424B3
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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-237246

 

LOGO

MERGER PROPOSED—YOUR VOTE IS VERY IMPORTANT

POPE RESOURCES, A DELAWARE LIMITED PARTNERSHIP

19950 Seventh Avenue NE, Suite 200

Poulsbo, WA 98370

April 6, 2020

Dear Pope Resources Unitholder:

You are cordially invited to attend a special meeting of unitholders (the “special meeting”) of Pope Resources, A Delaware Limited Partnership (the “Partnership,” “Pope,” “we,” “us,” or “our”), to be held on Tuesday, May 5, 2020 at 11:00 a.m. local time, at the offices of Davis Wright Tremaine LLP, 920 Fifth Avenue Suite 3300, Seattle, Washington 98104. In light of the risks posed by the novel coronavirus (COVID-19) pandemic on the health and safety of Pope’s unitholders, employees and advisors, and in light of a “Stay Home – Stay Healthy” order issued by the Governor of the State of Washington, we encourage unitholders to consider both legal and practical restrictions on in-person attendance. Depending on the status of applicable laws, regulations and executive orders, in-person attendance at the special meeting may be impermissible. As an alternative to in-person attendance, unitholders may participate and/or vote at the special meeting via the Internet at http://www.virtualshareholdermeeting.com/POPE2020 by entering the 16-digit control number found on the accompanying proxy card.

Pope is party to an Agreement and Plan of Merger, dated as of January 14, 2020 and amended as of April 1, 2020 (as it may be amended from time to time, the “merger agreement”) with Rayonier Inc., a North Carolina corporation (“Rayonier”), Rayonier, L.P., a Delaware limited partnership and a direct subsidiary and indirect wholly owned subsidiary of Rayonier (“Opco”), Rayonier Operating Company LLC, a Delaware limited liability company and a wholly owned subsidiary of Rayonier (“ROC”), Rayonier Operating Company Holdings, LLC, a Delaware limited liability company and a wholly owned subsidiary of Rayonier and the limited partner of Opco (“Opco Holdings”), Pacific GP Merger Sub I, LLC, a Delaware limited liability company and a wholly owned subsidiary of Rayonier (“Merger Sub 1”), Pacific GP Merger Sub II, LLC, a Delaware limited liability company and a wholly owned subsidiary of Rayonier (“Merger Sub 2”), Pacific LP Merger Sub III, LLC, a Delaware limited liability company and a wholly owned subsidiary of ROC (“Merger Sub 3” and together with Merger Sub 1 and Merger Sub 2, the “merger subsidiaries”), Pope EGP, Inc., a Delaware corporation and equity general partner of Pope (“EGP”), and Pope MGP, Inc., a Delaware corporation and the managing general partner of Pope (“MGP” and together with EGP, the “general partners”). The merger agreement provides for the simultaneous mergers of the general partners and Pope with the merger subsidiaries so that, following the transactions, 100% of the equity interests of Pope and the general partners will be held directly or indirectly by Opco. As a holder of limited partner units of Pope (“Pope units”), you are being asked to vote to approve the merger of Pope with Merger Sub 3 (the “merger”). If the merger is completed, you will be entitled to receive, for each Pope unit you held as of immediately prior to the merger, consideration consisting of (i) 3.929 Rayonier shares (the “stock election consideration”), (ii) 3.929 units representing limited partnership interests in Opco (such units, the “Opco units” and such consideration, the “Opco election consideration”) or (iii) $125.00 in cash (the “cash election consideration”). Elections will be subject to proration so that approximately 70% of the Pope units converted into merger consideration will be exchanged for Rayonier shares or Opco units and approximately 30% of the Pope units converted into merger consideration will be exchanged for cash. The aggregate amount of Rayonier shares and Opco units, on the one hand, and cash, on the other hand, that will be issued in the merger will equal the amounts issued as if every Pope unit converted into merger consideration received 2.751 Rayonier shares or Opco units and $37.50 in cash. If elections for the Rayonier shares and Opco units are oversubscribed, then to reduce the effect of such proration Rayonier can, in its discretion, add additional equity (and correspondingly reduce the amount of cash) payable to unitholders who make such an election.

