International Paper Agrees to Sell 5.1 Million Acres of U.S. Forestland For Approximately $6.1 Billion
April 4th, 2006
STAMFORD, Conn. — April 4, 2006 — International Paper (NYSE: IP) today announced definitive agreements with two separate investor groups under which it will sell a total of approximately 5.1 million acres of forestlands for aggregate proceeds of approximately $6.1 billion. The sale of forestlands is part of International Paper’s previously announced transformation plan to focus on uncoated papers and industrial and consumer packaging.
Under one of the agreements announced today, International Paper will sell approximately 3.8 million acres of forestlands located across the southern U.S. and 440,000 acres in Michigan to an investor group led by Resource Management Service, LLC (RMS) for approximately $5 billion in cash and notes at closing. Under a separate agreement, International Paper will sell approximately 900,000 acres of forestland in Louisiana, Texas and Arkansas to an investor group led by TimberStar for approximately $1.1 billion in cash and notes at closing.
Upon closing these sales and the sales to conservation groups that were announced last week, International Paper will have sold 5.4 million acres, or approximately 85 percent, of its U.S. forestland holdings, and will have realized proceeds of approximately $6.5 billion. The company believes these combined transactions represent the largest private forestland sale in U.S. history.
“These agreements for the sale of forestlands at very attractive valuations are important steps forward in our plan to increase our focus and improve returns to shareowners,” said John Faraci, International Paper chairman and chief executive officer. “The strong value achieved is a testament to the expertise of our forest resources team and their excellent management of the forestlands. As we transition much of our forestland to new ownership, we continue to demonstrate our commitment to sustainable forestry and environmental conservation. The agreements we have negotiated will ensure this fiber will continue to come from sustainably managed forestlands.”
Because of the size and scope of these transactions and the extensive title work involved in completing them, International Paper expects to receive a portion of the proceeds in the third quarter, with the bulk of proceeds arriving in the fourth quarter of this year. The gain on these sales will be dependent upon the final amount of proceeds and costs at closing, with the timing of gain recognition to be determined by the accounting treatment of the forestland sales transactions and the fiber supply agreements.