Longview Fibre Plans Conversion to REIT

LONGVIEW, WA-Longview Fibre Co. plans to convert to a REIT effective Jan. 1, 2006. In conjunction with the conversion, the company says it will refinance its $443 million in debt and make an earnings and profit payout to shareholders of as much as $400 million.Longview Fibre will continue to own and manage approximately 585,000 acres of timberlands. The company’s manufacturing operations, including the sawmill, converting and paper & paperboard facilities, will be transferred into a wholly owned subsidiary that will be subject to corporate level tax on its earnings. Longview Fibre CEO/chairman/president Rick Wollenberg says the conversion should increase the company’s free cash flow, enabling it to pay a larger dividend and better positioning the company to increase its timberland holdings. “We also expect our REIT structure to improve the company’s access to equity markets, enhancing our flexibility to pursue strategic opportunities… .” The special, taxable distribution of its pre-REIT undistributed earnings and profits–currently estimated to be approximately $350-400 million–is required by tax rules applicable to REIT conversions.Shareholders will have the opportunity to elect to receive the E&P distribution in cash, shares or a combination of the two. The total cash portion of the E&P distribution is expected to be capped at approximately 20%. Subject to final Board approval, the company expects the E&P distribution to occur on or before January 15, 2006. Beginning in the first calendar quarter of 2006, Longview Fibre expects to pay a quarterly dividend amounting to approximately $1.00 per share on an annualized basis. As a part of the REIT conversion, the company will change its tax and GAAP fiscal year end to December 31 from October 31. Goldman, Sachs & Co. is acting as advisor to the company on the REIT conversion. Skadden, Arps, Slate, Meagher & Flom LLP is the company’s legal counsel. Related to the refinancing of its debt, the company also filed a universal shelf registration statement on Form S-3 with the Securities and Exchange Commission. The company expects to cover the refinance and the special distribution by issuing at least $150 million of common stock and long-term notes, in combination with a new credit facility.