PORTLAND, Ore., March 12 -- Willamette Industries Inc. announced Tuesday it will buy the timber operations of Cavenham Forest Industries, an affiliate of Hanson PLC, in Louisiana and the Pacific Northwest for $1.59 billion. The assets include 1.09 million acres of timberland and a saw mill in Warrenton, Ore. London-based Hanson has been selling off its North American timber operations to cut its debt load and said the pact with Willamette deal will bring proceeds from Cavenham asset sales to about $3.2 billion. William Landuyt, chief executive of Hanson Industries, said proceeds from the deals have exceeded initial expectations and negotiations by Cavenham's management were concluded well ahead of schedule. Willamette said it plans to retain and operate the saw mill and timberland in northwest Oregon, southwest Washington and north central Louisiana, valued at about $1 billion. It said Crown Pacific Partners L. P., Hancock Timber Resource Group and Temple-Inland Inc. have expressed interest in acquiring some of the remaining properties. Willamette said it has agreed with Crown Pacific to sell it 207,000 acres located in eastern Oregon and on the Olympic Peninsula in Washington and with Temple-Inland, which will acquire 230,000 acres in southwest Louisiana. It said discussions are underway with Hancock about its acquisition of 104,000 acres in Columbia County, Ore. Willamette, of Portland, Ore., did not disclose how much it would receive for the remaining properties. Steven R. Rogel, Willamette's chief executive officer, said the Hanson deal offers the company an opportunity to boost its stock price.
Willamette stock was off 25 cents to $57 a share in mid-session Nasdaq trading. 'We were able to obtain some of the most productive timberlands in the world at a very attractive price relative to their productivity,' he said. 'This resource base, combined with our production and marketing abilities, will give us a strong platform for building shareholder value.' Rogel said the north central Louisiana acqisiition takes advantage of Cavenham and Willamette lands existing in an interwoven pattern in many areas. 'The Northwest Oregon timberlands and the Warrenton mill allow us to rebuild our West Coast lumber production from a self-sufficient resource base,' he said. 'This acquisition is an important step for Willamette, helping assure a future fiber supply.' After closing the deal with Hanson, Willamette will have 96 forest products manufacturing facilities in 21 states with more than 13,300 employees. Debt-rating agency Standard & Poor's announced Tuesday it would review its single-A corporate credit rating and senior unsecured debt ratings on Willamette for possible downgrade. S&P said the deal, scheduled to close in the second quarter, is expected to be debt financed, increasing the debt-to-capital ratio to between 45 to 50 percent from the current level of between 30 and 35 percent. It said the preliminary discussions to sell some of the acquired properties would reduce acquisition debt somewhat but debt levels will still increase significantly.
