local economies.
“We think the public-private model in Arizona, which empowers local industry with NewLife’s production infrastructure at the core, will be the blueprint for forest restoration worldwide,” said de Silva
About NewLife Forest Restoration LLC
NewLife Forest Restoration is a sustainable forest products company which restores overgrown forests to a healthy, more natural state with the mission of reducing the incidence of catastrophic wildfires. NewLife manufactures a variety of softwood lumber products to supply the fast-growing housing markets in Arizona, California and Texas. The company supports a burgeoning network of suppliers, customers, and partners as it redevelops the forest products industry in Arizona with a new focus on restoration. Visit www.nlfpaz.com for more information.
About Lateral Investment Management LLC
Lateral Investment Management is a private investment firm that enables transformational growth at owner-operated middle market businesses in North America. Lateral provides “first institutional” growth capital and value-added support to established businesses that can become leaders in key sectors such as manufacturing, healthcare and infrastructure at the intersection of technology and disruptive change. Lateral embraces the mission of companies that create high quality jobs, protect the earth, and solve problems for humanity. Visit www.lateralim.com for more information.