By Christopher Walker. Portland, Ore.-based building product giant LP has announced plans to divest itself of nearly half of its operations, citing a new growth strategy and the need to significantly reduce its $840 million debt. The firm currently operates 60 lumber mills in North America and employs 9,700 workers. By the fall of 2003, the company plans to own just 30 to 35 mills and employ 5,300.
"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," a company press release states.
The timberlands are LP's single largest source of revenue, but its strongest market position is in oriented strand board (OSB). OSB, composite wood products, engineered wood products, and plastic building products will constitute the "core businesses" of the leaner LP, the release states. According to the company, those four businesses generated $46 million in profit in 2001.
The Home Channel News quotes LP chairman and CEO Mark Suwyn as saying the company "is not being forced into this action by any liquidity event .... The bottom line is we have some very good facilities that should be attractive to companies." LP expects proceeds from the sales to be between $600 million and $700 million.