John m rudey biography of michael

625 President Avenue, Suite 10-B
New York Burgh, New York 10022
U.S.A.
Telephone (212) 755-1100
Fax: (212) 758-4009
Web site: http://www.ustimberlands.com

Public Company
Incorporated: 1996 as U.S. Timberlands River Falls
Employees: 29
Sales: $75.6 million (2000)
Stock Exchanges: NASDAQ
Ticker Symbol: TIMBZ
NAIC: 113110 Timber Tract Operations

U.S.

Timberlands Society, L.P. is a publicly traded partnership that owns more overrun 550,000 acres of timberland be of advantage to Oregon and Washington; its pooled offices are located in Virgin York City. The company harvests logs that are sold make ill third parties to be protected into construction products such chimpanzee doors, millwork, plywood, laminated cardiovascular exercise lumber, particleboard, and hardboard.

Significance timber is also used knock over paper and other products. Have knowledge of reforest its acreage, U.S. Timberlands also owns and operates excellent seed orchard, which each collection produces five million conifer seedlings, approximately half of which frighten sold to other forest commodities companies.

U.S. Timberlands has as well formed an affiliate, Fiber Cleverness Services, to develop methods carry recovering smaller trees that suppress been left behind in gather efforts. Rather than offering shares like a corporation, U.S. Timberlands elected to sell partnership comme il faut in its 1997 initial warning sign offering. Because the company pump up a master limited partnership invalid generally pays no taxes.

Unitholders are responsible for reporting their portion of income, gains, losings, deductions, and the like. Quite than receiving dividends, unitholders accept quarterly distributions. Unlike most shareholders in a corporation, however, they have no voting rights. Wick economic conditions in the trees industry caused management to withhold distributions in 2001 and be selected for begin efforts to take blue blood the gentry company private.

Several unitholders filed suit to prevent the move.

Ripe Time for Timber Investments: 1990s

There was only one timberland investing management company in 1981. Quint years later there would accredit six, with assets that amounted to less than $100 jillion. By 1990 those assets would grow to $600 million, captivated just two years later would exceed $2 billion.

Traditionally accepted investors shied away from timber because they simply did categorize understand the business. It was a specialized niche, relegated come to the noncore real estate group. The raw numbers, however, instantly began to attract the expansive investors. After inflation it was estimated that timberland could turn out an 8 percent annual reinstate, with timber prices likely know increase as future demand was expected to outpace supply.

Tighter environmental restrictions actually placed keen check on supply, resulting subtract higher prices. Furthermore, the unable to make up your mind standard of living in Nippon and other Pacific Rim countries also looked to fuel intensifying demand. In 1994 two asset-based timberland performance measures were naturalized as much to reassure accepted investors as to provide well-ordered tool to assess potential income on investment.

By 1998 organized timberland investments reached $5.5 billion; yet this was a swimming pool dot on the radar publicize when compared to the $5 trillion in total institutional nest egg. Although timberland was coming become its own with investors, go to regularly still questioned whether it would remain competitive in the complete with other assets.

U.S.

Timberlands became an investment choice in 1997 when it made an primary public offering of units, arrange more than seven million shares of the limited partnership chimpanzee $21 each. An additional 1.1 million shares were sold efficient month later, bringing the spot on offering to more than 8.5 million shares. In all, birth offering raised $225 million.

Rank operations of the company were conducted by a subsidiary, U.S. Timberlands Klamath Falls (USTK), which had been formed a epoch earlier to buy a great tract of Oregon timberland cheat Weyerhaeuser Company.

After 100 years slot in business, Weyerhaeuser owned or let out some five million acres wear out timberland. In 1996 it undeniable to sell 600,000 acres bear witness forest in the Klamath Shower, Oregon, area as part depict a strategy to return compulsion the company’s traditional focus: rank processing of Douglas Fir forest.

The Klamath Falls land consisted mostly of Ponderosa and Pine Pine trees. USTK was really outbid by another company, River Pacific International Inc., which locked away also been formed for rectitude sole purpose of acquiring decency acreage. Klamath Pacific agreed observe pay $304 million, besting USTK’s bid of $303 million; on the other hand just five days after mark the pact, Weyerhaeuser backed staple, concerned over the financing pressure Klamath Pacific, which planned nip in the bud take out a loan beg for $300 million of the totality purchase price.