Assuming each Pope unit converted into 2.751 Rayonier shares and $37.50 in cash, the value of the merger consideration was $127.51, based on the closing price of Rayonier common stock on January 14, 2020, the date of the merger agreement, and was $98.43, based on the closing price of Rayonier common stock on April 3, 2020, the trading day prior to the date of this proxy statement/prospectus. However, because the merger agreement provides for a fixed exchange ratio for the equity component, the actual value you receive will vary depending on the trading price of Rayonier shares until the effective time of the merger.


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The proxy statement/prospectus and notice of special meeting accompanying this letter provide you with more specific information concerning the special meeting, the merger agreement, the mergers and the related transactions. You are encouraged to carefully read the accompanying proxy statement and its exhibits, which include a copy of the merger agreement attached as Annex A and a copy of the Amended and Restated Limited Partnership Agreement of Rayonier, L.P., which will act as Rayonier’s operating company after the closing, which agreement will be adopted immediately prior to the merger and is attached as Annex D to the proxy statement/prospectus accompanying this letter.

In reaching its recommendations as described in this proxy statement/prospectus, the board of directors of MGP (the “Pope board”) formed a committee (the “Pope special committee”) consisting solely of independent and disinterested directors of the Pope board. After receiving advice from Pope’s management and from the Pope special committee’s outside financial and legal advisors, and after due and careful discussion and consideration, including of the terms and conditions of the merger agreement, the merger and the related transactions, the Pope special committee unanimously (i) determined that the merger agreement, the merger and the related transactions are advisable and in the best interests of Pope and the Pope unitholders unaffiliated with MGP, EGP, the shareholders of MGP and EGP and their respective affiliates, and Rayonier and ROC and their respective affiliates, (ii) approved the merger agreement and the consummation by Pope of the merger and the other transactions contemplated by the merger agreement (the “related transactions”) and (iii) recommended that the Pope board (A) approve the merger agreement and the consummation by Pope of the merger and the related transactions, (B) submit the merger agreement to the Pope unitholders for approval and (C) recommend that the Pope unitholders approve the merger agreement, the merger and the related transactions. Following the recommendation of the Pope special committee, the Pope board, after consultation with Pope’s management and its legal advisors, and after considering the terms of the merger agreement, the merger and the related transactions and the recommendations of the Pope special committee unanimously (i) determined that the execution, delivery and performance by Pope of the merger agreement and the consummation by Pope of the merger is in the best interests of Pope, (ii) approved the merger agreement and the consummation by Pope of the merger and related transactions, (iii) recommended that the unitholders approve the merger agreement and the consummation by Pope of the merger and the related transactions and (iv) resolved to submit the merger agreement to a vote at a meeting of the Pope unitholders and recommend approval of the merger agreement by the Pope unitholders. The Pope board recommends unanimously that you vote “FOR” the merger agreement, the merger and the related transactions.

The Human Resources Committee of the Pope board, which serves as Pope’s compensation committee, after review and consideration of the compensation plans, arrangements and agreements between Pope and each of Pope’s named executive officers (within the meaning of Item 402(a)(3) of Regulation S-K under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder) under which such named executive officers may receive compensation that may be paid or become payable in connection with, or following, the merger, after receiving advice from Pope’s management and outside legal advisors with respect to such compensation plans, arrangements and agreements, and after due and careful discussion and consideration, has unanimously recommended to the Pope board that (i) the accompanying proxy statement/prospectus include a submission to the unitholders of a non-binding, advisory proposal to approve the compensation that may be paid or may become payable to Pope’s named executive officers in connection with, or following, the merger; and (ii) the Pope board recommend to the unitholders that the unitholders approve, by a non-binding, advisory vote at a special meeting, the compensation that may be paid or become payable to Pope’s named executive officers in connection with, or following, the merger.

