Item 1.01 Entry into a Material Definitive Agreement.
Merger Agreement
On January 14, 2020, Rayonier, Inc., a North Carolina corporation ("Rayonier"),
and Rayonier Operating Company LLC, a Delaware limited liability company and a
wholly owned subsidiary of Rayonier ("Opco"), entered into an Agreement and Plan
of Merger (the "Merger Agreement") with Pope Resources, a Delaware limited
partnership ("Pope"), and its general partners, Pope MGP, Inc., a Delaware
corporation ("MGP"), and Pope EGP, Inc., a Delaware corporation ("EGP", together
with MGP and Pope, the "Pope Entities"), pursuant to which Rayonier would
acquire (1) all of the issued and outstanding shares of Pope through a merger of
Pope and a wholly owned subsidiary of Opco (the "LP Merger") and (2) all of the
issued and outstanding shares of MGP and EGP through a merger of those entities
and wholly owned subsidiaries of Rayonier (the "GP Mergers").
Pursuant to the Merger Agreement, each unit representing limited partnership
interests of Pope (the "Pope Units") outstanding immediately prior to the
effective time of the LP Merger will, at the option of its holder, have the
right to elect for each Pope Unit and subject to proration as described below:
• 3.929 shares of Rayonier common stock (the "Stock Election Consideration");
• 3.929 units of Opco (the "Opco Election Consideration"); or
• $125.00 in cash (the "Cash Election Consideration").
Holders of Pope Units who do not make a valid election will receive the Stock
Election Consideration. The elections will be subject to proration to ensure
that the aggregate amount of cash, on the one hand, and Rayonier common stock
and Opco units, on the other hand, that are issued in the LP Merger would be
equal to the amounts issued if every Pope Unit received 2.751 shares of Rayonier
common stock or Opco units and $37.50 in cash. If Stock Election Consideration
and Opco Election Consideration are oversubscribed as a result of the proration
described in the prior sentence, then to reduce the effect of such proration,
Rayonier can, in its discretion, add additional equity (and decrease the amount
of cash) payable to the holders of Pope Units making the Stock Election
Consideration and the Opco Election Consideration.
The Merger Agreement provides that, prior to the effective time of the LP
Merger, Opco will be converted into a limited partnership under the name
Rayonier Operating Partnership LP, and the Opco units will be convertible into
cash based on the market price of Rayonier common shares or, at Rayonier's
option, exchanged for Rayonier common shares on a 1:1 basis following a 60-day
notice period.
The Merger Agreement provides that each restricted Pope Unit granted under
Pope's equity compensation plans that is outstanding immediately prior to the
effective time of the LP Merger will be converted into restricted shares of
Rayonier common stock on substantially the same terms and conditions as were
applicable to such restricted Pope Units.
Pursuant to the Merger Agreement, the holders of shares of MGP common stock and
EGP common stock outstanding immediately prior to the effective time of the GP
Mergers will be entitled to receive an aggregate of $10,000,000 in cash.
The consummation of the LP Merger and GP Mergers is subject to certain
conditions, including (1) the approval of the transactions by a majority of the
outstanding Pope Units, (2) the termination or expiration of any waiting period
applicable to the transactions under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, (3) the absence of any law, injunction or other legal
restraint preventing or making illegal the consummation of the transactions
contemplated by the Merger Agreement, (4) the
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effectiveness of a Registration Statement on Form S-4 registering the shares of
Rayonier common stock and Opco units to be issued in connection with the LP
Merger, (5) the approval for listing on the New York Stock Exchange of the
shares of Rayonier common stock to be issued in connection with the LP Merger,
(6) the accuracy of each party's representations and warranties and compliance
by each party with its covenants under the Merger Agreement, subject to certain
materiality qualifications and exceptions and (7) the receipt of certain legal
opinions by Rayonier and Pope.
The board of directors of MGP (the "Pope Board") has unanimously recommended
that holders of Pope Units vote to approve the LP Merger, and the Pope Entities
have agreed not to solicit alternative transactions from third parties, to
provide non-public information to third parties or to engage in discussions with
third parties regarding alternative transactions, subject to customary
exceptions.
The Merger Agreement contains certain termination rights for Rayonier and Pope.
If the Merger Agreement is terminated under specified circumstances, including
with respect to a change of the recommendation of the Pope Board, Pope will pay
Rayonier a termination fee equal to $20,000,000.
The foregoing description of the Merger Agreement does not purport to be
complete and is qualified in its entirety by reference to the Merger Agreement,
which is filed as Exhibit 2.1 hereto and is incorporated herein by reference.
