Monday, real estate investment trust Potlatch Corp. (PCH), announced that its Board of directors have given final approval to the spin-off of its pulp-based business, Clearwater Paper, which the company is planning to complete through a special tax-free dividend of Clearwater Paper corporation common stock.
Potlatch's Board has established the close of business on December 9, 2008 as the record date, and set a distribution ratio of one share of Clearwater Paper stock for every 3.5 shares of Potlatch corporation stock.
The distribution of Clearwater Paper common stock is scheduled to occur on December 16, 2008.
Following the distribution, and based on the approximately 39.5 million shares of Potlatch stock that are currently outstanding, approximately 11.3 million shares of Clearwater Paper will be outstanding.
In connection with the spin-off, Clearwater Paper will be retaining the obligation to pay the interest and principal on $100 million principal amount of debentures previously issued by an affiliate of Potlatch Corporation that will become due and payable in full in December 2009. In addition, Clearwater Paper intends to immediately draw $50 million from its anticipated $125 million revolving credit facility and transfer that amount to a subsidiary of Potlatch corporation. As a result, Clearwater Paper will have $150 million principal amount of debt outstanding.
Additionally, Potlatch said that it expects Clearwater Paper common stock to begin regular way trading on the NYSE under the ticker "CLW" on December 17, 2008, while Potlatch itself will continue to trade on the NYSE under the same current ticker "PCH."
On the first day of trading following the distribution date, all shares of Potlatch common stock will trade on an "ex dividend" basis without the benefit of the Clearwater Paper common stock distribution.
Gordon Jones, who is slated to become the president and CEO of Clearwater Paper upon the spin-off, said, "The experienced Clearwater Paper management team is in place and excited about working to realize the full value of this pulp and paper based business."
Michael Covey, president and CEO of Potlatch, said, "We believe that separating these businesses will present both companies with more opportunities to maximize their potential as independent entities, while affording each business the flexibility to be more responsive to changing industry and economic dynamics."
PCH ended Monday's regular trading at $20.78, down 22.11% or $5.90, on a volume of 1.33 million shares on the NYSE.
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