Form 8-K CatchMark Timber Trust, For: May 05
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 5, 2016
CATCHMARK TIMBER TRUST, INC.
(Exact name of registrant as specified in its charter)
Maryland | 001-36239 | 20-3536671 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
5 Concourse Parkway, Suite 2325
Atlanta, Georgia 30328
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (855) 858-9794
Former name or former address, if changed since last report: N/A
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2 below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
CatchMark Timber Trust, Inc. (the “Company”) is party to purchase and sale agreements (the “Purchase Agreements”) with each of FIATP Timber LLC and FIATP Timber SSF LLC (collectively, the “Sellers”) to purchase an aggregate of approximately 51,700 acres of timberland located in South Carolina (the “Carolinas Midlands III Timberlands”) for approximately $101.8 million, in the aggregate, exclusive of closing costs (the “Acquisition”). The Purchase Agreements, entered into on April 27, 2016, became binding upon the Sellers on May 5, 2016. The Company has until May 12, 2016 to determine if it intends to proceed with the Acquisition, and if it determines during that period not to proceed, the Purchase Agreements will be terminated without any penalty to the Company.
The Carolinas Midlands III Timberlands contain approximately 2.1 million tons of merchantable timber, comprising 70% pine plantations by acreage and 52%/48% pulpwood to sawtimber mix by tons. The Carolinas Midlands III Timberlands are proximate to and complementing other recent purchases by the Company in the state and in North Carolina, providing synergies in pricing power, haul distances, management and land sales.
Completion of the Acquisition is subject to the satisfaction of customary closing conditions. Therefore, the Company cannot guarantee that the Acquisition will be completed. The Company presently expects the Acquisition to close during the second quarter or early third quarter of 2016 and that the Acquisition will be funded through debt financing under the Company’s multi-draw term credit facility.
Item 7.01 Regulation FD Disclosures.
Reference is made to the information set forth in response to Item 1.01, which information is incorporated herein by reference. A copy of the press release announcing the Acquisition is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
A presentation related to the Acquisition is furnished as Exhibit 99.2 to this Current Report on Form 8-K. The foregoing description is qualified in its entirety by reference to such exhibit. The Company is not undertaking to update this presentation.
As provided in General Instruction B.2 to Form 8-K, the information furnished in Exhibits 99.1 and 99.2 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit No. | Description | |
99.1 | Press Release: CatchMark Agrees to $102 Million Acquisition of Prime South Carolina Timberlands | |
99.2 | Presentation Regarding Carolinas Midlands III Acquisition | |
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” or other similar words. Readers of this report should be aware
that there are various factors that could cause actual results to differ materially from any forward-looking statements made in this report. Factors that could cause or contribute to such differences include, but are not limited to, the Company may determine not to proceed with the Acquisition, the conditions to closing may not be satisfied and, as a result, the acquisition of the Carolinas Midlands III Timberlands may not be completed, the Company may not generate the harvest volumes from the acquired timberlands that it currently anticipates, the mix of timberland located on the Carolinas Midlands III Timberlands may be different than the Company currently anticipates which may impact the revenues than the timberlands will generate, as well as changes in general economic and business conditions in the geographic regions where the Company’s timberlands are located, changes in timber prices and the impact on the Company’s revenues, changes in the supply of timberlands available for acquisition that meet the Company’s investment criteria, industry trends, changes in government rules and regulations (including changes in tax laws), and increases in interest rates. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CATCHMARK TIMBER TRUST, INC. | ||
Date: May 5, 2016 | By: | /s/ BRIAN M. DAVIS |
Brian M. Davis Senior Vice President and Chief Financial Officer | ||
FOR IMMEDIATE RELEASE
CatchMark Agrees to $102 Million Acquisition of Prime South Carolina Timberlands
Deal with Forest Investment Associates for 51,700 Acres
ATLANTA - May 5, 2016 - In the company’s single, largest acquisition to date since its listing on the NYSE, CatchMark Timber Trust, Inc. (NYSE: CTT) announced today an agreement to acquire 51,700 acres of prime timberlands in South Carolina for $101.8 million, excluding closing costs, from funds managed by Forest Investment Associates. The acquisition of the Carolinas Midlands III timberlands will expand significantly CatchMark’s recent entry into North Carolina and South Carolina from 17,600 to 69,300 acres, and will increase the company’s total acreage in the U.S. South to 480,400 acres. Closing of the transaction is expected by the end of the second quarter or early third quarter 2016.
Adding approximately 2.1 million tons1 to CatchMark’s merchantable inventory, the acquisition comprises 70% pine acres and a 52%/48% pulpwood to sawtimber mix with significant diversity in topography, creating a range of seasonal harvest options to meet changing market demand. The transaction’s productivity is expected to be 4.8 to 5.8 tons per acre per year, adding approximately 250,000 to 300,000 tons per year to CatchMark’s harvest over the next decade.
The Carolinas Midlands III timberlands are proximate to and complementing other recent CatchMark purchases in South Carolina and North Carolina, providing synergies in pricing power, haul distances, management and land sales.
