DBRS Confirms Weyerhaeuser Company at BBB with Stable Trend

DBRS has today confirmed the Issuer Rating of Weyerhaeuser Company (WY or the Company) and the All Series Sinking Fund Debentures of MacMillan Bloedel Limited at BBB with a Stable trend following WY’s announcement that the Company will acquire Longview Timber LLC from affiliates of Brookfield Asset Management Inc. for $2.65 billion, which includes the assumption of debt.

The confirmation reflects that DBRS views the transaction as positive for the Company, as the additional high-value timberlands will further solidify WY’s position as a leading North American timberland holder. WY plans to raise $2.45 billion in equity and long-term debt to finance the acquisition; the mix of financing is expected to be 50% equity and 50% debt. On a pro forma basis, DBRS estimates WY’s credit metrics to be slightly weaker from the current level but to remain acceptable for the current rating. Moreover, the rating continues to be supported by the strong liquidity provided by WY’s sizeable timberland holdings, which continue to provide well over 2.0 times asset-to-debt coverage on a pro forma basis.
The Company is acquiring approximately 645,000 acres of unique, high-quality timberlands in Washington and Oregon that are highly complementary and contiguous with WY’s existing acreage. This transaction will expand WY’s timber holdings in the Pacific Northwest by 33% to approximately 2.6 million acres and increase the total amount of U.S. timberlands it owns or controls to approximately 6.6 million acres. The Company expects to reach annual synergies of approximately $20 million within two years of closing. The transaction is expected to close in July 2013, subject to the satisfaction of customary closing conditions.
Notes:
All figures are in U.S. dollars unless otherwise noted.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found by clicking on the link to the right under Related Research or by contacting us at info@dbrs.com.

The applicable methodology is Rating Companies in the Forest Products Industry (June 2011), which can be found on our website under Methodologies.