MeadWestvaco Corp. is on the hunt for at least one financial partner to help it “unlock the value” of its large Summerville-based real estate business and the 650,000 acres it oversees, including large swaths of land in the Charleston region.
MeadWestvaco said Tuesday that cold weather, poor economic conditions in Europe, factory outages and restructuring charges dragged first-quarter profits down more than 77%, despite rising sales.It reported earnings of $11 million, or 6 cents a share. Excluding one-time items, it earned 16 cents, short of the 23 cents analysts had expected. Revenue edged up 2% to $1.34 billion, shy of the $1.36 billion Wall Street was looking for. CEO John Luke called the results “disappointing.”MeadWestvaco operates in 30 countries. In the last few years, it has gone from a mill-centric paper supplier to a global packaging partner for brands like Procter & Gamble and Coca-Cola. It sold its North Charleston paper mill in July 2008.Source: Associated Press
Executives stressed that any dealings between outside investors and MWV Community Development and Land Management won’t alter the company’s high-profile local projects, namely Nexton and East Edisto.
“The company intends to retain control of those developments and continue to develop those projects as previously planned,” said Ken Seeger, president of MWV Community Development and Land Management.
Seeger added that Tuesday’s announcement wouldn’t affect the Summerville development staff.
“We expect the whole team to continue to do what they’re doing,” he said.
MeadWestvaco owns 650,000 acres of forestland in five Southeast states that it once used to harvest trees for its paper mills. As the Richmond, Va.-based company has shifted away from the paper-making business, it no longer needs as much property, though it typically retains timber rights for land it sells.
Seeger estimated his division has sold about 500,000 to 600,000 acres since it was created six years ago. About half of the remaining acreage it manages is in South Carolina.
Seeger and MeadWestvaco CEO John Luke said it’s always been part of the plan to review the “strategic options” for the real estate holdings “when the timing was appropriate.”
“An improvement in market fundamentals as well as progress in the business suggested the timing was right to review a broad range of alternatives, and that process is ongoing,” Luke announced while discussing quarterly earnings Tuesday.
The company has retained Bank of America Merrill Lynch and Goldman Sachs & Co. to line up potential buyers or investors. Those firms are marketing “forestlands, properties with mineral rights, and development properties in the Charleston ... region,” according to a statement.
“Job one is to look at unlocking value, maximizing value for the shareholders,” Luke told an analyst who asked what the company will do with any sale or investment proceeds,
Speaking about the real estate projects in the Charleston area, Luke said MeadWestvaco is “pleased” with their progress.
He also echoed Seeger’s comments about the role of outside investors in those deals, saying “we will consider transactions in which MWV retains control and the present ... development team remains engaged to ensure that the company’s stewardship commitment remains intact and that our shareholders benefit from the significant value that already has been and will be created with these properties.”
Luke said the company ideally would like to work with just one financial partner, though he acknowledged that could be difficult given the diverse types of properties that are in play.
MeadWestvaco hopes to announce a transaction by the end of the year, Luke said.
“We’re very enthusiastic about the potential, but it would be premature to put a line in the sand to commence a timeline” he said.
MWV Community Development and Land Management’s two biggest undertakings are Nexton, a live-work-play community that’s getting off the ground in Summerville, and the 72,000-acre East Edisto, which has been described as 50-year mixed-use project where western Charleston County bumps up against Dorchester County.
The company also is building several business parks around the Lowcountry.
Contact John McDermott at 937-5572.
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