Performance Fibers Business to be Spun Off as
Independent Company
Rayonier to Retain Forest Resources and Real
Estate Businesses
Rayonier Inc. (NYSE:RYN) announced today it intends to separate
its Performance Fibers business from its Forest Resources and Real
Estate businesses. The separation will result in two independent,
publicly-traded companies by means of a tax-free spin-off of the
Performance Fibers business to Rayonier shareholders. The
separation is expected to be completed in mid-2014.
“Rayonier’s board and management team continuously evaluate
strategic options to best position the company to drive value for
shareholders. As part of our strategic planning process, we began
in-depth analysis and preparation for the business separation
almost two years ago. With an improving U.S. housing market, strong
timber export markets, and the successful expansion of our
cellulose specialties capacity, we concluded that now is the
optimal time to pursue the separation of these two non-integrated
businesses,” said Paul Boynton, Chairman, President and CEO.
Boynton continued, “While these businesses have historically
provided Rayonier with balance and financial strength, the company
has evolved into two distinct businesses and investment
opportunities. Accordingly, through this separation, each business
will gain the flexibility to pursue its own growth strategies and
operating priorities, and develop the optimal capital structure and
allocation to generate long-term growth and value for
shareholders.”
Benefits of Separation
Rayonier has achieved important milestones to transition
Performance Fibers to a specialty chemical company with an
excellent foundation for long-term growth and stability. The
company has recently unlocked significant growth potential with the
completion of its cellulose specialties expansion project, which
increased production capacity of high-value cellulose specialties
at its Jesup, Ga. mill by 190,000 metric tons. Compared with 2013,
Performance Fibers is expected to sell an additional 30,000 to
50,000 metric tons of cellulose specialties in 2014 as it commences
the multi-year ramp-up to full cellulose specialties
production.
In its Forest Resources business, Rayonier has repositioned its
portfolio to focus on core regions, including the recent sale of
its New York timberlands. It has made significant acquisitions of
high-quality timberlands, and owns some of the most valuable
timberlands in North America and New Zealand. In its Real Estate
business, the company has obtained land use entitlements for
higher-and-better-use properties to position them for enhanced
sales values. Together, these businesses are positioned for ongoing
growth in the current environment of increasing housing starts and
improving economic conditions.
Following completion of the separation, each company is expected
to be well capitalized, generate strong free cash flows, be well
positioned for future growth and be best-in-class in its respective
industry. Additional benefits of the separation include:
- Distinct investment identity - The
companies have different markets, growth drivers, risk profiles,
business processes and capital needs. With the separation,
investors will be able to evaluate and invest in each business
based on its respective merits, performance and future
prospects.
- Enhanced strategic and management focus
- The board and management team of each company will be able to
pursue its distinct operating priorities and strategies, and focus
on its own long-term growth and profitability.
- More efficient allocation of capital -
Each company will concentrate its financial resources solely on its
own operations, and have greater flexibility to invest capital in a
time and manner appropriate for its distinct strategy.
- Independent access to capital markets -
Each company will have ready access to the capital markets and more
flexibility to capitalize on its unique growth opportunities.
- Alignment of incentives with
performance objectives - The separation will focus incentive
compensation arrangements for employees more directly to the
performance and growth objectives of the relevant company’s
business.
Upon completion of the planned separation, the two business
profiles will be:
Rayonier Inc.
Comprised of the company’s existing Forest Resources and Real
Estate businesses, Rayonier Inc. will be a geographically diverse
pure-play forest resources company with 2.6 million acres of
high-quality timberlands, including approximately 200,000 acres
well situated for real estate development along coastal Florida and
Georgia. Since early 2011, Rayonier has invested $700 million in
timberland acquisitions in executing its strategy to grow its
timberland ownership. Rayonier will maintain its status as a highly
tax-efficient REIT. The company will maintain its strong balance
sheet, pay a competitive dividend to its shareholders, and expects
to retain an investment-grade credit profile.
Performance Fibers
The Performance Fibers company, not yet named, will be the
world’s leading producer of high-value specialty cellulose fibers
with revenue of more than $1 billion and EBITDA1 of $386 million in
2013. The Performance Fibers business has intellectual property and
manufacturing processes that have been developed over 85 years and
today, with facilities in Florida and Georgia, has approximately
675,000 metric tons of cellulose specialties capacity and nearly
double the sales of its next largest competitor. The company is
expected to continue to generate strong cash flows and to pay a
dividend competitive with its peer group. The Performance Fibers
company intends to target a mid-BB grade credit profile.
Leadership
Upon completion of the separation, Mr. Boynton will become
Chairman, President and CEO of the Performance Fibers company, and
Hans Vanden Noort, CFO, will remain CFO of Rayonier. The current
business unit leaders will continue in their roles with Lynn
Wilson, EVP Forest Resources and Chris Corr, SVP Real Estate at
Rayonier and Jack Kriesel, SVP Performance Fibers at the
Performance Fibers company.