A copy of the Merger Agreement has been included as an exhibit hereto to provide
investors with information regarding its terms. It is not intended to provide
any other factual information about Rayonier or Pope. In particular, the
assertions embodied in the representations and warranties contained in the
Merger Agreement are qualified by information in confidential disclosure letters
provided by each of Rayonier and Pope to each other in connection with the
signing of the Merger Agreement or in filings of the parties with the Securities
and Exchange Commission ("SEC"). These confidential disclosure letters have not
been filed herewith and contain information that modifies, qualifies and creates
exceptions to the representations and warranties and certain covenants set forth
in the Merger Agreement. Moreover, certain representations and warranties in the
Merger Agreement were used for the purposes of allocating risk between Rayonier
and Pope rather than establishing matters of fact. Accordingly, the
representations and warranties in the Merger Agreement should not be relied on
as characterization of the actual state of facts about Rayonier or Pope.
Voting Agreements
On January 14, 2020, in connection with the execution of the Merger Agreement,
Rayonier entered into voting and support agreements (the "Voting Agreements")
with Emily T. Andrews 1987 Revocable Trust, Gordon Andrews, Gordon Pope Andrews
Separate Property Revocable Trust U/T/D 5/9/2013, PT Pope Properties LLC, PMG
Family Limited Partnership and Maria M. Pope (collectively, the "Andrews and
Pope Stockholders"), which collectively beneficially own approximately 16% of
the outstanding Pope Units. The Voting Agreements require, subject to the terms
and conditions thereof, the Andrews and Pope Stockholders to vote their shares
of Pope Units in favor of the transactions contemplated by the Merger Agreement.
The foregoing description of the Voting Agreements and the transactions
contemplated thereby are only a summary, and are subject to and qualified in
their entirety by reference to those agreements, copies of which are filed with
this Current Report on Form 8-K as Exhibits 10.1 and 10.2 and incorporated by
reference herein.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number Description
2.1 Agreement and Plan of Merger, dated as of January 14, 2020, by and
among Rayonier Inc., Rayonier Operating Company LLC, Pacific GP
Merger Sub I, LLC, Pacific GP Merger Sub II, LLC, Pacific LP Merger
Sub III, LLC, Pope Resources, a Delaware limited partnership, Pope
MGP, Inc. and Pope EGP, Inc.*
10.1 Voting and Support Agreement, dated as of January 14, 2020 by and
among Rayonier Inc, PT Pope Properties LLC, PMG Family Limited
Partnership and Maria M. Pope.
10.2 Voting and Support Agreement, dated as of January 14, 2020 by and
among Rayonier Inc, Emily T. Andrews 1987 Revocable Trust, Gordon
Andrews and Gordon Pope Andrews Separate Property Revocable Trust
U/T/D 5/9/2013.
99.1 Press release, dated January 15, 2020
99.2 Investor Presentation, dated as of January 15, 2020
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
* Schedules and exhibits omitted pursuant to Item 601(b)(2) of Regulation S-K.
Rayonier agrees to furnish a supplemental copy of any omitted schedule to the
SEC upon request.
Cautionary Statement Regarding Forward-Looking Information
In addition to historical information, this communication contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements, which are based
on current expectations, estimates and projections about the industry and
markets in which Rayonier and Pope operate and beliefs of and assumptions made
by Rayonier's management and Pope's management, involve uncertainties that could
significantly affect the financial or operating results of Rayonier, Pope or the
combined company. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "seeks," "estimates," "will," "should," "may," "projects," "could,"
"estimates" or variations of such words and other similar expressions are
intended to identify such forward-looking statements, which generally are not
historical in nature, but not all forward-looking statements include such
identifying words. Such forward-looking statements include, but are not limited
to, projections of earnings, statements of plans for future operations or
expected revenues, statements about the benefits of the proposed transaction
involving Rayonier and Pope, including future financial and operating results,
the combined company's plans, objectives, expectations and intentions. All
statements that address operating performance, events or developments that we
expect or anticipate will occur in the future, including statements relating to
(i) the expected benefits of the proposed transaction to stockholders, employees
and other constituents of the combined company, (ii) the expected synergies and
other cost savings as a result of completion of the proposed transaction,
(iii) the expected timetable for completing the proposed transaction or
integration of the two companies, (iv) the general economic conditions in the
geographic areas where Rayonier or Pope operate, (v) creating value for
stockholders, (vi) changes in timber prices, (vii) changes in sales or
contribution volume of developed properties and (viii) the availability of
capital to finance the proposed transaction are each forward-looking statements.
