Rayonier to lift stake in Matariki Forestry
Rayonier plans to increase its holding in Matariki Forestry Group to 77% from 65% with a US$160 million capital infusion that will be used to repay debt.
Rayonier manages 2.7 million acres of forests in the US and New Zealand. Matariki is New Zealand's third-largest forestry estate with more than 169,000 hectares of plantations.
The company's Matariki partner 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% 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.
The company says since it is providing 100% of this capital infusion, its ownership in the joint venture will increase from 65% to about 77% based on an implied pro forma net asset value of $706 million, which equates to approximately $85 million for the incremental 12% stake. The investment will result in consolidated interest cost savings of about US$5 million a year.
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% to $339 million.
"We believe the joint venture recapitalisation transaction represents an attractive capital allocation alternative for the company 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 says.
Rayonier shares last traded at $US24.39 on the New York Stock Exchange and have fallen 25% in the past 12 months.