PRT Forest Regeneration Income Fund
TSX : PRT.UN

PRT Forest Regeneration Income Fund

December 19, 2007 16:53 ET

PRT Provides 2008 Market Outlook, and Reduces Distributions

VICTORIA, BRITISH COLUMBIA--(Marketwire - Dec. 19, 2007) - PRT Forest Regeneration Income Fund (TSX:PRT.UN) today released a preliminary assessment regarding its business and market outlook for 2008.

The recent downturn in US housing starts combined with the weaker US dollar has created an adverse operating environment for forest companies in Canada. Weaker lumber demand and lower profit margins have led to reduced timber cutting, mill closures, and cash flow preservation measures.

Seedling markets have been impacted by these events more than previously expected. Based on early indications the company expects demand in its market area will decline by 10% to 20% in 2008. While PRT expects to maintain its relative market share in 2008, prices have come under some pressure as surplus capacity comes available in the industry.

Government managed tree planting programs related to independent timber harvesting, Mountain Pine Beetle and forest fire damage continue to create growing seedling demand from the BC Government. However, government orders in 2008 are expected to be only marginally higher in 2008, and therefore will not offset reduced orders from forest industry customers.

President & CEO John Kitchen commented: "The current forest industry downturn is unprecedented, and the forest seedling industry is struggling to cope with the drop in seedling demand. While 2008 growing contracts are not yet final, our sales force has been doing a great job maintaining market share under these highly competitive conditions. Nevertheless, we believe the expected impact of lower volumes and prices in 2008 will necessitate prudent cash flow management measures. We have reviewed planned spending and capacity utilization, and will make reductions where we can without sacrificing long-term strategic initiatives. We are carefully monitoring our order book as it firms up, and will continue to develop strategies to balance short-term and long-term needs."

The Fund will update its outlook when it releases its fourth quarter results expected in late February 2008, when further contract details are known.

Distribution Change for 2008

In light of expected business challenges in 2008, the Board of Trustees and Management believe it is prudent to reduce monthly distributions from the Fund to bring them in line with the anticipated reduction in PRT's operating cash flow. Accordingly, the Fund will reduce its expected monthly distribution from $0.07 to $0.046 per month ($0.84 to $0.55 per year annualized), effective with the January 2008 distribution declaration.

About the Fund

The PRT Forest Regeneration Income Fund, through its operating subsidiary, Pacific Regeneration Technologies Inc., is the largest producer of container grown forest seedlings in North America. PRT operated 15 nurseries and managed approximately 200 million seedlings in 2007. The Fund's units are listed for trading on the Toronto Stock Exchange under the symbol PRT.UN.

Forward Looking Statements

Certain statements in this press release constitute "forward-looking statements" which involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. These statements include statements relating to estimated future production volumes, prices and revenues, as well as the financial impact of the volume and price changes. Words such as "anticipate", "expect", "potential", "intends", "opportunity", "believes", "may", "will" and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and actual events or results may differ materially.

There are many factors that could cause such actual events or results expressed or implied by such forward-looking statements to differ materially from any future results expressed or implied by such statements, including, but not limited to, our potential inability to successfully execute our sales and marketing strategies or achieve planned cost reduction measures.

Forward-looking statements are based on current expectations and the company assumes no obligation to update such information to reflect later events or developments, except as required by law.

Contact Information

  • PRT Forest Regeneration Income Fund
    Robert Miller
    VP Finance/CFO
    1-866-553-8733 ext. 227