These statements are not guarantees of future performance and involve certain
risks, uncertainties and assumptions that are difficult to predict. Although we
believe the expectations reflected in any forward-looking statements are based
on reasonable assumptions, we can give no assurance that our expectations will
be attained and therefore, actual outcomes and results may differ materially
from what is expressed or forecasted in such forward-looking statements. The
following important factors, among others, could cause actual results or events
to differ materially from those expressed in forward-looking statements that may
have been made in this document: risks associated with achieving expected
synergies and other
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costs savings; risks associated with the ability to complete the proposed
transaction on the terms contemplated or at all; and the expected timing of the
closing of the proposed transaction; the ability to successfully integrate our
operations and employees following the closing of the proposed transaction; the
cyclical and competitive nature of the industries in which we operate;
fluctuations in demand for, or supply of, our forest products and real estate
offerings; entry of new competitors into our markets; changes in global economic
conditions and world events; fluctuations in demand for our products in Asia,
and especially China; the uncertainties of potential impacts of climate-related
initiatives; the cost and availability of third party logging and trucking
services; the geographic concentration of a significant portion of our
timberland; our ability to identify, finance and complete timberland
acquisitions; changes in environmental laws and regulations regarding timber
harvesting, delineation of wetlands, and endangered species, that may restrict
or adversely impact our ability to conduct our business, or increase the cost of
doing so; adverse weather conditions, natural disasters and other catastrophic
events such as hurricanes, wind storms and wildfires, which can adversely affect
our timberlands and the production, distribution and availability of our
products; interest rate and currency movements; our capacity to incur additional
debt; changes in tariffs, taxes or treaties relating to the import and export of
our products or those of our competitors; changes in key management and
personnel; our ability to meet all necessary legal requirements to continue to
qualify as a real estate investment trust and changes in tax laws that could
adversely affect beneficial tax treatment; the cyclical nature of the real
estate business generally; a delayed or weak recovery in the housing market; the
lengthy, uncertain and costly process associated with the ownership, entitlement
and development of real estate, especially in Florida, which also may be
affected by changes in law, policy and political factors beyond our control;
unexpected delays in the entry into or closing of real estate transactions;
changes in environmental laws and regulations that may restrict or adversely
impact our ability to sell or develop properties; the timing of construction and
availability of public infrastructure; and the availability of financing for
real estate development and mortgage loans; the potential impact of announcement
of the proposed transaction or consummation of the proposed transaction on
relationships, including with employees and customers; the unfavorable outcome
of any legal proceedings that have been or may be instituted against Rayonier or
Pope; the amount of the costs, fees, expenses and charges related to the
proposed transaction and the actual terms of the financings that may be obtained
in connection with the proposed transaction; those additional risks and factors
discussed in reports filed with the SEC by Rayonier and Pope from time to time,
including those discussed under the heading "Risk Factors" in their respective
most recently filed reports on Form 10-K and 10-Q. Except to the extent required
by applicable law or regulation, Rayonier disclaims any duty to update any
forward-looking statements contained in this communication or to otherwise
update any of the above-referenced factors.
Important Additional Information and Where to Find It
In connection with the proposed transaction, Rayonier and its subsidiary,
Rayonier Operating Company LLC, will file with the SEC a registration statement
on Form S-4 to register the shares of Rayonier common stock and units
representing partnership interests in ROC to be issued in connection with the LP
Merger. The registration statement will include a proxy statement/prospectus
which will be sent to the stockholders of Pope seeking their approval of the
merger-related proposals. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE
REGISTRATION STATEMENT ON FORM S-4 AND THE RELATED PROXY STATEMENT/PROSPECTUS,
AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS AND ANY OTHER
RELEVANT DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED
MERGER, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT RAYONIER, POPE AND THE PROPOSED TRANSACTION.
Investors and security holders may obtain copies of these documents free of
charge through the website maintained by the SEC at www.sec.gov or from Rayonier
at its website, www.rayonier.com, or from Pope at its website,
www.poperesources.com. Documents filed with the SEC by Rayonier will be
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available free of charge by accessing Rayonier's website at www.rayonier.com
under the heading Investor Relations, or, alternatively, by directing a request
by telephone or mail to Rayonier at 1 Rayonier Way, Wildlight, FL 32097, and
documents filed with the SEC by Pope will be available free of charge by
accessing Pope's website at www.poperesources.com under the heading Investor
Relations or, alternatively, by directing a request by telephone or mail to Pope
at 19950 Seventh Avenue NE, Suite 200, Poulsbo, WA 98370.
PARTICIPANTS IN THE SOLICITATION
Rayonier and Pope and certain of their respective directors and executive
officers and other members of management and employees may be deemed to be
participants in the solicitation of proxies from the stockholders of Pope in
respect of the proposed transaction under the rules of the SEC. Information
about Pope's directors and executive officers is available in Pope's Annual
Report on Form 10-K and certain of its Current Reports on Form 8-K. Information
about Rayonier's directors and executive officers is available in Rayonier's
proxy statement dated April 1, 2019 for its 2019 Annual Meeting of Stockholders,
and certain of its Current Reports on Form 8-K. Other information regarding the
participants in the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, will be contained in the
proxy statement/prospectus and other relevant materials to be filed with the SEC
regarding the merger when they become available. Investors should read the proxy
statement/prospectus carefully when it becomes available before making any
voting or investment decisions. You may obtain free copies of these documents
from Rayonier or Pope using the sources indicated above.
NO OFFER OR SOLICITATION
This document shall not constitute an offer to sell or the solicitation of an
offer to buy any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S. Securities Act of
1933, as amended.
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