Jerry Barag, CatchMark’s President and Chief Executive Officer, said: “This transaction, in one of the Southeast’s strongest timber markets, fits our criteria for prime quality pine plantations and natural pine
and hardwood stands with excellent soil quality and above average growing capacity for producing sustainable yields and durable earnings. Proximity to stable, well managed mills, including one of the most efficient and highest capacity mills in the U.S., as well as assumption of an existing long-term supply agreement provides clarity of future sales volumes. The acquisition expands what we believe is one of the industry’s highest quality timberlands portfolio.”
The transaction will be financed through CatchMark's multi-draw term loan.
1. Subject to standard final adjustment prior to closing.
About CatchMark
Headquartered in Atlanta, CatchMark Timber Trust, Inc. is a self-administered and self-managed publicly traded REIT that began operations in 2007 and owns interests in approximately 428,700 acres* of timberland located in Alabama, Florida, Georgia, Louisiana, North Carolina, South Carolina, Tennessee and Texas. Listed on the NYSE (CTT), CatchMark provides institutions and individuals an opportunity to invest in a public company focused exclusively on timberland ownership with an objective of producing stockholder returns from sustainably recurring harvests. For more information, visit www.catchmark.com. From time to time, CatchMark releases important information via postings on its corporate website. Accordingly, investors and other interested parties are encouraged to enroll to receive automatic email alerts regarding new postings. Enrollment information is found in the “Investors Relations” section of www.catchmark.com.
* As of March 31, 2016.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as "may," "will," "expect," "intend," "anticipate," "estimate," "believe," "continue," or other similar words. However, the absence of these or similar words or expressions does not mean that a statement is not forward-looking. Forward looking statements are not guarantees of performance and are based on certain assumptions, discuss future expectations, describe plans and strategies, contain projections of results of operations or of financial condition or state other forward looking information. Such statements include, but are not limited to, that the inventory mix and diversity in topography of the
Carolinas Midlands III timberlands will result in a range of seasonal harvest options to meet changing market demand, that harvest volumes will increase, that the timberlands have the capability to produce sustainable yields and durable earnings, that the timberlands offer significant additional pricing power benefits, and that we have a robust deal pipeline in place. Readers of this press release should be aware that there are various factors that could cause actual results to differ materially from any forward-looking statements made in this press release. Factors that could cause or contribute to such differences include, but are not limited to: (i) the conditions to closing may not be satisfied and, as a result, the acquisition of the Carolinas Midlands III timberlands may not be completed, (ii) we may not generate the harvest volumes from our timberlands that we currently anticipate; (iii) the demand for our timber may not increase at the rate we currently anticipate or at all due to changes in general economic and business conditions in the geographic regions where our timberlands are located; (iv) timber prices may not increase at the rate we currently anticipate or could decline, which would negatively impact our revenues; (v) the supply of timberlands available for acquisition that meet our investment criteria may be less than we currently anticipate; (vi) we may be unsuccessful in winning bids for timberland that are sold through an auction process; (vii) we may not be able to access external sources of capital at attractive rates or at all; (viii) potential increases in interest rates could have a negative impact on our business; and (ix) the factors described in Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, under the heading “Risk Factors” and our other filings with Securities and Exchange Commission. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We undertake no obligation to update our forward-looking statements, except as required by law.
###
Contacts
Investors: Media:
Brian Davis Mary Beth Ryan, Miller Ryan LLC
(855) 858-9794 (203) 268-0158
CatchMark Timber Trust NYSE: CTT M a y 2 0 1 6 Carol inas Midlands I I I Acquisit ion M A Y 2 0 1 6
F O R WA R D - L O O K I N G S TAT E M E N T S 2 This presentation contains certain forward-looking statements within the meaning of the safe harbor from civil liability provided for such statements by the Private Securities Litigation Reform Act of 1995 (as set forth in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) that are subject to risks and uncertainties. Such forward-looking statements can generally be identified by use of forward-looking terminology such as "may," "will," "expect," "intend," "anticipate," "estimate," "believe," "continue," or other similar words. These forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain financial and operating projections or state other forward-looking information. The Company's ability to predict results or the actual effect of future events, actions, plans or strategies is inherently uncertain. Although the Company believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions, the Company's actual results and performance could differ materially from those set forth in, or implied by, the forward-looking statements. You should be aware that there are various factors that could cause actual results to differ materially from any forward-looking statements made in this presentation. Factors that could cause or contribute to such differences include, but are not limited to, (i) the conditions to closing may not be satisfied and, as a result, the acquisition of the Carolinas Midlands III timberlands may not be completed when expected or at all (ii) we may not generate the harvest volumes or the harvest mix from our timberlands that we currently anticipate; (iii) the demand for our timber may not increase at the rate we currently anticipate or at all due to changes in general economic and business conditions in the geographic regions where our timberlands are located; (iv) the cyclical nature of the real estate market generally, including fluctuations in demand and valuations, may adversely impact our ability to generate income and cash flow from sales of higher-and-better use properties; (v) housing starts and timber prices may not increase at the rate we currently anticipate or could decline, which would negatively impact our revenues; (vi) the supply of timberlands available for acquisition that meet our investment criteria may be less than we currently anticipate; (vii) we may be unsuccessful in winning bids for timberland that are sold through an auction process; (viii) we may not be able to access external sources of capital at attractive rates or at all; (ix) potential increases in interest rates could have a negative impact on our business; (x) our share repurchase program may not be successful in improving shareholder value over the long-term; (x) our cash dividends are not guaranteed and may fluctuate; and (xi) the factors described in Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, under the heading “Risk Factors” and our other filings with Securities and Exchange Commission. You are cautioned not to place undue reliance on any of these forward-looking statements, which reflect the Company's views only as of this date. Furthermore, except as required by law, the Company is under no duty to, and does not intend to, update any of our forward-looking statements after this date, whether as a result of new information, future events or otherwise.
