International Paper Agrees to Sell 13 Lumber Mills to West Fraser Timber Co. Ltd. for Approximately $325 Million
MEMPHIS, Tenn. *Nov. 29, 2006* International Paper (NYSE:IP) has signed a definitive agreement to sell 13 lumber mills to West Fraser Timber Co. Ltd. for approximately $325 million in cash, subject to certain adjustments. The transaction is expected to close in the first quarter of 2007, subject to various closing conditions including receipt of regulatory approvals and other customary conditions.
The transaction includes lumber mills in Citronelle, Maplesville and <br /> Opelika, Ala.; Leola, Ark.; McDavid and Whitehouse, Fla.; Augusta and <br /> Folkston, Ga.; Armour and Seaboard, N.C.; Newberry, S.C.; and New Boston <br /> and Henderson, Texas. The mills employ approximately 2,200 people and <br /> have a combined production capacity of approximately 1.8 billion board <br /> feet. <br /><br /> The transaction is part of IP’s previously announced transformation plan <br /> to focus on uncoated papers and industrial and consumer packaging <br /> globally, as well as xpedx, its North American distribution segment. <br /> Expected proceeds from divestitures announced to date, including the <br /> sale of these 13 lumber mills, total approximately $10 billion. <br /><br /> “The agreement with West Fraser marks another positive step in focusing <br /> our company,” said John Faraci, IP chairman and chief executive officer. <br /> “I’m pleased with the progress we’ve made so far to reshape <br /> International Paper. Our divestitures are moving forward faster than <br /> projected, and they’ve generated more proceeds than we’d originally <br /> anticipated. We’ve got more work to do, but we will continue delivering <br /> on our commitments to shareowners.” <br /><br /> Hank Ketchum, chairman, president and CEO of West Fraser, said, “We are <br /> delighted to be adding these mills to our existing operations in the <br /> U.S. South, and we look forward to welcoming our new employees to the <br /> West Fraser organization. With our core focus on solid wood products, <br /> our track record of operating efficient and profitable mills, and our <br /> commitment to the communities we operate in, we expect to build on the <br /> strong relationships established by International Paper and create a <br /> successful future for these mills.” <br /><br /> In connection with the transaction, International Paper, which had <br /> negotiated long-term log supply agreements with the buyers of its <br /> Southern forestlands, has agreed to assign a portion of those rights to <br /> West Fraser. In turn, West Fraser has agreed to supply wood chips from <br /> the acquired lumber mills to International Paper at market prices. <br /><br /> The sale agreement also includes the termination of outstanding <br /> long-term pulp supply agreements entered into in connection with <br /> International Paper’s sale of its Weldwood operations in Canada to West <br /> Fraser in 2004. The pulp supply agreements pertained to IP’s former <br /> industrial papers and U.S. coated papers businesses, which were divested <br /> in June 2005 and August 2006, respectively. <br /><br /> International Paper continues to explore strategic options, including <br /> possible sales, for the remainder of its wood products business, which <br /> includes four plywood & lumber complexes in Chapman, Ala.; Gurdon, Ark.; <br /> Springhill, La.; and Camden, Texas; four lumber mills in Meldrim, Ga.; <br /> Johnston and Sampit, S.C.; and Franklin, Va.; a plywood mill in <br /> Corrigan, Texas; an engineered wood products mill in Thorsby, Ala.; and <br /> a utility pole plant in Wiggins, Miss. <br /><br /> About West Fraser Timber Co. Ltd. <br /> West Fraser is an integrated forest products company that produces <br /> lumber, LVL, MDF, plywood, pulp, linerboard, kraft paper and newsprint. <br /> The company has manufacturing operations in British Columbia, Alberta <br /> and the southern United States. West Fraser has approximately 6,900 <br /> employees and is headquartered in Vancouver, British Columbia. <br /><br /> About International Paper <br /> Headquartered in the United States, International Paper has been a <br /> leader in the forest products industry for more than 100 years. The <br /> company is currently transforming its operations to focus on its global <br /> uncoated papers and packaging businesses, which operate and serve <br /> customers in the U.S., Europe, South America and Asia. These businesses <br /> are complemented by an extensive North American merchant distribution <br /> system. International Paper is committed to environmental, economic and <br /> social sustainability, and has a long-standing policy of using no wood <br /> from endangered forests. To learn more, visit www.internationalpaper.com. <br /><br /> ### <br /><br /> This press release may contain forward-looking statements. These <br /> statements reflect managements current views and are subject to risks <br /> and uncertainties that could cause actual results to differ materially <br /> from those expressed or implied in these statements. Factors which could <br /> cause actual results to differ relate to: (i) the ability of the parties <br /> to successfully consummate the transactions contemplated by the sale <br /> agreement without a purchase price adjustment; (ii) the successful <br /> fulfillment (or waiver) of all conditions set forth in the sale <br /> agreements; (iii) the successful closing of the transaction within the <br /> estimated timeframes; (iv) the ability of the Company to successfully <br /> negotiate satisfactory sale terms for assets that are contemplated for <br /> sale but are not currently under contract; and (v) industry conditions, <br /> including changes in the cost or availability of raw materials and <br /> energy, changes in transportation costs, competition, changes in the <br /> Companys product mix and demand and pricing for the Companys products. <br /> We undertake no obligation to publicly update any forward-looking <br /> statements, whether as a result of new information, future events or <br /> otherwise. Other factors that could cause or contribute to actual <br /> results differing materially from such forward looking statements are <br /> discussed in greater detail in the companys Securities and Exchange <br /> Commission filings.
