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Clearwater Paper urged to split, sell by hedge fund

Thu., Aug. 23, 2012

SAC Capital Advisers, an East Coast hedge fund operated by Steven A. Cohen, is pushing directors of Spokane-based Clearwater Paper Corp. to break into two parts and sell off at least one unit.

Clearwater has two product categories: private-label tissue and toilet paper; and bleached paperboard used to make folding cartons and food packages.

Cohen’s hedge fund manages more than $12 billion and has 180 employees at a trading office in Stamford, Conn. SAC owns about 1.6 million shares, about 7 percent of Clearwater’s common stock, according to the SEC filing submitted last week.

The filing said Cohen had a meeting with Clearwater directors recently and is urging them to split the firm and “pursue the divestiture of one or both businesses to one or more strategic and/or financial buyers.”

Cohen also asked the board to hire an investment bank to locate potential buyers, as well as appoint two new independent directors.

Matt Van Vleet, a spokesman for Clearwater, said the company is committed to working with its investors and will continue the dialogue it has with SAC Capital.

“The company is committed to acting in the best interests of its shareholders,” Van Vleet said.

Clearwater Paper is a spinoff unit formerly part of Spokane-based Potlatch. In 2008, Potlatch created Clearwater so it could focus on paper products while Potlatch continued as a timber-products company.

Earlier this year SAC Capital wrote a letter to Clearwater Chairman and CEO Gordon Jones calling its stock “deeply undervalued.” The hedge fund also suggested that separate sales of its two parts would net as much as $1.6 billion – about 112 percent of the market value at the time.

Since that letter, Clearwater’s stock has climbed 11 percent and has a market value of $834 million. Its second quarter net profit was $21.5 million on total sales of $473 million.

Clearwater has a nationwide headcount of about 3,700 employees; roughly 80 are in Spokane and another 1,350 work in Lewiston.

The company has 15 manufacturing plants in the United States and Canada.

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