Milbank Structures Leveraged Acquisition Financing For Private Equity Group in Connection With $6.1 Billion Private Land Sale
International Paper Company To Sell 5.1 Million Acres of Forestland To Private Timberland Investment Groups
NEW YORK, NY, April 10, 2006 – Consistent with its strategy of exiting its forestry and logging business to focus on paper and packaging production, International Paper Company (NYSE: IP) has agreed to sell most of its United States forestland to two private investor groups for $6.1 billion, believed to be the largest private forestland sale in United States history. The international law firm Milbank, Tweed, Hadley & McCloy LLP, led by partners John Cobb, Michael Fitzgerald and David Stagliano, represented Merrill Lynch in arranging $1 billion acquisition financing for one of the investor groups.
In two separate transactions International Paper has agreed to sell 5.1 million acres of forestland (about the size of Massachusetts) located in the southern United States and Michigan to two private timberland investor groups. The company is selling 3.8 million acres in the South and 440,000 acres in Michigan to the investor group led by Resource Management Service LLC (RMS) and Forest Investment Associates for $5 billion in cash and notes. In a second transaction, International Paper is selling 900,000 acres in Louisiana, Texas and Arkansas to TimberSTAR for $1.1 billion.
Milbank represented Merrill Lynch in providing commitments for approximately $1 billion of leveraged acquisition financing for TimberSTAR. The financing involves a commitment to provide first and second lien bridge loans with the possibility of permanent financing and various take-out alternatives. TimberSTAR, founded by commercial real estate finance firm iStar Financial and two timber industry veterans, is an Atlanta, Georgia based investment management company specializing in the timber industry.
Commenting on the transaction, Mr. Cobb noted, “The transaction is a perfect example of how Milbank is able to draw on its established financing expertise in specific industries and its experience with major lenders in order to craft a structure that addresses the needs of private equity and other types of alternative capital sources. In this case our expertise in leveraged financing enabled us to work with the parties to develop a two-tiered financing structure that meets the private equity investors’ short term funding requirements while at the same time providing flexibility with respect to longer term financing/refinancing options and choice of ultimate exit strategy for these investors.”
The Milbank team representing Merrill Lynch was led by partners John Cobb, Michael Fitzgerald and David Stagliano and associates Jackie Rose, Lisa Brabant, Karina Dorin, Erika Del Duca, Caroline Wainwright and Carl Fleming, all in the New York office.
About Milbank
Milbank’s Global Securities/M&A/General Corporate Group is renowned for its leadership in sophisticated domestic as well as cross-border transactions and combines both the transactional and regulatory expertise necessary to successfully negotiate and closes mergers & acquisitions and other transactions across a wide range of industries.
Milbank has been cited for its role in a number of “first of its kind” transactions in virtually every country on the continent, spanning a number of industry sectors such as power & energy, satellite & telecoms and housing.
Milbank, Tweed, Hadley & McCloy LLP is a global law firm headquartered in New York, with offices in Los Angeles, Washington, D.C., London, Frankfurt, Munich, Tokyo, Hong Kong and Singapore. Milbank is a recognized leader in mergers and acquisitions, capital markets and corporate finance, project finance, acquisition finance and other major fields of legal practice. Milbank has English, German and U.S. law capabilities, and provides a full range of services to many of the world’s leading financial, industrial and commercial enterprises, as well as governments, institutions and individuals.