First West Capital provides new source of financing for long-time industry leader

Watkins Sawmills Ltd. has grown from a modest beginning to one of the largest manufacturers of Western Red Cedar Roofing and Siding in North America.

Watkins Sawmills Ltd has been proudly family owned and operated since it started operations in Ruskin, BC almost 70 years ago. The business has grown from modest beginnings to become one of the largest manufacturers of cedar shakes and shingles in North America.

Ed Watkins and his brother, Len, had been co-piloting the family business for almost 20 years until Len passed away suddenly in 2011. By the fall of 2013, the company had come to an arrangement for the purchase of Len’s share of the business, but a perfect storm of factors conspired to make funding the buyout a challenge. A new log supplier, a fire, a lawsuit and a slowdown resulting from the slower than expected recovery in the US economy had put a crimp on the company’s usual financing channels.

Understanding the intangibles

Watkins is a fourth generation family business; with 125 years of management experience in the forestry industry, the management team had weathered many previous industry downturns. The company had made many sound business decisions in the 2011-2012 period. It used funds to secure a steady, long-term supplier of logs and secured ownership of a proprietary fire-retardant process that gave it a sustainable competitive advantage in the industry. The business was sound and the economy was looking up, but financing options were limited.

First West Capital Associate Director, Sarah Lloyd says, “After talking with the management team and a visit to view their operations to get a better understanding of their business, it was very clear that this was a well-run company. They had ridden out the recession very well and were in a great position strategically to rebound strongly over the next few years.”

First West Capital quickly became a trusted advisor

PwC was advising Watkins. When it came time to put a financing deal together, First West Capital came highly recommended by both PwC’s Mike Vermette and Chris Stucco.

Ed Watkins commented, “To be honest, I wasn’t at all familiar with First West Capital, but they came highly recommended and I soon saw why. Kristi Miller and Sarah Lloyd were straightforward about our options and easy to talk to — they had clearly done their homework about our business. They made it very easy from our side to pull together the necessary documentation, projections and financial records needed to support the proposal and meet the closing deadline.”

The deal closed in the fall of 2013 and, as expected, Watkins’ management experience and keen strategic vision resulted in a strong year in 2014 and a phenomenal 2015. The company repaid the term loan right on schedule late last year.

Ed Watkins says, “The company has never been stronger. We are currently eyeing a number of expansion opportunities and possible acquisitions and will certainly be looking to First West Capital again for financing options. ”