International Paper to Sell 13 Lumber Mills to West Fraser Timber
Nov. 29, 2006 (Press Release) - International Paper has signed a definitive agreement to sell 13 lumber mills to West Fraser Timber Co. Ltd. for approximately $325 million in cash, subject to certain adjustments. The transaction is expected to close in the first quarter of 2007, subject to various closing conditions including receipt of regulatory approvals and other customary conditions.
The transaction includes lumber mills in Citronelle, Maplesville and Opelika, Ala.; Leola, Ark.; McDavid and Whitehouse, Fla.; Augusta and Folkston, Ga.; Armour and Seaboard, N.C.; Newberry, S.C.; and New Boston and Henderson, Texas. The mills employ approximately 2,200 people and have a combined production capacity of approximately 1.8 billion board feet.
The transaction is part of IP's previously announced transformation plan to focus on uncoated papers and industrial and consumer packaging globally, as well as xpedx, its North American distribution segment. Expected proceeds from divestitures announced to date, including the sale of these 13 lumber mills, total approximately $10 billion.
"The agreement with West Fraser marks another positive step in focusing our company," said John Faraci, IP chairman and chief executive officer. "I'm pleased with the progress we've made so far to reshape International Paper. Our divestitures are moving forward faster than projected, and they've generated more proceeds than we'd originally anticipated. We've got more work to do, but we will continue delivering on our commitments to shareowners."
Hank Ketchum, chairman, president and CEO of West Fraser, said, "We are delighted to be adding these mills to our existing operations in the U.S. South, and we look forward to welcoming our new employees to the West Fraser organization. With our core focus on solid wood products, our track record of operating efficient and profitable mills, and our commitment to the communities we operate in, we expect to build on the strong relationships established by International Paper and create a successful future for these mills."
In connection with the transaction, International Paper, which had negotiated long-term log supply agreements with the buyers of its Southern forestlands, has agreed to assign a portion of those rights to West Fraser. In turn, West Fraser has agreed to supply wood chips from the acquired lumber mills to International Paper at market prices.
The sale agreement also includes the termination of outstanding long-term pulp supply agreements entered into in connection with International Paper's sale of its Weldwood operations in Canada to West Fraser in 2004. The pulp supply agreements pertained to IP's former industrial papers and U.S. coated papers businesses, which were divested in June 2005 and August 2006, respectively.
International Paper continues to explore strategic options, including possible sales, for the remainder of its wood products business, which includes four plywood & lumber complexes in Chapman, Ala.; Gurdon, Ark.; Springhill, La.; and Camden, Texas; four lumber mills in Meldrim, Ga.; Johnston and Sampit, S.C.; and Franklin, Va.; a plywood mill in Corrigan, Texas; an engineered wood products mill in Thorsby, Ala.; and a utility pole plant in Wiggins, Miss.
About West Fraser Timber Co. Ltd.
West Fraser is an integrated forest products company that produces lumber, LVL, MDF, plywood, pulp, linerboard, kraft paper and newsprint. The company has manufacturing operations in British Columbia, Alberta and the southern United States. West Fraser has approximately 6,900 employees and is headquartered in Vancouver, British Columbia.
SOURCE: International Paper