Nevada County Picayune and Gurdon Times Newspaper Archive

Potlatch Announces Timber Land To Enter Into Trust

Potlatch Corporation and Anderson-Tully Company (ATCO) announced February 10 that the two companies have entered into a definitive agreement to combine all of Potlatch's 514,000 acres of primarily softwood timberlands in Arkansas and all of ATCO's 324,000 acres of primarily hardwood timberlands into Timberland Growth Corporatin (TGC), a newly formed real estate investment trust (REIT). The new company would be the first publicly traded REIT focused on the ownership of timberlands.

Under the terms of the agreement, TGC will acquire ATCO's timberlands through a cash merger for approximately $410 million. Potlatch's lands are located in Arkansas and Mississippi. The merger will be funded primarily by a proposed initial public offering of the newly formed TGC's common stock.

Potlatch and ATCO also announced that Potlatch has entered into a definitive agreement to acquire two hardwood sawmills and a hardwood veneer plant from ATCO and an affiliate for $60 million.

ATCO is widely recognized as one of the premier providers of high-quality hardwood in the United States, and has extensive expertise in hardwood resource management. Its timberlands contain substantial inventories of higher value hardwood species, such as red oak and ash, as well as other hardwoods, such as cottonwood, hackberry, sweet gum and pecan.

"Timberland Growth Corporation will be well diversified between hardwoods and softwoods, both in terms of timber inventory and in management expertise," John M. Richards, chief executive officer of Potlatch, said.

Potlatch expects to own a majority interest in the new company. Potlatch and TGC will also enter into a long-term timber purchase agreement, pursuant to which Potlatch will purchase all of the timber for TGC's timberlands at fair market value prices. The majority of TGC's board of directors will be unaffiliated with Potlatch. A chief executive officer for TGC has not yet been named.

"This transaction should benefit Potlatch shareholders in a number of ways," Richards said.

"First, we believe that there is an excellent strategic fit between these assets," he said. "Additionally, because TGC's shares will trade independently in financial markets, the underlaying value of these timberlands, as well as our retained timberlands, will be more clearly understood.

"The REIT structure, together with the new company's expertise in both softwoods and hardwoods, should make it a very effective vehicle for the acquisition of additional timberlands. Through Potlatch's continuing ownership in TGC, Potlatch shareholders should participate in these expected benefits," Richards said.

"This is a major step in Anderson-Tully's more than 100- year history of acquiring timberlands and enhancing the value of our lands with forest management expertise, Parnell S. Lewis, president of ATCO, said.

"Based on Potlatch's track record, we are confident that the new company will uphold Anderson-Tully's respected, century-long tradition of environmentally responsible timber management, he continued.

"This merger assures our customers the continuation of premium products and our employees the benefits of affiliation with one of the preeminent timber management companies in the world," Lewis said. "These actions may also allow us to expand services and products for our customers, and future opportunities for our employees.".

"Timberland Growth Corporation recognizes the shared benefits of the long-term association Potlatch and ATCO have enjoyed with hunting clubs and other recreational users of their timberlands," Richards said. "These relationships, which sustain ecological and wildlife diversity and provide quality recreational experience, will be continued by TGC."

All the shares to be sold in the proposed public offering will be sold by TGC. The net proceeds from the offering are expected to be used to fund a portion of TGC's merger of ATCO's timberlands, with the balance of the consideration funded through borrowings by TGC.

TGC's initial public offering and acquisition of Potlatch's southeastern timberlands and ATCO's timberlands, as well as Potlatch's purchase of ATCO's sawmills and veneer plant will close concurrently and are subject to certain conditions, including regulatory approvals. The closing is currently anticipated to occur in the second quarter of 1988.

Potlatch Corporation, incorporated in 1903, is an integrated forest products company engaged principally in the growing and harvesting of timber and the manufacture and sale of wood products, printing papers and other pulp- based products.

After the contemplated transactions, Potlatch will own approximately 343,000 acres of timberland in northen Idaho and a 22,000-acre hybrid poplar plantation in Oregon. Potlatch's manufacturing facilities are currently located in Idaho, Arkansas (including Prescott), Minnesota and Nevada.

ATCO is one of the premier land and hardwood timber management companies in North America, and a major producer of premium hardwood lumber and other forest products.

Founded in 1889, ATCO is headquartered in Memphis, Tenn. with operations in Memphis and Vicksburg, Miss.