Monday, March 2, 2009

I-P to Sell 143,000 acres

The following is from IP’s website
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International Paper (NYSE: IP) announced today that it plans to divest approximately 143,000 acres of properties located in the southeastern United States in a transaction with American Timberlands Fund I, LP (the "Partnership").

The transaction value is approximately $275 million. International Paper will sell approximately 114,000 acres to the Partnership for $220 million in cash and will contribute 29,000 acres, with a value of $55 million, in exchange for a 20 percent interest in the Partnership.

The transaction value is subject to various adjustments at closing and is contingent upon the Partnership raising $220 million to finance the transaction. The transaction is expected to close in mid-June.
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A couple of observations:
1. American Timberlands Company, out of Columbia, SC, also bought 20,000 acres from I-P last year. The Registered Agent for them is Mark W. Buyck III from Florence SC. Other than that, I don't know anything about them but it looks like they could use some money.

2. It also looks like somebody thinks the value of timberland has not dropped. The reported value is $1,923/acre. --Brian

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Visit my web site at Timberland Strategies
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11 comments:

  1. Where in the Southeast is the property located?

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  2. I think a lot of this was HBU. Without knowing a lot of details about the assets it does seem to me they got it for a pretty good deal. Any chance IP was distressed?

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  3. This is pretty much all of the remaining IP property. It is located in all of the coastal states from Virginia to Texas. This is the land that IP withheld from the original (large) sale because it believed that these tracts had value above the basic timberland value. Some of these tracts are existing residential developments in at least two states. This is clearly not a "timberland" sale from a comparable sale standpoint. There has been some speculation that this deal is overpriced and might not close but I'm on the other side of that guess. It looks like a lot of value for the price. --Brian

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  4. If one was attempting to determine what percentage of the per acre price could be allocated to the HBU component, what would that be?

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  5. I couldn't even give an informrd guess. The fact that IP put all of these tracts in one bucket labeled HBU does say something. --Brian

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  6. Did this deal ever close?

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  7. No, not that I am aware of. According to the Q2 earnings conference call, it is expected to close in Q3.

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  8. IP now says closing will not occur until Q4 "at the earliest". Delays are reportedly due to delays in doing the due diligence. Possible but questionable.

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  9. (IP Q4 09 Conf call). “Our previously announced agreement to sell approximately 143,000 acres has expired in accordance with its terms and will not be completed. The company has nearly 200,000 acres of land remaining for sale, primarily composed of smaller retail and larger transitional tracts.”

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