Fitch Affirms Plum Creek's IDR at 'BBB-'.CHICAGO -- Fitch Ratings has affirmed Plum Creek Timber Plum Creek Timber (NYSE: PCL) is the largest private landowner in the United States. Most of its lands were originally purchased as timberland.[1] Headquartered in Seattle, Washington, Plum Creek was spun off from Burlington Resources as a master limited Company's (PCL (Printer Command Language) The page description language for HP LaserJet printers. It has become a de facto standard used in many printers and typesetters. PCL Level 5, introduced with the LaserJet III in 1990, also supports Compugraphic's Intellifont scalable fonts. ) ratings as follows: --Issuer Default ratings 'BBB-' --Senior unsecured bond, 'BBB-' --Bank revolver and of 'BBB-'. In addition, Fitch also rates the company's new $350 million bank term loan 'BBB-'. The Outlook is Stable. PCL has not been immune to the chaos afflicting lumber and building materials caused by the retreat in homebuilding. However, earnings have been resilient and PCL should weather current misfortunes better than its downstream lumber and panel manufacturing customers. This past first-quarter's operating margin was still north of 20% and little changed from the fourth quarter of last year. The upside to PCL's timber business has been a strong pulpwood pulp·wood n. Soft wood, such as spruce, aspen, or pine, used in making paper. pulpwood Noun pine, spruce, or any other soft wood used to make paper Noun 1. market, and PCL has been taking advantage. Manufacturing operations (lumber, plywood and fiberboard fi·ber·board n. A building material composed of wood chips or plant fibers bonded together and compressed into rigid sheets. Noun 1. ) have been running nominally EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become positive (better than most), and real estate operating margins have been firm although the acreage sold has been variable. The small decline in EBITDA that PCL will probably see this year is not a harbinger of the future, in Fitch's view. More significant is the borrowing that PCL is doing to indirectly finance its share repurchase program. Debt is growing at nearly twice the pace of PCL's enterprise value and if the current share repurchase authorization of $200 million is exhausted before the end of this year, net debt to EBITDA could approach 4.5 times (x). At the end of the first quarter net debt to EBITDA was 4x. Fueling PCL's share repurchases in part is the high price of timberland itself, which has made business reinvestment a difficult return proposition. Fitch's affirmation of PCL's ratings and Outlook contemplate additional share repurchases up to the limits of the current authorization. Additional information on PCL can be found on the Fitch Ratings web site at www.fitchratings.com. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. |
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