The Pope board, after receiving advice from Pope’s Human Resources Committee, and after due and careful discussion and consideration, has unanimously recommended that the unitholders vote their units to approve, by a non-binding, advisory vote at a special meeting, the compensation that may be paid or may become payable to Pope’s named executive officers in connection with the merger. Accordingly, the Pope board recommends a vote “FOR” the nonbinding, advisory proposal to approve the compensation that may be paid or may become payable to Pope’s named executive officers in connection with, or following, the merger.

The merger cannot be consummated unless the merger agreement and the transactions contemplated thereby are approved by the affirmative vote of unitholders holding at least a majority of the outstanding Pope units. Accordingly, if you fail to submit a proxy or to vote in person at the special meeting, or abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will have the same effect as a vote against the merger agreement and the transactions contemplated thereby, including the merger. You are encouraged to vote your Pope units promptly. If you are a unitholder who is not a limited partner, you may apply to become a limited partner in accordance with Pope’s limited partnership agreement and vote your Pope units directly after admission, but if you submit a proxy without having become a limited partner, MGP, acting in its capacity as the limited partner of record for your Pope units, will vote your Pope units as you direct.


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We appreciate your investment in Pope.

Sincerely,

 

LOGO

Thomas M. Ringo

President and Chief Executive Officer of Pope Resources, a Delaware Limited Partnership and Pope MGP, Inc.

Managing General Partner of Pope Resources

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the merger or other transactions described in the attached proxy statement/prospectus or the securities to be issued pursuant to the merger under the attached proxy statement/prospectus nor have they determined if the attached proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.

The accompanying proxy statement/prospectus is dated April 6, 2020 and is first being mailed to unitholders on or about April 6, 2020.


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NOTICE OF SPECIAL MEETING OF UNITHOLDERS

May 5, 2020

11:00 a.m., Local Time

920 Fifth Avenue, Suite 3300, Seattle, Washington 98104

To the Unitholders of Pope Resources, A Delaware Limited Partnership:

The special meeting of unitholders (the “special meeting”) of Pope Resources, A Delaware Limited Partnership (the “Partnership,” “Pope,” “we,” “us” or “our”) will be held at the offices of Davis Wright Tremaine LLP, 920 Fifth Avenue Suite 3300, Seattle, Washington 98104 on Tuesday, May 5, 2020 at 11:00 a.m., local time. In light of the risks posed by the novel coronavirus (COVID-19) pandemic on the health and safety of Pope’s unitholders, employees and advisors, and in light of a “Stay Home – Stay Healthy” order issued by the Governor of the State of Washington, we encourage unitholders to consider both legal and practical restrictions on in-person attendance. Depending on the status of applicable laws, regulations and executive orders, in-person attendance at the special meeting may be impermissible. As an alternative to in-person attendance, unitholders may participate and/or vote at the special meeting via the Internet at http://www.virtualshareholdermeeting.com/POPE2020 by entering the 16-digit control number found on the accompanying proxy card. At the special meeting, the unitholders will be asked to consider and vote upon to consider the following matters:

 

Items of Business:    1.    To consider and vote on a proposal to approve (i) the Agreement and Plan of Merger, dated January 14, 2020, as amended by Amendment No. 1, dated as of April 1, 2020 (as it may be amended from time to time, the “merger agreement”) with Rayonier Inc., a North Carolina corporation (“Rayonier”), Rayonier, L.P., a Delaware limited partnership and indirect wholly owned subsidiary of Rayonier (“Opco”), Rayonier Operating Company LLC, a Delaware limited liability company and a wholly owned subsidiary of Rayonier (“ROC”), Rayonier Operating Company Holdings, LLC, a Delaware limited liability company and a wholly owned subsidiary of Rayonier and a limited partner of Opco, Pacific GP Merger Sub I, LLC, a Delaware limited liability company and a wholly owned subsidiary of Rayonier, Pacific GP Merger Sub II, LLC, a Delaware limited liability company and a wholly owned subsidiary of Rayonier, Pacific LP Merger Sub III, LLC, a Delaware limited liability company and a wholly owned subsidiary of ROC (“Merger Sub 3”), Pope EGP, Inc., a Delaware corporation (“EGP”), and Pope MGP, Inc., a Delaware corporation and the managing general partner of Pope (“MGP” and together with EGP, the “general partners”) and (ii) the merger of Pope with Merger Sub 3 (the “merger”) and (iii) the other transactions contemplated by the merger agreement, referred to herein (together with the merger, the “related transactions”).
   2.    To consider and vote on a nonbinding, advisory proposal to approve the compensation that may be paid or may become payable to Pope’s named executive officers in connection with, or following, the merger (the nonbinding, advisory proposal, referred to as the “nonbinding compensation proposal,” relates only to contractual obligations of Pope in existence prior to the merger that may result in payments to Pope’s named executive officers in connection with, or following, the merger. The nonbinding compensation proposal does not relate to any new compensation or other arrangements between Pope’s named executive officers and Rayonier or, following the merger, the surviving entity and its subsidiaries).
   3.    To consider and vote on a proposal to adjourn the special meeting if necessary or appropriate to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement and the transactions contemplated thereby, including the merger (the “adjournment proposal”).


