Longview Fibre Rejects Unsolicited Acquisition Proposal
April 17, 2006 - Longview Fibre Company today announced that its Board of Directors voted unanimously to reject the previously-disclosed proposal from Obsidian Finance Group, LLC and The Campbell Group, LLC (Obsidian/Campbell) to acquire all of the outstanding shares of the company.
Longview Fibre's Board concluded that the Obsidian/Campbell proposal is highly conditional and, even if it could be executed on, undervalues Longview Fibre and its high quality timber assets. The Board believes that completing the company's conversion to a real estate investment trust (REIT) and implementing an improved operating plan represents a superior alternative for enhancing shareholder value.
The company's improved operating plan and the REIT conversion are expected to result in:
- a special distribution to shareholders of approximately $385 million, of which up to approximately $77 million, representing approximately $1.50 per share, is expected to be distributed in cash, with the remainder to be distributed in shares of the company's common stock;
- an initial 20% increase in the company's annual cash dividend rate to $1.20 per share (excluding the effect of shares to be issued in the special distribution);
- an increase in cash flow as a result of:
- accelerating the company's timber harvest rate consistent with Sustainable Forestry Initiative (SFI) practices;
- implementing a program to monetize the company's higher and better use (HBU) lands;
- restructuring the company's manufacturing operations, including exploring the potential divestiture of the company's sawmill and select converting plants; and
- reducing taxes; and
- a reduction in the company's borrowing rate and aggregate interest expense through refinancing.
Richard H. Wollenberg, Longview Fibre's President, Chief Executive Officer and Chairman of the Board, said, "We are taking steps to accelerate the delivery of value to shareholders. We expect the REIT conversion, in combination with our improved operating plan, to drive shareholder value by, among other things, increasing the company's cash flow, enabling us to pay a larger dividend and positioning the company to increase its timberland holdings. We also expect the potential divestiture of selected manufacturing assets to enhance our operating performance and provide additional cash to reduce debt."
The Board of Directors, with the assistance of its financial and legal advisors, carefully considered the Obsidian/Campbell proposal and the company's improved operating plan. In making its unanimous decision to reject the Obsidian/Campbell proposal, the Board considered, among other things:
- the significant shareholder value enhancements expected to be delivered by the REIT conversion and the company's improved operating plan;
- management's record of delivering value to shareholders; and
- the highly conditional nature of the Obsidian/Campbell proposal, which is subject to significant due diligence and financing contingencies and associated risks.
Mr. Wollenberg added, "We are committed to acting in the best interests of the company and its shareholders and have already taken steps to accelerate value creation. In the past few years, we have implemented a number of operational improvements and we are now poised to reap the benefits from these initiatives. We believe that the REIT conversion process has begun to unlock the inherent value in our strong portfolio of assets and that the intrinsic value of Longview Fibre is not reflected in our current or historical stock price. Engaging in a transaction with Obsidian/Campbell at this time, before the company has had the opportunity to fully implement its strategy, would prevent the company and our shareholders from realizing the potential value of the company's REIT conversion and improved operating plan."
The company also announced today that Bank of America, N.A. and Goldman Sachs Credit Partners L.P. have provided commitments for the funds necessary to complete the REIT conversion.
Additional information regarding the company's plan will be available later today in presentation materials posted on the company's Web site at www.longviewfibre.com . The presentation materials will also be filed with the Securities and Exchange Commission.
In connection with today's announcement, Mr. Wollenberg sent the following letter to Obsidian/Campbell:
April 17, 2006
Obsidian Finance Group, LLC
10260 SW Greenburg Road, Suite 1150
Portland, Oregon 97223
Attention: David W. Brown, Senior Principal
The Campbell Group, LLC
One S.W. Columbia, Suite 1700
Portland, Oregon 97258
Attention: John S. Gilleland, President
After careful consideration of your proposal with the assistance of
the company's financial and legal advisors, Longview Fibre's Board of
Directors unanimously concluded that pursuing your proposal is not in
the best interests of the company and its shareholders.
We believe that your proposal is highly conditional, involving
significant due diligence and financing contingencies and associated
risks, and undervalues Longview Fibre and its high quality timber
assets. The Board of Directors determined that it is in the best
interests of the company and its shareholders to complete the
company's conversion to a real estate investment trust and fully
implement the company's improved operating plan.
Very truly yours,
/s/ Richard H. Wollenberg
Richard H. Wollenberg
President, Chief Executive Officer and
Chairman of the Board
SOURCE: Longview Fibre Company