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Pulpmakers get a black liquor break
A recently introduced US tax incentive has led to pulpmakers getting a spot of cash in their bank accounts. Pulp mills can claim certification for excise tax credits when they use black liquor mixed with conventional fuels such as diesel oil to produce steam. The legislation has already paid off for International Paper which said it had received $71.6 million for the mix it used at 15 mills between November 14 and December 14, 2008. Not everyone is as happy as IP, however. One company said it could lead to overproduction of pulp and send prices even lower than they are now. The incentive runs until the end of 2009. In other IP news: Since the beginning of 2009, the company: • Raised about $470 million from a bank syndicate to refinance the majority of its euro 500-million bank term loan, which was to have matured in August 2009. The new term loan matures in March 2012. The company used available cash to pay off the remaining loan balance of about $170 million. Including the repayment of about $365 million of notes in January 2009, International Paper has repaid $535 million of debt by mid-March. The company has $530 million of remaining debt maturities in 2009, of which it plans to repay $195 million with cash on hand and extend the maturity date on the balance of $335 million. At the end of February, International Paper had about $900 million in cash on hand and had no borrowings on either its revolving credit facility or accounts receivable securitization facility. • Said it plans to divest about 143,000 acres of properties in the Southeastern US in a transaction with American Timberlands Fund I, LP valued at about $275 million. IP will sell about 114,000 acres to the Partnership for $220 million in cash and will contribute 29,000 acres, with a value of $55 million, in exchange for a 20% interest in the Partnership. The transaction value is subject to various adjustments at closing and is contingent upon the Partnership raising $220 million to finance the transaction. The transaction is expected to close in mid-June. • Declared a regular quarterly dividend of $0.25 per share for the period from Jan. 1, 2009, to March 31, 2009, inclusive, on its common stock, par value $1. It also declared a regular quarterly dividend of $1 per share for the same period on the cumulative $4 preferred stock of the company. The dividends were payable on March 16, 2009, to holders of record at the close of business on Feb. 16, 2009. However, in March IP reduced the quarterly common stock dividend from 25 cents ($0.25) to 2-1/2 cents ($0.025) per share, effective for the dividend payable June 15, 2009, to shareholders of record on May 18, 2009. The company expects to preserve about $100 million in cash on a quarterly basis, which will be used to reduce debt more quickly. Dividends for the cumulative $4 preferred stock were unchanged. • Rescheduled its Investor Day from Feb. 18 to June 9. The company postponed the event, which was originally intended to focus solely on its industrial packaging business, in order to provide a broader company update. The event will be webcast live on IP's web site at www.internationalpaper.com/Investors/Presentations. • Said it was to close its Inverurie, Scotland, mill by the end of March. A three-month employee consultation failed to find a financially viable alternative future for the mill. The closure removes 250,000 tonnes of uncoated freesheet capacity from IP European output. • Said its preliminary full-year 2008 net earnings were $57 million ($0.13 per share) compared with $1.2 billion ($2.70 per share) in 2007. In 4Q08, the net loss was $452 million ($1.07 per share) compared with earnings of $327 million ($0.78 per share) in 4Q07. Amounts in all periods include special items, including a $438-million ($1.04 per share) goodwill impairment charge in the 2008 periods. |
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