Shareholders of Nexfor Inc. (TSX:NF)voted Tuesday to split the company into two separate arms, a fine paper company and a panelboard business.
The split will allow the two companies to pursue their own objectives, Nexfor said in the proxy circular for the meeting. Each company will have its own board and management.
The division was backed by Nexfor's controlling shareholder, holding company Brascan Corp. (TSX:BNN.a). It owns 43 per cent of Nexfor's common stock and 75 per cent of the preferred shares.
Norbord Inc. is the profitable panelboard company, while Fraser Papers Inc. is the money-losing paper producer.
According to pro-forma financial statements, Fraser would have lost $79 million US ($2.63 a share) on sales of $873 million US in 2003. Norbord would have made $178 million US ($1.14 a share) on sales of $1.07 billion US.
Norbord is expected to continue Nexfor's annual 40-cents-a-share dividend on common stock, while it will be up to Fraser's board to make dividend decisions, the circular said.
The split is expected to be effective on June 30. Then Norbord will trade on the TSX under the ticker NBD, and Fraser as FPS.
Nexfor holders will get one Fraser share for every five Nexfor shares, and Nexfor will be renamed Norbord.
Shares of Nexfor closed down 2 cents at $16.08 while Brascan shares rose 19 cents to $36.19 on the TSX.