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SOURCE:  Longview Daily News.  

Fibre execs mum on prospect of sale
By Evan Caldwell
Apr 07, 2006 - 07:39:01 am PDT

Curious Longview Fibre Co. shareholders couldn't pry any information from Fibre executives about a possible sale during the company's annual shareholder meeting Thursday in Longview. Longview Fibre Co. CEO Rick Wollenberg didn't address or answer questions about a $1.3 billion unsolicited buyout offer it is considering from Portland-based Obsidian Finance Group and The Campbell Group.

About 50 shareholders gathered at the Monticello Hotel to help elect four new board members, listen to a presentation from Wollenberg and ask questions about the company. The elephant in the room -- the proposed buyout -- was off-limits for discussion, however. Shareholders' questions about the company's future and the proposed buyout -- $26 a share, plus assumption of about $400 million in debt --- were deflected by Wollenberg.

"I wish they would have talked about (the buyout proposal)," said Bill Parish, president and CEO of Parish & Co., Investment Management & Research Services in Portland, who represents some Fibre stockholders. "I wanted to know what they defined as what is best for shareholders." Parish asked Wollenberg --- who had earlier said the board of directors is acting in the best interest of the shareholders --- if "best interest" meant short-term or long-term gains. Wollenberg responded by saying, "the board is doing what's right for the shareholders."

During the presentation, Wollenberg touted Fibre's success in reducing debt, operating more efficiently and marketing toward niche products. He said Fibre is operating nine paper machines in the Longview mill, with one other machine ready to be turned on if industry demands increase. "We are well-positioned to capitalize on production demand upticks," Wollenberg said.

Parish said he and his clients believe the buyout is not in Fibre's best long-term interests. "To sell, it would be a quick, short-term gain and we think the company would be broken up," Parish said. "To see (Fibre as we know it) disappear would be disappointing."

Mark Kralj, a principal at Ferguson Wellman Capital Management in Portland, said he understands why Fibre didn't discuss the buyout proposal. "It would have been nice if they talked about it," he said, "but they obviously don't want to discuss publically what's going on and none of the shareholders really pressed the issue."

Only six shareholders asked questions to Wollenberg, mostly about the effects of switching to a Real Estate Investment Trust, or REIT. REITs allow a company to distribute earnings to shareholders without paying federal income taxes. Fibre, which became a REIT on Jan. 1 by splitting its company into the timberlands and a subsidiary manufacturing company, needs to raise $350 million to $400 million for a special distribution to shareholders as part of the conversion to a REIT.

Before the question and answer time, Wollenberg said: "This is not the time to talk about the proposal from Obsidian and Campbell. Our past public statements stand on their own." Fibre most recently issued a three-sentence statement saying the board is reconsidering the buyout offer from Obsidian and Campbell. Obsidian senior principals David Brown and Kevin Padrick were at the meeting and said they weren't surprised the buyout wasn't discussed. "We're waiting --- like everyone is -- on the company," Brown said. "We're eager for more information."

Members of the Association of Western Pulp and Paper Workers Local 153 at the meeting declined to comment on the record, saying the union advised them not to talk.

Brown and Padrick said recently they will hire someone to operate the mill if their joint buyout bid with Campbell is successful. Under the proposed buyout, Obsidian would obtain Fibre's struggling mill operations, while The Campbell Group would assume ownership of Fibre's more lucrative timber holdings. Fibre has 17 production facilities scattered across 13 states.

Chuck Shaw, a shareholder from Portland, said he is just trying to figure out if he should "ride it out or bail." "With the big institutional investors and mutual funds, us small guys don't have much power or say," Shaw said. "Obsidian is in it to make money and I think Fibre's on the right track with the REIT ... but this is all a game."

New board members
These five will join the board's six other members.
• Rick Bentzinger, 54, vice president of human resources at Oregon Health and Science University
• Curtis Stevens, 53, executive vice president of administration at Louisiana-Pacific Corp.
• David Bowden, 70, former senior vice president of timber at Fibre
• Richard "Rick" H. Wollenberg, 53, Fibre CEO
• David Wollenberg, 58, president of The Cortana Corp., a real estate investment company in Menlo Park, Calif.

Bill Parish
Parish & Company
10260 SW Greenburg Rd., Suite 400
Portland, OR  97223
Tel:  503-643-6999  Fax: 503-221-3161

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