In addition, each company will have its own separate board of
directors. The current Rayonier board membership will be assigned
to the board of one of the two companies. Richard Kincaid will
serve as chairman of the Rayonier board and David Brown will be the
lead director of the new Performance Fibers company board. Mr.
Boynton will be working with the Rayonier board over the coming
months to identify the CEO of Rayonier as well as the additional
board members for each company.
Transaction Details
Rayonier expects to maintain its quarterly dividend until the
separation is completed.
Upon completion of the transaction, each company is expected to
be listed on the New York Stock Exchange.
The Performance Fibers company plans to file a Form 10 this week
with the Securities and Exchange Commission to register its
securities. Work to effect the separation is underway and further
details will be disclosed during the next several months.
The planned separation does not require a shareholder vote but
is subject to final Rayonier board approval, receipt of a favorable
ruling from the Internal Revenue Service concerning the tax-free
status of the separation, effectiveness of the Form 10 registration
statement, and satisfactory completion of related financing.
Advisors
Bank of America Merrill Lynch is acting as lead financial
advisor and Credit Suisse is also acting as financial advisor to
Rayonier on the proposed transaction. Wachtell, Lipton, Rosen &
Katz is serving as its legal advisor.
Conference Call and Webcast
Rayonier will host a conference call and webcast today at 10:00
a.m. EST to discuss its fourth quarter 2013 results and the planned
separation of the businesses. Presentation materials and access to
the live webcast will be available at www.rayonier.com. Investors and analysts may also
choose to access the conference call by dialing 888-989-7543,
password: Rayonier. A replay of the webcast will be available on
the company’s website shortly after the call. Complimentary copies
of Rayonier press releases and other financial documents are also
available by calling 1-800-RYN-7611.
1 EBITDA is a non-GAAP measure which is defined and reconciled
to GAAP in the attached exhibit.
About Rayonier
Rayonier is a leading international forest products company with
three core businesses: Forest Resources, Real Estate and
Performance Fibers. The company owns, leases or manages 2.6 million
acres of timber and land in the United States and New Zealand. The
company's holdings include approximately 200,000 acres with
residential and commercial development potential along the
Interstate 95 corridor between Savannah, Ga., and Daytona Beach,
Fla. Its Performance Fibers business is one of the world's leading
producers of high-value specialty cellulose fibers, which are used
in products such as filters, pharmaceuticals and LCD screens.
Approximately 50 percent of the company's sales are outside the
U.S. to customers in approximately 20 countries. Rayonier is
structured as a real estate investment trust. More information is
available at www.rayonier.com.
_________________________________________________________________________
Forward-Looking Statements
Certain statements in this document regarding anticipated
financial, legal or other outcomes including business and market
conditions, outlook and other similar statements relating to
Rayonier's future events, developments or financial or operational
performance or results, are "forward-looking statements" made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 and other federal securities laws.
These forward looking statements are identified by the use of words
such as "may," "will," "should," "expect," "estimate," "believe,"
"intend,” "anticipate" and other similar language. However, the
absence of these or similar words or expressions does not mean that
a statement is not forward-looking. While management believes that
these forward-looking statements are reasonable when made,
forward-looking statements are not guarantees of future performance
or events and undue reliance should not be placed on these
statements.
Although Rayonier believes that the expectations reflected in
any forward-looking statements are based on reasonable assumptions,
it can give no assurance that these expectations will be attained
and it is possible that actual results may differ materially from
those indicated by these forward-looking statements due to a
variety of risks and uncertainties. Such factors include, but are
not limited to: uncertainties as to the timing of the spin-off and
whether it will be completed, the possibility that various closing
conditions for the spin-off may not be satisfied or waived, the
expected tax treatment of the spin-off, the impact of the spin-off
on the businesses of Rayonier and the Performance Fibers company,
the ability of both companies to meet debt service requirements,
the availability and terms of financing and expectations of credit
rating. Other important factors are described in the company’s most
recent Form 10-K and 10-Q reports on file with the Securities and
Exchange Commission that could cause actual results or events to
differ materially from those expressed in forward-looking
statements that may have been made in this document. Rayonier
assumes no obligation to update these statements except as is
required by law.
RAYONIER INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP
MEASURES
December 31, 2013
(unaudited)
(millions of dollars)
SEGMENT EBITDA Year Ended December 31,
2013
Operating Income to Segment EBITDA Reconciliation
Operating Income $ 311 Depreciation, depletion and amortization 75
Segment EBITDA $ 386
(a) Segment EBITDA is defined as operating
income before depreciation, depletion and amortization, and
unallocated corporate expenses. Segment EBITDA is a non-GAAP
measure used by our Chief Operating Decision Maker, existing
shareholders and potential shareholders to measure how the Company
is performing relative to the assets under management.
A
RayonierInvestorsEd Kiker, 904-357-9186orMediaRussell Schweiss,
904-357-9158
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