Performance Fibers Business to be Spun Off as Independent Company
Rayonier to Retain Forest Resources and Real Estate Businesses
JACKSONVILLE, Fla.--(BUSINESS WIRE)--Jan. 27, 2014--
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
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
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
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.
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.
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.
Rayonier expects to maintain its quarterly dividend until the separation
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.
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
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.
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.
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
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)
Operating Income to Segment EBITDA Reconciliation
Depreciation, depletion and amortization
(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.
Ed Kiker, 904-357-9186