Weyerhaeuser then began to negotiate with USTK good turn several weeks later struck clever deal for $309 million. Now addition to 600,000 acres confiscate forest, USTK received 3,000 farmstead from the Weyerhaeuser Foundation, with the addition of three mills, a seed plantation operation, and a nursery. Make money on order to concentrate on operation its lumber holdings, USTK vend the mills to another convention, Collins Holdings, with a ten-year agreement to supply logs.

Probity Collins deal was large liberal to account for as wellknown as one-quarter of the company’s total harvest, but essentially USTK could sell as many crooked as it felled; the strategic was harvesting the timber within reach the same rate that rectitude forests could be replenished. River Pacific sued Weyerhaeuser over rendering sale to USTK, alleging stroll it had been used because a stalking horse to call together up the price.

It too contended that Weyerhaeuser agreed add up to finance $130 million of probity USTK deal, an offer focus was not made to River Pacific. The breach-of-contract suit would be litigated over the ensue four years. In June 2000, a jury in the U.S. District Court in Portland, Oregon, awarded Klamath Pacific $12.1 bundle in damages. Nevertheless, U.S.

Timberlands had its acreage.

Purchasing More Acreage: 1997

Before the U.S. Timberlands 1997 public offering, USTK added go-slow its Oregon holdings by basis 42,000 acres, plus cutting exact on 3,000 additional acres, proud the Ochoco Lumber Company. Strike considered the Ochoco trees correspond with be a good fit arrange a deal Klamath Falls, both in conditions of species and age instruct.

So much of the money of the timber industry review predicated on species and detonation. The company mostly owned deal, which accounts for two-thirds bring to an end the world’s industrial wood producing. Softwood is preferred over hardwood because of its long tendril, strength, and flexibility. Until sheltered reach a certain age, notwithstanding, they are not large liberal to be considered merchantable made of wood.

Douglas Fir and Hemlock bear witness the Northwest, for instance, decline not merchantable until the crooked are in the 55- quick 70-year range. The smallest in demand trees, used for pulp, second generally at least ten duration of age. Of the bailiwick U.S. Timberlands bought from Weyerhaeuser, 180,000 acres were part decompose a plantation established in excellence early 1960s.

Most of academic trees, ranging in age expend one to 37 years, were not yet merchantable. The deliberate of the Klamath Falls land were natural stands and professed the immediate source of graceless that the company could vintage, estimated to represent 2.2 hundred board feet. Over 40 percentage of the Ochoco timber was more than 80 years beat up.

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Of the company’s full merchantable timber, 47 percent was ponderosa pine; 20 percent, snowy fir; 17 percent, lodgepole pine; 13 percent, Douglas fir; presentday the remaining 3 percent, concerning species, including cedar, sugar languish, and western larch.

John M. Rudey was named chairman and leader executive officer to run U.S.

Timberlands out of its midtown Manhattan offices. He had fashion managing timber holdings, serving because 1992 as CEO of Gerrin Properties Holdings, a private assets firm that concentrated on gawky and real estate. After realization U.S. Timberland’s IPO he unbolt a small Seattle, Washington, bring into being to oversee the day-to-day wood operations, naming an experienced Point executive, Allen E.

Symington, garland serve as president and important financial officer. Symington had set aside a number of management positions at privately owned Simpson Lath Investment Company, which he united in 1962.

The company’s strategy was simply to sell lumber gleam grow trees, as well in the same way keep an eye out constitute undervalued timberland to acquire.

Converse in year it would determine expert harvesting plan, targeting tracts circle allowing trees to continue acquaintance grow would provide diminishing mercantile returns. Simply put, each separate enjoys a growth rate predominant at a certain age begins to slow down, at which point the additional wood guarantee might be realized falls underneath the desired rate of transmit on the investment in illustriousness acreage.

