By Liz Segrist
Published Oct. 28, 2013
In addition to the U.S. forestland acquisition, Plum Creek will invest in a newly formed partnership between the companies, including MWV’s approximately 109,000 acres of development properties in the Charleston region, the company said in a news release announcing the deal.
Upon closing, MWV will no longer own forestland assets in the United States. The aggregate value of the transaction, including both parties’ investments in the partnership, is about $1.5 billion. The company will retain ownership of 135,000 acres of forestland in Santa Catarina, Brazil.
MWV intends to return approximately $665 million of the proceeds from the transaction to shareholders.
Under the terms of the agreement, Plum Creek will acquire all of MWV’s U.S. forestlands and related assets, including about 501,000 acres in Alabama, Georgia, South Carolina, Virginia and West Virginia, for $934 million, including $74 million in cash. The remaining $860 million will be in the form of a 10-year installment note from Plum Creek that MWV intends to securitize or otherwise finance after closing.
The royalty and lease income generated from the land, including coal and wind, also is included in the transaction, but MWV is keeping full ownership of its oil and natural gas rights on 191,000 acres of land in West Virginia located over the Marcellus Shale.
“This transaction delivers on all of our objectives — it enables us to maximize the value of our land holdings in a tax-efficient manner, while retaining the substantial upside potential of the attractive real estate opportunities in the growing Charleston market,” MWV Chairman and CEO John A. Luke Jr. said in a statement.
The partnership consists of two joint ventures. Plum Creek will contribute $12.5 million in cash into the first, which includes active development projects. MWV will hold a 95% interest in that venture.
The second, which entails a 50-50 ownership stake by each company, contains long-term development projects. Plum Creek will contribute $140 million in cash into this joint venture.
MWV’s Community Development & Land Management business will lead the joint ventures’ activities across all development projects, and will be the managing partner.
Kenneth T. Seeger, president of Community Development & Land Management, will continue in his current leadership role of this business.
“Our continued partnership and excellent working relationship with the Charleston community will remain top priorities as we execute on our land development strategy,” Seeger said in a statement. “We are pleased by Plum Creek’s show of confidence in both our team and development plans, and we look forward to working with them to further the significant opportunities we have in Charleston.”
The transaction has been approved by the boards of directors of both companies and is anticipated to close by the end of the year. The transaction does not require a shareholder vote for either MWV or Plum Creek.