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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.
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
"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."
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,"
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."
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.
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