Rayonier split will keep both firms here
Fifteen years ago, it took a $2.57 million city incentive package to entice Rayonier Inc. to move its corporate headquarters from Stamford, Conn., to Jacksonville.
Now that the forest products company has decided to split into two publicly traded companies, it doesn't need any prodding to keep those headquarters in the city.
"Our plan is to remain right here with both companies in Jacksonville," Rayonier Chairman, President and CEO Paul Boynton said in an interview Monday after announcing the spinoff plan.
Rayonier itself was created as a separate public company in 1994 when it was spun off from ITT Corp. With much of its land holdings and manufacturing facilities in the Southeast, it decided to move the corporate offices to the region five years later and chose Jacksonville.
Rayonier operates three business segments: performance fibers, forest resources and real estate. The plan announced Monday morning calls for the performance fibers business to be spun out as a separate public company.
"We're adding another publicly traded company," Boynton said. "That's exciting for Jacksonville."
The forest resources and real estate company will retain the Rayonier name. It consists of about 2.6 million acres of timberland, including 200,000 acres of property in Northeast Florida and Southeast Georgia that the company has targeted for development.
The performance fibers business produces specialty cellulose fibers at plants in Fernandina Beach and Jesup, Ga. It's Rayonier's biggest business segment, producing $1.04 billion of the company's $1.71 billion in total revenue in 2013.
The Jesup mill, the larger of the two, completed an expansion last year that added 190,000 metric tons of annual capacity, bringing its total capacity to about 675,000 metric tons.
The completion of that project, along with improving markets for housing and timber, made it a good time to go ahead with a spinoff plan that Rayonier has been considering for about two years, Boynton said.
"We think it's a perfect time to launch this project," he said.
Rayonier's stock dropped sharply in October and several analysts downgraded their ratings after the company said it may not see the full benefits of the Jesup expansion until 2017 or 2018.
Boynton said Monday that market reaction did not affect the timing of the decision to split up, because the company is not as concerned about short-term market moves.
"It's the long-term play that makes this thing make sense," he said.
Boynton will be chairman and CEO of the new performance fibers company, which does not yet have a name, but will have no role in the new Rayonier after the split. Chief Financial Officer Hans Vanden Noort will remain with Rayonier.
The two companies will have separate boards of directors, and Rayonier will be searching for a CEO.
Rayonier operates as a real estate investment trust, or REIT, that is required to pay out most of its earnings to shareholders as cash dividends. The new Rayonier, with its focus in real estate, will continue to operate as a REIT.
The performance fibers company will not be a REIT, but Boynton said it expects to continue paying cash dividends to shareholders.
"We think it will be paying a dividend in line with its peers," he said. The peer group for that company will be specialty chemicals businesses, he said.
The spinoff, which Rayonier hopes to complete in mid-2014, will allow investors to focus on its distinct businesses.
"It's really allowing us to separate out our investor base," Boynton said.
"We're very excited to create and unlock value for our shareholders," he said.
Rayonier's stock rose $4 to $45.18 Monday, but it remains well below its record high of $60.62 in the spring of 2013.
Rayonier also on Monday reported fourth-quarter earnings from continuing operations of 62 cents a share, 3 cents higher than the fourth quarter of 2012 and 10 cents higher than the average forecast of analysts surveyed by Thomson Financial.