Plum Creek Timber Operations I, L.L.C., Plum Creek Trs, L.L.C. Completes Formation of Timberland Joint Venture with Washington State Investment Board, Oregon Public Employees Retirement Fund, Alaska Permanent Fund Corporation, and Silver Creek Capital Management, LLC and Silver Creek Advisory Partners, LLC
Sep 21 15
On September 15, 2015, certain subsidiaries of Plum Creek Timber Company Inc. (Plum Creek) completed the formation of a timberland joint venture with certain institutional investors that will be conducted through Twin Creeks Timber, LLC, a limited liability company consisting of two series, one of which will acquire, own, lease, and operate timberlands and one of which will engage in logging, hauling, merchandising, and selling logs (the Joint Venture). The terms of the Joint Venture are governed by a limited liability company agreement (the Joint Venture Agreement) entered into on September 15, 2015, by and among Plum Creek Timber Operations I, L.L.C., Plum Creek TRS, L.L.C. (Plum Creek Members), the Washington State Investment Board, the Oregon Public Employees Retirement Fund, the Alaska Permanent Fund Corporation, and Silver Creek Capital Management, LLC (the Institutional Members" and, together with the Plum Creek Members, the Members") and Silver Creek Advisory Partners, LLC (Silver Creek), as manager of the Joint Venture. Plum Creek Timberlands, L.P., Plum Creek's operating partnership, is also a party to the Joint Venture Agreement for the limited purpose of agreeing to pay certain organizational expenses. When fully subscribed, the Joint Venture is expected to have committed capital of approximately $1,000,000,000. Also on September 15, 2015, Plum Creek Timberlands, L.P. and Plum Creek Timber Operations I, L.L.C. entered into a Contribution Agreement with Twin Creeks Timber, LLC which governs the terms of the initial timberland property acquisition by the Joint Venture. Under the terms of the Contribution Agreement, the Plum Creek parties have agreed to contribute and sell to the Joint Venture approximately 260,000 acres, in the aggregate, of Plum Creek's southern U.S. timberlands. Of this amount, approximately 195,000 acres will be sold to the Joint Venture for a cash purchase price of approximately $420,000,000, and approximately 65,000 acres will be contributed to the Joint Venture in exchange for equity having a value of approximately $140,000,000. The sale and contribution transactions are expected to occur on or about January 4, 2016. The Contribution Agreement contains customary representations and warranties, closing conditions and provisions for excluding timberlands from the contribution and sale transactions based upon certain specified contingencies. Based on the parties' initial capital commitments on September 15, 2015 of approximately $800,000,000, the Plum Creek Members acquired a common interest in the Joint Venture representing approximately 25% of the Joint Venture's common equity in exchange for its initial capital commitment of approximately $140,000,000 of timberlands and up to approximately $60,000,000 of committed capital for future timberland acquisitions. The Institutional Members acquired common interests in the Joint Venture collectively representing approximately 75% of the Joint Venture's common equity in exchange for their collective capital commitment of approximately $420,000,000 in cash to be contributed to the Joint Venture upon consummation of the Contribution Agreement and up to approximately $180,000,000 of committed capital for future timberland acquisitions. It is anticipated that additional investors will make capital commitments of approximately $150,000,000, at which time the Plum Creek Members will increase their total capital commitment by an additional $50,000,000 to maintain their approximately 25% equity ownership percentage in the Joint Venture. The Joint Venture Agreement contains several provisions that govern the rights and obligations of the Members and the authority of the manager. These include provisions governing cash distributions to the Members, Member withdrawal from the Joint Venture, and the Members' respective capital commitment obligations to the Joint Venture. The agreement also requires that certain material actions be approved by specified vote of the Members, including the removal and replacement of the Joint Venture manager, the removal and replacement of the Joint Venture timberland property manager, debt incurrence by the Joint Venture, and the admission of new members to the Joint Venture. Silver Creek is designated as the Joint Venture manager, in which capacity Silver Creek will, among other things, manage cash distributions to the Members, oversee the accounting and related audit of the Joint Venture's results of operations, report to the Members regarding the Joint Venture's financial performance, and act as an intermediary among the Members and between the Joint Venture and third-party service providers, including the timberland property manager. The Joint Venture Agreement also gives Silver Creek discretion to approve timberland acquisitions for the Joint Venture if such acquisitions meet certain specified criteria and are recommended to the Joint Venture by the timberland property manager. A subsidiary of Plum Creek will act as the timberland property manager to the Joint Venture and will recommend timberland acquisitions and manage the Joint Venture's day-to-day timberland operations. Unless extended by unanimous vote of the Members, the term of the Joint Venture is 15 years, at which time the Joint Venture's
assets will be sold for cash and distributed to the Members in accordance with their respective ownership interests.