Rayonier to lift stake in Matariki Forestry to 77% by repaying US$160M of debt

Thursday 6th August 2015

Rayonier, which manages 2.7 million acres of forests in the US and New Zealand, plans to increase its holding in Matariki Forestry Group to 77 percent from 65 percent with a US$160 million capital infusion that will be used to repay debt.

Rayonier's partner in Matariki, New Zealand's third largest forestry estate with more than 169,000 hectares of plantations, is Phaunos Timber Fund, a Guernsey registered, London Stock Exchange listed investor in timberland and wood processing that was launched in 2006 and now has about US$321 million of assets. Phaunos acquired 35 percent of Matariki in 2010 from existing shareholders in Australia and the US.

The capital for Matariki is part of US$550 million of new credit facilities announced by Rayonier overnight which are being used to refinance existing facilities. The investment requires the approval of the Overseas Investment Office.

"Since Rayonier is providing 100 percent of this capital infusion, its ownership in the JV will increase from 65 percent to approximately 77 percent based on an implied pro forma net asset value of $706 million, which equates to approximately $85 million for the incremental 12 percent stake," it said in a statement. The investment would result in consolidated interest cost savings of about US$5 million a year, it said.

Matariki Forestry posted a $16.4 million loss in calendar 2014, compared with a profit of $50.6 million a year earlier. Much of that reflected a loss on revaluation of its biological assets, compared to a year earlier gain. Finance costs rose to $21.6 million from $19.7 million. Timber revenue jumped 47 percent to $339 million.

"We believe that the JV recapitalisation transaction represents an attractive capital allocation alternative for Rayonier and is being made at an opportune time based on the long term outlook for the business, the enhanced strategic flexibility that it provides, and the currently favourable NZ$/US$ exchange rate," Rayonier chief executive David Nunes said in the statement.

Rayonier shares last traded at US$24.39 on the New York Stock Exchange and have fallen 25 percent in the past 12 months.

BusinessDesk.co.nz

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