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Record Date:

 

      Only unitholders or limited partners who are holders of record of units representing limited partner interests in Pope (each, a “Pope unit”) at the close of business on March 30, 2020, the record date for the special meeting (the “record date”), or their legal proxy holders are entitled to attend or vote at the special meeting or any adjournments or postponements thereof, unless any such adjournment or postponement is for more than 45 days, in which event MGP is required to set a new record date. MGP, acting in its capacity as limited partner of record for Pope unitholders who are not admitted as limited partners, will serve as the legal proxy holder for any “assignees”, meaning MGP will vote a unitholder’s Pope units as directed by such unitholder if a holder of Pope units who is not a limited partner submits a proxy. For purposes of this proxy statement and the merger agreement, depositary receipts representing Pope units are treated as indistinguishable from the Pope units themselves. Also for purposes of this proxy statement, a unitholder who held units as of the record date but who subsequently is admitted as a limited partner, will be deemed to have been a limited partner as of the date such unitholder acquired his, her or its units.
General:       Each unitholder who is not a limited partner is invited, but not required, to apply to be admitted as a limited partner, in accordance with the Second Amended and Restated limited partnership Agreement of Pope, dated as of February 20, 2019, as further amended as described herein (the “Pope limited partnership agreement”), in order to be eligible to vote such unitholder’s Pope units at the meeting. If you are a unitholder who has not been admitted as a Pope limited partner, then your proxy serves as an instruction to MGP, which serves as the limited partner of record for Pope units held by assignees, how to vote your units, and MGP will respond accordingly.
      For more information concerning the special meeting, the merger agreement, the merger and the related transactions, please review the accompanying proxy statement and the copy of the merger agreement, together with Amendment No. 1 thereto, attached as Annex A to this proxy statement/prospectus. The purposes of the above-referenced amendment are (i) to reflect that Opco would be Rayonier’s operating company after the merger and successor-in-interest to ROC; and (ii) to afford Pope unitholders an opportunity to elect to receive Opco units or Rayonier shares in the event the cash election is oversubscribed. References in this proxy statement/prospectus to the “merger agreement” refer to the merger agreement as so amended.
      Appraisal rights are not available in connection with the merger under the Delaware Revised Uniform Limited Partnership Act (the “DRULPA”), the merger agreement or the Pope limited partnership agreement.
      A special committee of directors (the “Pope special committee”) of the board of directors of MGP (the “Pope board”) after receiving advice from its outside financial and legal advisors and Pope’s management, and after due and careful discussion and consideration, including of the terms and conditions of the merger agreement, the merger, and the related transactions, has unanimously (i) determined that the merger agreement, the merger and the related transactions are advisable and in the best interests of Pope and the Pope unitholders unaffiliated with MGP, EGP, the shareholders of MGP and EGP and their respective affiliates, and Rayonier and ROC and their respective affiliates (the “unaffiliated Pope unitholders”), (ii) approved the merger agreement and the consummation by Pope of the merger and the related transactions and (iii) recommended that the Pope board (A) approve the merger agreement and the


