OfficeMax (OMX) Affirms Effectiveness of Extinguishing Lehman-Backed Timber Notes; Sees Non-Cash Gain
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Financial Fact:
Interest expense: -16.64M
Today's EPS Names:
BTTX, VAXX, ELYS, More
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OfficeMax Incorporated (NYSE: OMX) confirmed that its agreement to extinguish the non-recourse liability related to the Lehman-backed timber notes is now effective as the result of the entry of a Final Order by the United States Bankruptcy Court resolving certain claims against Lehman Brothers based on the notes.
As a result, OfficeMax will recognize a non-cash, pre-tax gain of $671.1 million in the third quarter of this year. In the fourth quarter, OfficeMax anticipates that it will make a cash payment in the amount of approximately $15 million, representing the accelerated tax liability on approximately one half of the gain on the 2004 timberlands sale transaction, mostly offset by alternative minimum tax credits. OfficeMax anticipates using available cash to fund the tax payment.
As previously disclosed, OfficeMax received an $817.5-million Lehman-backed note in connection with a 2004 timberlands sale. Also in 2004, OfficeMax monetized the note by issuing securitization notes through a special purpose entity. Payment of these securitization notes was guaranteed by Lehman and was non-recourse to OfficeMax. Lehman's bankruptcy filing on September 15, 2008 constituted an event of default under the note. For more information on these matters, see the company's most recent Form 10-Q, filed with the Securities and Exchange Commission on August 3, 2012 and the company's news release issued on August 16, 2012.
As a result, OfficeMax will recognize a non-cash, pre-tax gain of $671.1 million in the third quarter of this year. In the fourth quarter, OfficeMax anticipates that it will make a cash payment in the amount of approximately $15 million, representing the accelerated tax liability on approximately one half of the gain on the 2004 timberlands sale transaction, mostly offset by alternative minimum tax credits. OfficeMax anticipates using available cash to fund the tax payment.
As previously disclosed, OfficeMax received an $817.5-million Lehman-backed note in connection with a 2004 timberlands sale. Also in 2004, OfficeMax monetized the note by issuing securitization notes through a special purpose entity. Payment of these securitization notes was guaranteed by Lehman and was non-recourse to OfficeMax. Lehman's bankruptcy filing on September 15, 2008 constituted an event of default under the note. For more information on these matters, see the company's most recent Form 10-Q, filed with the Securities and Exchange Commission on August 3, 2012 and the company's news release issued on August 16, 2012.
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