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Potlatch to consider spinoff of pulp-based businesses
By Lisa Kerner
Charlotte, N.C., April 17 - Potlatch Corp. said its board of directors authorized the company to evaluate a potential tax-free spinoff of its pulp-based businesses.
The spinoff would create two standalone, publicly traded entities: a timber real estate investment trust and a pulp-based manufacturing company, according to a statement released on Thursday.
Potlatch noted that the businesses that could be spun off had revenues of some $1.2 billion in 2007.
One business would be a pure-play timber REIT and the other a pulp-based manufacturing company that would include Potlatch's consumer products and pulp and paperboard businesses, Potlatch chairman, president and chief executive officer Michael J. Covey said in the release.
"If the board decides to pursue the spinoff of our pulp-based businesses, it would, among other things, enable management to focus more intently on Potlatch's core timber and real estate businesses to drive more predictable cash flows, limit volatility from future earnings and deliver long-term growth," Covey added.
Any transaction would likely be completed during the fourth quarter of 2008, subject to market, regulatory and other conditions, the release stated.
Potlatch said it will remain based in Spokane, Wash., and led by Covey.
Russell Reynolds Associates will assist Potlatch in its external search for a CEO for the proposed pulp-based manufacturing company.
Potlatch operates as a REIT that owns and manages timberlands. The company operates in five segments: new resource, new land sales and development, wood products, pulp and paperboard, and consumer products.
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