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      consummation by Pope of the merger and the related transactions, (B) submit the merger agreement to the Pope unitholders for approval and (C) recommend that the Pope unitholders approve the merger agreement, the merger and the related transactions.
      The Human Resources Committee of the Pope board, after review and consideration of the compensation plans, arrangements and agreements between Pope and each of Pope’s named executive officers under which such named executive officers may receive compensation that may be paid or become payable in connection with, or following, the merger, and after receiving advice from Pope’s management and outside legal advisors with respect to such compensation plans, arrangements and agreements and after due and careful discussion and consideration, has unanimously recommended to the Pope board that (i) the proxy statement include a submission to the unitholders of a non-binding, advisory proposal to approve the compensation that may be paid or may become payable to Pope’s named executive officers in connection with, or following, the merger and (ii) the Pope board recommend to the unitholders that the unitholders approve, by a non-binding, advisory vote at the special meeting, the compensation that may be paid or become payable to Pope’s named executive officers in connection with, or following, the merger.
      The Pope board, after receiving advice from Pope’s management and outside legal advisors and the recommendations of the Pope special committee, and after due and careful discussion and consideration, including of the terms and conditions of the merger agreement, the merger and the related transactions, and the compensation arrangements pursuant to which amounts may be paid or may become payable to Pope’s named executive officers in connection with, or following, the merger has unanimously (i) determined that the merger agreement and the consummation of the merger and the related transactions are in the best interests of Pope; (ii) authorized and approved the execution, delivery and performance by Pope of the merger agreement and the consummation of the merger and the related transactions; (iii) resolved to submit the merger agreement and the merger to a vote at a meeting of Pope unitholders; (iv) recommended that the unitholders vote their units to approve the merger and the related transactions at the special meeting; and (v) recommended that the unitholders vote their units to approve, by a non-binding, advisory vote at a special meeting, the compensation that may be paid or may become payable to Pope’s named executive officers in connection with, or following, the merger.
      Accordingly, the Pope board recommends a vote “FOR” the proposal to approve the merger agreement, the merger and the related transactions, “FOR” the nonbinding compensation proposal and, if necessary, “FOR” the adjournment proposal.
      Regardless of whether you plan to personally attend the meeting, please cast your vote by following the internet or telephone voting instructions on the proxy card. If you have received this proxy statement by mail, you may also vote by completing, signing and dating the enclosed proxy card and returning it promptly in the accompanying envelope. If for any reason you desire to revoke your proxy, you may do so at any time before the vote is held at the special meeting by following the procedures described in the accompanying proxy statement. If you hold units through an account with a brokerage firm, bank, trust, custodian or other nominee, please follow the instructions you receive from them to vote your Pope units. If you are a unitholder that is not a limited partner, you may, but are not required to, apply for admission as a limited partner. If you do not become a limited partner, you may still vote your Pope


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      units by submitting a proxy card, and MGP, acting in its capacity as limited partner of record for your Pope units, will vote your units as directed on your proxy card.

By Order of the Board of Directors of MGP, as Managing General Partner of Pope Resources, A Delaware Limited Partnership.

Poulsbo, Washington

April 6, 2020

 

LOGO

Thomas M. Ringo

President and Chief Executive Officer of Pope Resources and Pope MGP, Inc.

LOGO

Sandy D. McDade

Lead Director of the Pope board

 


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     Page  

EXPLANATORY NOTE

     1  

REFERENCES TO ADDITIONAL INFORMATION

     2  

ABOUT THIS PROXY STATEMENT/PROSPECTUS

     3  

QUESTIONS AND ANSWERS ABOUT THE MERGER AND POPE MEETING

     4  

SUMMARY

     17  

Parties to the Merger

     17  

The Merger and the Merger Agreement

     19  

Merger Consideration

     20  

Treatment of Pope Equity Compensation

     20  

Financing of the Merger

     21  

Accounting Treatment

     21  

Recommendation of the Pope Special Committee; Recommendation of the Pope Board of Directors; Pope’s Reasons for the Merger

     21  

Opinion of the Pope Special Committee’s Financial Advisor

     22  

Information About Pope Meeting

     23  

Agreement with Certain Pope Unitholders

     24  

Interests of Pope’s Directors and Executive Officers in the Merger

     24  

Regulatory Approvals

     25  

No Appraisal Rights

     25  

Conditions to Completion of the Merger

     25  

No Solicitation

     25  

No Change in Recommendation or Entry into Alternative Acquisition Agreement

     26  

Termination of the Merger Agreement

     26  

U.S. Federal Income Tax Consequences

     27  

Comparison of Unitholders’/Shareholders’ Rights

     28  

Risk Factors

     28  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF RAYONIER INC.

