Potlatch to sell Minnesota plants

Potlatch Corp. will sell its three oriented strand board plants in Minnesota to a Canadian firm for $457.5 million cash, company officials announced late Wednesday.

The sale of the oriented strand board plants to Ainsworth Lumber Co. Ltd. of Vancouver, B.C., is expected to close in the third quarter. Potlatch will use the money to pay down debt, and make other strategic investments, said company Chairman Penn Siegel in a statement.

A strong construction market has driven up the price of both oriented strand board and plywood.

“Our oriented strand board business has been very profitable in the last 18 months, and contributed greatly to Potlatch’s profitability during that period,” Siegel said. “Prior to the Ainsworth offer, Potlatch had not planned to sell.”

But the offer from Ainsworth was in the best interests of Potlatch’s shareholders, he said. Potlatch, which has invested regularly in the mills, estimates their book value at $180 million. The mills were worth more to Ainsworth, who is a larger player in oriented strand board markets, and in a better position to grow the business, Siegel said.

The acquisition is Ainsworth’s first outside of Canada. Ainsworth sells oriented strand board in the United States and Canada, Europe and Asia. The Potlatch purchase will increase its annual production by a third, to 3.3 billion square feet annually.

The oriented strand board plants employ 600 workers in the Minnesota communities of Grand Rapids, Bemidji and Cook. Ainsworth has agreed to offer jobs to the employees at comparable wages. The two companies said they will work to extend the union contract currently in place at the Grand Rapids mills.

Potlatch, which is based in Spokane, is the largest private landowner in Minnesota. The company will continue to supply regional mills from its timberlands, including the Ainsworth plants, officials said.