SEATTLE--(BUSINESS WIRE)--Aug. 27, 2008--Plum Creek TimberCompany, Inc. (NYSE: PCL) today announced it will form a joint venturewith The Campbell Group LLC (Campbell Group) that will allow PlumCreek to capture the value of approximately 454,000 acres ofinvestment grade Southern timberlands. The transaction values thesetimberlands at $783 million, or approximately $1,725 per acre. PlumCreek will contribute the timberlands to the joint venture and aninvestment fund sponsored by Campbell Group will contribute $783million in cash. Campbell Group, a timber investment managementorganization based in Portland, Ore., will manage the joint venturelands for continued timber production. The timberlands are located insix states including Oklahoma, Arkansas, Mississippi, North Carolina,South Carolina and Georgia.
"This transaction highlights the value of our Southern timberlandsand is both earnings and cash flow accretive for Plum Creek. Theformation of this joint venture allows Plum Creek to immediatelycapture substantially all of the value of these timberlands and tomaintain an ongoing interest in their continuing cash flow andpotential for growth," said Rick Holley, president and chief executiveofficer of Plum Creek.
John Gilleland, president of Campbell Group, said, "On behalf ofour investors, we are extremely pleased to enter into this jointventure with Plum Creek. The 454,000 acres are strategically locatedin well-established log markets and provide for managementefficiencies with the Campbell Group's nearly 2 million acres ofSouthern timberland assets currently under management. We look forwardto continuing to manage these lands responsibly and under therequirements of the Sustainable Forestry Initiative(R) Standard."
Under the terms of the agreement, Plum Creek will receive a $705million preferred interest in the joint venture. The preferredinterest establishes the economic returns with respect to 90 percentof Plum Creek's investment. Additionally, Plum Creek will receive a$78 million common interest, representing the balance of itsinvestment.
Separately, Plum Creek will receive cash of $783 million through aloan from the joint venture.
Campbell Group's investors will receive a common interest in thejoint venture, representing approximately 91 percent of the jointventure's common equity.
The joint venture's results will include income from timberoperations as well as interest income from its loan to Plum Creek. Thejoint venture will make periodic distributions of cash from operationsto both partners in accordance with their ownership interests.
"Capital allocation remains Plum Creek's most important task. Weexpect to utilize half of the proceeds from this transaction to retireexisting debt. The remaining proceeds will be used for generalcorporate purposes, including continued repurchase of the company'sstock," concluded Holley.
The agreement is expected to become effective during the fourthquarter of 2008.
Further terms of the joint venture agreement are set forth in theagreements filed with the Securities and Exchange Commission.
Supporting information providing additional details for thistransaction is available in the "Investors" information section ofPlum Creek's Web site at www.plumcreek.com.
Goldman, Sachs & Co. served as financial advisor and Heller EhrmanLLP served as legal advisor to Plum Creek. Morrison & Foerster LLP andSchwabe, Williamson & Wyatt served as legal advisors to The CampbellGroup in connection with the joint venture.
Plum Creek is the largest and most geographically diverse privatelandowner in the nation with approximately 8 million acres oftimberlands in major timber producing regions of the United States and10 wood products manufacturing facilities in the Northwest.
The Campbell Group, LLC (www.campbellgroup.com) is a full-servicetimberland investment management company headquartered in Portland,Oregon. The company is focused on investing in and managing highquality, investment grade forestland on behalf of institutionalinvestors to produce superior risk-adjusted returns. Campbell Groupcurrently manages approximately 2.4 million acres of investment gradetimberlands in 13 states.
This press release contains forward-looking statements within themeaning of the Private Litigation Reform Act of 1995 as amended. Someof these forward-looking statements can be identified by the use offorward-looking words such as "believes," "expects," "may," "will,""should," "seek," "approximately," "intends," "plans," "estimates," or"anticipates," or the negative of those words or other comparableterminology. The accuracy of such statements is subject to a number ofrisks, uncertainties and assumptions including, but not limited to,the cyclical nature of the forest products industry, our ability toharvest our timber, our ability to execute our acquisition ordisposition strategy, the market for and our ability to sell orexchange non-strategic timberlands and timberland properties that havehigher and better uses and various regulatory constraints. These andother risks, uncertainties and assumptions are detailed from time totime in our filings with the Securities and Exchange Commission underthe Securities Exchange Act of 1934, as amended, and the SecuritiesAct of 1933, as amended. It is likely that if one or more of the risksmaterializes, or if one or more assumptions prove to be incorrect, thecurrent expectations of Plum Creek and its management will not berealized. Forward-looking statements are not guarantees ofperformance, and speak only as of the date made, and neither PlumCreek nor its management undertakes any obligation to update or reviseany forward-looking statements. Click here for PCL Southern Timberland JV Supporting Material
Plum Creek Timber Company, Inc.
John Hobbs, 1-800-858-5347
Robin Keegan, 1-888-467-3751
SOURCE: Plum Creek Timber Company, Inc.