Neenah Paper to Sell Remaining Timberlands
March 1, 2010 - Neenah Paper has signed a definitive agreement to sell its remaining 475,000 acres of timberlands in Nova Scotia for C$82.5 million to Northern Pulp Nova Scotia, through their affiliate, Northern Timber Nova Scotia. Neenah will receive cash at the time of closing, which is expected to occur before March 31, 2010.
"With this transaction, we have successfully completed our strategy to exit pulp and transform into a larger, more global specialty and premium paper company," said Sean Erwin, Neenah's CEO.
"This sale is the fourth and final transaction in this transformation, and we believe the approach we took to separate the sales of the timberlands from the pulp mills optimized the value we received for these assets.
"With this sale, ownership of the woodlands is again closely aligned with the pulp and forestry companies in Nova Scotia. Neenah Paper will use the proceeds to pay down debt, including a $40 million term loan that is part of our revolving credit facility, and this will result in an attractive and flexible capital structure going forward," Erwin said.
Since the sale price is approximately equal to the tax basis of the timberlands, the transaction is not expected to generate a cash tax liability. A pre-tax book gain on the sale of approximately $75 million will be recognized at the time of closing, the company said.
Neenah Paper said the sale marks its exit from all of its Canadian operations, and as a result, a non-cash gain of $88 million will be recognized into earnings for the reclassification of deferred foreign currency translation gains from accumulated other comprehensive income.
SOURCE: Neenah Paper