International Paper to Sell Mills

Forest products and paper company International Paper (IP Quote) said it has agreed to sell 13 lumber mills to West Fraser Timber for about $325 million in cash.

The Memphis, Tenn.-based company said the transaction inlcudes mills in Citronelle, Maplesville and Opelika, Ala.; Leola, Ark.; McDavid and Whitehouse, Fla.; Augusta and Folkston, Ga.; Armour and Seaboard, N.C.; Newberry, S.C.; and New Boston and Henderson, Tx., with a combined production capacity of about 1.8 billion board feet.

In connection with the transaction, International Paper, which had negotiated long-term log supply agreements with the buyers of its Southern forestlands, agreed to assign a portion of those rights to West Fraser. In turn, West Fraser has agreed to supply wood chips from the acquired lumber mills to International Paper at market prices.

"The agreement with West Fraser marks another positive step in focusing our company," International Paper said. "I'm pleased with the progress we've made so far to reshape International Paper. Our divestitures are moving forward faster than projected, and they've generated more proceeds than we'd originally anticipated. We've got more work to do, but we will continue delivering on our commitments to shareowners."

The transaction is expected to close in the first quarter of 2007, subject to various closing conditions including receipt of regulatory approvals and other customary conditions.