C A R O L I N A S M I D L A N D S I I I : T R A N S A C T I O N S U M M A R Y 3 Transaction/Purchase Price • CatchMark has agreed to acquire approximately 51,700 acres of prime timberlands in South Carolina from funds managed by Forest Investment Associates. • Purchase price of $101.8 million (~$1,969 per acre) Financing Plan • Transaction will be financed through CatchMark's multi-draw term loan. • Over $200 million remaining liquidity post transaction Timing • Closing expected by end of second quarter or early third quarter 2016
C O M P E L L I N G I N V E S T M E N T R AT I O N A L E • Significantly expands CatchMark’s recent entry into North Carolina and South Carolina from 17,600 to 69,300 acres, and will increase the company’s total acreage in the U.S. South to 480,400 acres • Proximity to stable, well managed mills, including one of the most efficient and highest capacity mills in the U.S • Includes assumptions of existing long-term supply agreement • Adds approximately 2.1 million tons1 to CatchMark’s merchantable inventory • Comprises 70% pine acres and a 52%/48% pulpwood to sawtimber mix • Expected to add approximately 250,000 to 300,000 tons per year (4.8 to 5.8 tons per acre per year) to CatchMark’s harvest volumes over the next decade • Average site index of plantations nearing maturity over 80 • Significant diversity in topography, creating seasonal harvest optionality 4 1. Subject to standard final adjustment prior to closing. 2. Site index is the height a tree can grow (in feet) in 25 years. US Southern averages are 60-65.
C O M P L E M E N TA R Y T O P R E V I O U S C A R O L I N A S A C Q U I S I T I O N S 5 Carolinas Midlands III provides synergies in pricing power, haul distances, management and land sales. NC SC Existing timberlands as of 3/31/2016 Carolinas Midlands III acquisition Carolinas Midlands III acquisition in same counties as existing timberland
H I G H VA L U E T I M B E R L A N D S W I T H AT T R A C T I V E I N V E N T O R Y M I X 6 Acreage Profile Inventory Profile Hardwood /Other 26% Pine 74% CatchMark (428,700 acres1) Hardwood /Other 30% Pine 70% Carolinas Midlands III (51,700 acres) Sawtimber /Chip-n-Saw 48% Pulpwood 52% Sawtimber /Chip-n-Saw 48% Pulpwood 52% 1. As of 3/31/2016.
H I G H LY P R O D U C T I V E T I M B E R L A N D S 7 U.S. South - Average U.S. South - Above Average Midlands III 3.5 4.0 5.3 Productivity Comparison (tons)1 Data based on management estimates. 1. Figures represent average growth in inventory per acre per year. Carolinas Midlands III timberlands have extraordinary productivity characteristics with inventory growth rates higher than “average” U.S. South timberlands.
S O U R C E S & U S E S / P R O F O R M A A N A LY S I S 8 ($ in 000s) Sources Multi-Draw Term Loan $102,275 Total Sources $102,275 Uses Acquire Timberlands $101,750 Estimated Transaction Expenses 525 Total Uses $102,275 CTT as of 3/31/2016 Balance Availability Remaining Availability Acquisition Pro Forma Balance Pro Forma Availability Pro Forma Liquidity Cash and Cash Equivalents $14,309 $14,309 $14,309 $14,309 $14,309 Revolving Credit Facility - 35,000 35,000 - 35,000 Multi-Draw Term Facility 98,002 365,000 266,998 102,275 200,277 164,723 Term Loan Facility 100,000 100,000 - 100,000 - $212,311 $514,309 $316,307 $102,275 $300,277 $214,032 Key Metrics CTT as of 3/31/2016 Acquisition Pro Forma % Change Pro Forma Asset Profile Fee 404,900 51,700 456,600 Leased 23,800 23,800 Total Acreage 428,700 51,700 480,400 12% Merchantable Inventory 17.01 2.1 19.1 12% % Pine (by Acreage) 74% 70% 74% 0% % Sawtimber (by Tons) 48% 48% 48% 0% Estimated Annual Harvest (in MMs) 1.9 - 2.1 .25 - .30 2.15 - 2.40 ~ 14% 1. Ending inventory includes estimated growth on fee timberland in the current year, which approximate current year harvest from fee timberland.
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