MWV Completes Sale of U.S. Forestlands to Plum Creek

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MeadWestvaco Corp. (MWV), Richmond, Va., USA, this week completed the sale of its previously announced U.S. forestlands (501,000 acres) to Plum Creek Timber Co., Seattle, Wash., USA. Plum Creek also has invested in a newly formed partnership comprised of MWV’s development properties in the Charleston, S.C. region (109,000 acres). Total consideration of the transaction was approximately $1.1 billion, and consists of $220 million in cash and $860 million in the form of a 10-year installment note that MWV expects to monetize within the next few weeks. The aggregate value of the transaction, including both parties’ investments in the partnership, was approximately $1.5 billion.

MWV expects to receive net proceeds of approximately $950 million in cash following the monetization of the installment note, of which the company expects to return $665 million to shareholders. The company will determine the optimal form of shareholder returns in January 2014, following the monetization of the note. In addition, $210 million will be used to repay an outstanding term loan to maintain MWV’s investment grade rating and $75 million will be retained by the new partnership to fund development activities.

"Through this cash-accretive transaction, Plum Creek meaningfully grows our core timber management business while also adding to our land and non-timber resources businesses," said Rick Holley, CEO of Plum Creek. "By significantly increasing our assets in the Southeast, we expand our presence in key markets, enhance our ability to service customers, and are well positioned to capture value from these assets as markets continue to improve."

MWV has retained full ownership of its oil and natural gas rights on approximately 191,000 acres of land in West Virginia that are located over the Marcellus Shale fairway. MWV no longer owns forestland assets in the U.S. and continues to own and manage approximately 135,000 acres of forestland in the state of Santa Catarina, Brazil.

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