Georgia-Pacific

Assignment

Georgia-Pacific was looking for ways to raise cash through the divestiture of some of its sizable timberland holdings. The company identified approximately 127,000 acres of high value timber that were non-strategic to current operations. The identified timberlands had an extremely low tax basis and corresponding significant exposure to a tax on capital gains. MainStream was hired by Georgia-Pacific to maximize the net cash generated from the asset sale.

Actions

MainStream performed due diligence on the identified assets to be sold as well as sought likely interested parties to purchase the timberlands. MainStream identified and structured a tax-advantaged transaction structure (installment note monetization) that maximized the Net Cash Flow and Net Present Value to the client. They also evaluated alternative funding markets including public bonds, private placements or a bank financing and concluded that the private placement market was most efficient. MainStream acted as exclusive capital markets advisor for $360 million installment note private placement to finance acquisition and defer capital gains tax.

Results

MainStream successfully completed the largest Timberland Monetization transaction to-date with terms, conditions, and timing that exceeded the client's expectations. MainStream designed and executed on this innovative and complex structure to meet the specific needs of Georgia-Pacific. An effective deferral of significant taxable capital gains resulted in substantial NPV savings and maximized the client's net transaction cash flow.