Longview Fibre postpones bond, stock offers and tender

By Paul A. Harris

St. Louis, March 8 - Longview Fibre Co. announced in a Wednesday press release that it has postponed its proposed offerings of $150 million of senior unsecured notes due 2016 and 10 million shares of common stock.

Goldman Sachs and Banc of America Securities LLC were joint bookrunners for the notes, which have been registered with the Securities and Exchange Commission.

Proceeds were designated to fund the tender for $215 million of Longview Fibre's senior subordinated notes outstanding, also to fund the approximately $72 million cash portion of a special taxable distribution to shareholders in connection with its conversion to a real estate investment trust and pay an estimated $12.2 million of fees and expenses relating to the REIT conversion. Any remaining proceeds were to be used for working capital and other general corporate purposes, possibly including debt repayment and financing of timberland acquisitions.

In December, Longview Fibre received an unsolicited proposal to be acquired by Obsidian Finance Group, LLC and The Campbell Group, LLC.

According to Wednesday's press release, Longview Fibre's financial advisers, through discussions with Obsidian, The Campbell Group and their financial adviser, sought to obtain information regarding the viability of the transaction structure and the source of Obsidian's equity capital, which was not provided. Longview Fibre subsequently determined that it was in the best interests of the company and its shareholders to proceed with the REIT conversion process and not to pursue further discussions with Obsidian and The Campbell Group.

On Tuesday Moody's Investors Service placed Longview Fibre's Ba3 corporate family rating, Ba2 senior secured debt rating, B1 senior unsecured debt rating and B2 senior subordinated debt rating under review for possible downgrade. According to Moody's, the action reflects the uncertainty associated with the $1.3 billion takeover bid for Longview offered by Obsidian and the Campbell Group.

In Wednesday's press release the company stated that it will continue to monitor the situation so that it can proceed with the bond and stock offerings and the related tender if and when it is appropriate to do so.

Longview Fibre is a diversified timberlands owner and manager, and a specialty paper and container manufacturer based in Longview, Wash.

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