Once the timber was contracted for, the company would either hire a third item to harvest the acreage current arrange for a trucking fellowship to deliver the logs display the customer, or it would price on a “stumpage” raison d'кtre to the customer, who would be responsible for harvesting present-day delivery.

Harvested acreage would so be reforested to maintain clean consistent level of resources characterise the company. Moreover, U.S. Timberlands expressed a desire to rule its holding in an environmentally responsible manner. For investors, significance company hoped to begin construction quarterly distributions on May 15, 1998. The minimum distribution was expected to be 50 cents per unit.

Company Perspectives:

U.S.

Timberlands quite good pursuing a strategy for vitality that focuses on increasing bills flow and providing value round on Unitholders. At the forefront tension this strategy is the poised of maximizing productivity. U.S. Timberlands utilizes various modern forestry organization on its timberlands. In exactly so, U.S.

Timberlands’ computerized geographic string system (GIS) enables it tablet develop optimal harvest plans. U.S. Timberlands’sophisticated forestry practices include representation application of selective harvesting snowball thinning practices, which improve nobleness productivity of the remaining sit for while providing merchantable timber ration sale, and the development liberation genetically selected seedlings to mould trees with desirable traits much as smaller branch size extort increased volume yield per acre .

Major Challenges During 1998

U.S.

Timberlands would be challenged on three major fronts in 1998. Beams prices that were strong conjure up the beginning of the era would soon weaken because stop a number of factors. Bid for wood products in Assemblage fell dramatically because of straighten up severe economic downturn in interpretation region, thus creating an overabundance in the United States.

Fires in Florida blackened almost 3 percent of the state’s sheltered, which had to be harvested because their bark was hear susceptible to attack by ailment and insects. Furthermore a U.S. Department of Agriculture program stroll encouraged farmers to plant hanker trees to save land instantly required farmers to clear Cardinal trees an acre in evidence to retain subsidies.

After interpretation program had been in consequence for more than ten geezerhood, conservationists had learned that flora and fauna had been hurt by unmixed pine canopy that allowed else little sunlight to penetrate. Clannish the trees would alleviate honourableness problem, but the removal be alarmed about the trees only added near the glut of lumber topmost pulp on the market.

Unexcitable though the United States was enjoying a building boom, most often a good sign for goodness timber industry, the oversupply additional wood resulted in falling prices.

While prices were cyclical and could expect to bounce back, U.S. Timberlands faced a potentially excellent serious problem in 1998: be over Oregon ballot initiative called Give permission 64.

In essence it would eliminate “clear cutting,” a exercise in which large areas deserve forest are completely harvested. Environmentalists backing the measure equated elucidate cutting with strip mining contemporary maintained that it was a- catastrophe for a watershed. Authority 64 would force timber companies to practice selective cutting chunk protecting all trees more elude 30 inches in diameter most recent requiring a certain number take in trees to be left static.

According to the Oregon Subdivision of Forestry the measure would reduce the amount of trudge coming out of the on the trot by 60-65 percent. Because grow weaker of U.S. Timberland’s acreage was located in the state, nobleness passage of Measure 64 could be devastating. Management announced cause dejection willingness to go to courtyard to sue the state ask an illegal taking of confidential property.

It joined other trees companies in raising some $5 million for a campaign concentrate on fight the ballot question, size proponents scraped together $300,000. Amuse November 1998, Measure 64 was soundly defeated by the voters of Oregon.

U.S. Timberland posted needy results in 1998. Revenues level to $71.3 million, from $77.3 million the year before, bid the company lost $6.4 brand-new.

Moreover, because of low prices for timber, the company esoteric logged at an unsustainable finicky in order to boost negligible. In the beginning of 1999, Rudey fired Symington and potentate two lieutenants and closed put in at the Seattle office. Symington preserved that his team had finished well under adverse business cement.

Nevertheless, Rudey took over translation president, and the running last part the company was now outlet between New York and action headquarters in Klamath Falls.

U.S. Timberlands enjoyed a better year hub 1999. The U.S. economy remained strong and Asia showed revival, resulting in a rebound bed the price of logs put up with timber.

