The nation’s large private landowner — Plum Creek Timber (NYSE:PCL) — took the initial step towards completing the sale of an estimated 130,000 acres of Montana forestlands last week. In the first step of a three phase plan, the company received $150 million in cash from The Nature Conservancy and The Trust for Public Land ($1,153 per acre). The complete announcement from Plum Creek’s corporate website follows:
SEATTLE–Dec. 17, 2008–Plum Creek Timber Company, Inc., (NYSE: PCL) today announced it completed the first phase of its previously announced sale of western Montana forestland to The Nature Conservancy and The Trust for Public Land. Plum Creek received $150 million in cash for approximately 130,000 acres of Montana forestlands in the first phase of the three-phase transaction.
“Plum Creek has a strong history of conservation and is pleased to partner in this effort to keep these forests in productive timber management, promote continued public access to these lands, and protect them for future generations,” said Rick Holley, president and chief executive officer. “With this transaction, we are proud that the company has placed nearly 700,000 acres of land across the nation into permanent conservation.
“In these unsettled and challenging markets, Plum Creek remains in a strong financial position with $750 million available under our undrawn line of credit and a healthy cash balance, which is enhanced further by the completion of this phase of the transaction,” Holley continued.
The company has updated its fourth quarter earnings outlook to take into account the earnings contribution of the conservation sale, the effects of the economic downturn on near-term results, and a gain on the early extinguishment of debt. As a result, the company expects to report fourth quarter earnings between, $0.48 and $0.53 per share.
The Montana conservation sale will contribute approximately $0.40 per share to the reported fourth quarter earnings. The balance of the quarter’s rural land sales are expected to be approximately $65 million. This is lower than the originally anticipated $75 to $85 million as a handful of planned sales have been rescheduled to 2009 or cancelled. In addition, the company expects the basis in the $65 million of lands sold to be approximately 38 percent of sales, higher than initially anticipated, reducing reported earnings but having no impact on cash flow.
The company’s manufacturing segment is expected to report a loss of approximately $20 million for the fourth quarter, a larger loss than initially anticipated. Approximately $7 million of expected loss is the result of a write down of certain purchased log commitments and log inventories. During the fourth quarter, the company has further reduced its lumber, plywood and medium density fiberboard production to match weak demand.
During the quarter, the company identified an attractive opportunity to execute open market purchases of its publicly traded bonds. The bonds, with a face value of $62 million, were redeemed for $50 million and permanently retired. The bonds carried a coupon of 5.875 percent and were scheduled to mature in 2015. As a result, the company expects to record an $11 million gain on the early extinguishment of debt during the fourth quarter.
“Our financial position and diverse timber and land asset base serve the company well, providing us with both financial and operational flexibility. As a result, our attention remains focused on long-term value creation, disciplined capital allocation, and maintaining our commitments to our investors,” Holley concluded.
The company expects to release its fourth quarter and full year 2008 earnings after the close of market on Monday, Feb. 2, 2009, followed by its regular investment community conference call at 5 p.m. EST the same day.
Plum Creek is the largest and most geographically diverse private landowner in the nation with more than 7 million acres of timberlands in major timber producing regions of the United States and 10 wood products manufacturing facilities in the Northwest.