EXHIBIT 99
LP NEWS RELEASE
805 SW Broadway
Portland, OR 97205
503.821.5100
Fax: 503.821.5107
Release No. 113-5-2
Contact:
David Dugan (Media Relations)
503.821.5285
Bill Hebert (Investor Relations)
503.821.5100
FOR IMMEDIATE RELEASE
LP Announces Plan For Major Divestitures; Proceeds Earmarked For Debt
Reduction
PORTLAND, Ore. (May 8, 2002) - Louisiana-Pacific Corporation (LP) (NYSE:
LPX) announced today that its board of directors has approved a plan to
sell selected businesses and assets in order to significantly reduce its
current debt. Once targeted debt levels have been achieved, capital will be
available to grow the more focused, more profitable product lines that it
retains.
The plan involves divesting the company's 935,000 acres of timberlands
along with its plywood, industrial panels and lumber businesses. The
company anticipates net proceeds in the $600-700 million range and that the
majority of the sales will be completed within 12 to 18 months. The company
plans to apply the bulk of proceeds from these sales to debt reduction. The
company anticipates cash restructuring charges, associated primarily with
severance, and non-cash impairment charges on certain assets to be sold.
Following the divestitures, the company will focus on businesses where the
company has a strong competitive position and where further opportunities
exist for rationalization and profitable improvement. These core businesses
will include:
o oriented strand board (OSB),
o composite wood products (specialty OSB, SmartSystem(R) siding and
hardboard siding),
o engineered wood products, and o plastic building products (vinyl
siding, composite decking and mouldings)
-more-
LP - Page 1 of 4
LP Chairman and Chief Executive Officer, Mark A. Suwyn said, "We believe
that our greatest potential to create shareholder value will result from
focusing on our core businesses as well as from using proceeds from the
divestitures to pay down debt. Additionally, our more focused company will
have the resources to apply technology and capital to further enhance our
competitiveness, and the simplified organizational structure will allow us
to reduce infrastructure costs even lower."
In 2001, the four businesses to be retained under this plan had revenues of
$1.4 billion and generated an operating profit of $46 million (see Table
1). Further, earnings before interest, taxes, depreciation, depletion and
amortization (EBITDA) for the retained businesses were $172 million. "These
businesses have proven their ability to generate attractive returns even in
a very sharp downturn. As this plan is implemented, we expect to
dramatically improve our earnings potential and strengthen our balance
sheet," noted Suwyn.
LP's Chief Financial Officer, Curtis M. Stevens, said, "We remain focused
on improving the company's credit statistics. Ultimately, we believe that
it is desirable to maintain investment grade ratings through all points in
the business cycle in order to best compete in this industry. Over the
long-term, this will allow the company to have a competitive cost of
capital which will complement our low cost operational status and increase
our financial flexibility."
The company will also change its segment reporting in order to reflect each
of the four businesses retained as individual segments. Stevens noted, "In
today's capital market environment, we believe this additional level of
disclosure and transparency will benefit our shareholders and provide the
necessary information to the marketplace that demonstrates the long-term
attractiveness of these key businesses to the company."
Retained operations
The company's major platform will continue to be OSB, where LP is the
world's leading producer. The company will grow its specialty OSB business
which uses LP's OSB technology to develop new building applications such as
exterior cladding, concrete forming panels, and soffit and trim products.
The company expects OSB to continue its strong growth rate as OSB takes
market share from plywood. In addition, new specialty OSB applications,
particularly in the industrial and transportation segments, are expected to
grow rapidly as they gain market acceptance.
-more-
LP - Page 2 of 4
The company will also retain its engineered wood products business, which
is growing and has proven to be an important link to top builders and their
key suppliers. The plastic businesses, including vinyl siding, moulding and
decking, are focused primarily at retail and specialty distribution.
Operations to be divested
The most significant assets to be divested are LP's 935,000 acres of
timberlands in Texas, Louisiana and Idaho, and its lumber business which
produces 1.4 billion board feet annually and holds the number-one position
in stud lumber in North America. "Our timberlands are very valuable
properties. However, given that we primarily buy pulp wood on the open
market and that there are more tax-efficient ownership vehicles for this
asset, we have made the decision to sell them. In lumber, we have made
significant improvements in the past several years, including the
acquisition of two modern mills and the closure of more than 30
non-competitive ones. This business is now well-positioned to become part
of an organization that is focused on lumber," noted Suwyn.
The company will also divest its plywood, industrial panels, wholesale and
distribution businesses.
Following the divestitures, LP expects to operate 30-35 mills in North
America and employ a workforce of approximately 5,300 compared to its
current portfolio of 60 mills and a workforce of 9,700.
Goldman, Sachs & Co. is acting as the company's financial advisor.
LP is a premier supplier of building materials, delivering innovative,
high-quality commodity and specialty products to its retail, wholesale,
homebuilding and industrial customers. Visit LP's web site at
www.lpcorp.com for additional information on the company.
###
FORWARD LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities and Exchange Act of 1934. Although LP believes the expectations
reflected in these forward-looking statements are based upon reasonable
assumptions, these expectations may not be achieved. In particular, LP's
ability to consummate the transactions referred to herein is subject to
numerous factors beyond its control, including conditions in the economy
generally and in LP's industry and the capital markets in particular, LP's
financial condition and results of operations, perceptions regarding LP's
business and prospects and other factors disclosed in LP's Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q. Accordingly, there can be no
assurance as to whether, when or the terms upon which LP may be able to
consummate any or all of these transactions or to achieve the objectives
described herein.
-more-
LP - Page 3 of 4
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
TABLE 1: DETAIL OF LOSS BEFORE TAXES, MINORITY INTEREST AND EQUITY IN
EARNINGS OF UNCONSOLIDATED AFFILIATES
(Dollar amounts in millions) (Unaudited)
Twelve Months Ended
December 31, 2001
------------------------------------------------
Depreciation,
Depletion
Operating and
Income Amortization EBITDA
Retained businesses $46 $126 172
All other businesses (80) 58 (22)
Other operating charges and credits, net (67)
Loss related to assets and liabilities
transferred under contractual arrangement (42)
General corporate and other expenses, net (86) 11
Interest expense, net (60)
---------------------------------------------------
Income (loss) before taxes, minority interest
and equity in earnings of unconsolidated
affiliates $(289) $195
1. Retained businesses include: commodity oriented strand board (OSB),
composite wood products (which will include specialty OSB
SmartSystem(R) siding and hardboard siding), engineered wood products,
and plastic building products (which will include vinyl siding,
composite decking, and mouldings).
LP - Page 4 of 4