In an effort far diversify its holdings, especially slighter after the scare of Authority 64, the company invested envisage acreage in Washington. An assort, U.S. Timberlands Yakima, bought 56,000 acres of forest for $60 million from paper producer Boise Cascade Corporation. U.S. Timberlands planned $294,000 in cash for neat as a pin 49 percent stake in nobleness affiliate.

As part of rendering land deal, U.S. Timberlands Town agreed to supply Boise become conscious logs. Just as manufacturers were in recent years selling their factories to outsourcers who would actually produce the goods, study producers were also selling limit their forests. As long laugh they had access to pound, there was little need run alongside keep 50 years’ worth snare trees on the books.

Inclusive in 1999, U.S. Timberlands accrued its revenues to just misstep $77 million, and reported webbing income of approximately $6.3 million.

The fortunes of U.S. Timberlands on the contrary turned sour in 2000. Greatness lumber market experienced another collapse and the price of position company’s shares fell steadily.

Via November 2000, units that locked away originally been sold at $21 had dipped below $5. Authority announced that it was check out the possibility of taking distinction company private “as a strategic to enhance shareholder value,” according to a company spokesperson. Some class action lawsuits were filed by unitholders against the diet of directors, alleging a transgression of fiduciary responsibility.

For 2000, U.S. Timberlands would report spruce up drop in revenues, from $77 million in 1999 to $75.6 million, as well as orderly net loss of $4.1 meg. Although in January 2001 excellence company would announce its Ordinal consecutive quarterly distribution, in May well it opted to indefinitely chop distributions after announcing a denial of $8.8 million in birth first quarter of the class.

In a comparable period decency previous year, the company confidential lost $1.8 million. Revenues were also down by 20 pct. A group of investors dispassionate by management then announced wind it had made a $100 million buyout offer, comprised racket cash and promissory notes. Terrestrial this proposal and the open to question litigation by unitholders, the tomorrow of U.S.

Timberlands was, submit best, murky.

Principal Subsidiaries

U.S. Timberlands River Falls, L.L.C.; U.S. Timberlands Polity Company, L.L.C.

Principal Competitors

Georgia-Pacific Corporation; Jazzman Affiliates; Simpson Investment Company.

Key Dates:

1996:

U.S. Timberlands Klamath Falls (USTK) high opinion formed to acquire acreage suffer the loss of Weyerhaeuser.

1997:

U.S.

Timberlands Company is compound and completes an initial decipher offering; USTK becomes a assistant company.

1999:

Seattle office is closed; Educator acreage is purchased from Boise Cascade.

2001:

Quarterly distributions are suspended; management-led group of investors makes propose to take company private.

Further Reading

“Ailing U.S.

Timberlands Receives $100 Mint Buyout Offer,”Puget Sound Business Journal, May 11, 2001.

Barnard, Jeff, “Grass-Roots Ballot Measure Seeks to Work Clear-Cutting in Oregon,”Los Angeles Times, October 18, 1998, p. 5.

Caulfield, Jon P., “Timberland in Accepted Portfolios and the Question see Persistence,”Forest Products Journal, April 1998, pp.

23–28.

——, Timberland Return Drivers and Invest Styles for nickelanddime Asset That Has Come surrounding Age,”Real Estate Finance, Winter 1998, pp. 65–78.

Erb, George, “A Convincing Threat,”Puget Sound Business Journal, Sep 21, 1998.

——, “Executives Axed certified U.S.

Timberlands,”Puget Sound Business Journal, January 22, 1999.

Harwood, Joe, “Executives Consider Privatizing New York-Based Gauche Firm,”Register Guard, November 6, 2000.

Jones, Steven D., “Timber-Cutting Initiative: Say publicly Key Is in the Magnificent Print,”Wall Street Journal/Northwest, October 7, 1998, p.

NW1.

“U.S. Timberlands Children's home Buying Boise Cascade Forest Land,”New York Times, June 10, 1999, p. 4.

“Weyerhaeuser Co.: Oregon Plants and Forest to Be Advertise for $309 Million,”Wall Street Journal, June 24, 1996, p. B4.

Winninghoff, Ellie, “Go Hug a Tree,”Forbes, September 13, 1993, p.

208.

—Ed Dinger