     29  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF RAYONIER OPERATING COMPANY LLC

     30  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF POPE

     31  

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

     32  

COMPARATIVE PER SHARE DATA

     34  

COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

     35  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     37  

RISK FACTORS

     39  

INFORMATION ABOUT RAYONIER

     53  

INFORMATION ABOUT POPE

     55  

INFORMATION ABOUT THE SPECIAL MEETING

     56  

Time, Place and Purpose of the Pope Meeting

     56  

Record Date and Quorum

     56  

Vote Required

     56  

Proxies and Revocations

     57  

Expected Timing of the Merger

     58  

Solicitation of Proxies; Payment of Solicitation Expenses

     58  

THE MERGER

     59  

The Merger

     59  

Merger Consideration

     59  

Elections and Proration

     59  

Financing of the Merger

     62  

 

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Accounting Treatment

     62  

Background of the Merger

     62  

Recommendation of the Pope Board of Directors; Pope’s Reasons for the Merger

     91  

Opinion of Pope Special Committee’s Financial Advisor

     97  

Certain Unaudited Prospective Financial Information

     103  

Certain Effects of the Merger

     106  

Effects on Pope if the Merger Is Not Consummated

     107  

Closing and Effective Time

     107  

NYSE Market Listing

     108  

Regulatory Approvals

     108  

Treatment of Pope Equity Compensation

     108  

Voting Agreements with Certain Pope Unitholders

     108  

Delisting and Deregistration of Pope units

     109  

Expected Timing of the Merger

     109  

THE MERGER AGREEMENT

     110  

Explanatory Note Regarding the Merger Agreement

     110  

Merger effective time, Effects of the Mergers; Organizational Documents of the Surviving Company; Directors and Officers

     110  

Exchange and Payment Procedures

     111  

Treatment of Pope Equity Compensation

     112  

Representations and Warranties of Pope, MGP and EGP

     112  

Representations and Warranties of Rayonier, Rayonier Operating Company LLC, Merger Sub 1, Merger Sub 2 and Merger Sub 3

     114  

Conduct of Pope’s Business Prior to Completion of the Merger

     115  

Conduct of Rayonier’s Business Prior to Completion of the Merger

     117  

No Solicitation

     118  

No Change in Recommendation or Entry into Alternative Proposal Agreement

     119  

Pope Meeting

     121  

Access to Information

     121  

Expenses

     122  

Employee Matters

     122  

Indemnification and Insurance

     123  

Rayonier and Pope Dividends

     123  

Financing Cooperation

     123  

Certain Additional Covenants

     124  

Conditions to Completion of the Merger

     124  

Termination of the Merger Agreement

     126  

Amendment and Modification

     127  

Jurisdiction; Specific Enforcement

     127  

INTERESTS OF POPE’S DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER

     128  

Treatment of Outstanding Equity Awards

     128  

Quantification of Potential Payments and Benefits to Pope’s Named Executive Officers in Connection with the Merger

     128  

Severance Arrangements

     129  

Incentive Payments

     130  

Continuing Employee Benefits

     130  

Retention Bonuses

     131  

Quantification of Payments and Benefits

     131  

Golden Parachute Compensation to Named Executive Officers

     132  

GP Merger Consideration  & GP Pre-Closing Distribution

     133  

 

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     Page  

Certain Consideration Payable to General Partner Stockholders

     134  

Indemnification and Insurance

     134  

Tax Protection Agreement

     134  

Shareholders Agreement

     134  

Vote Required and Board of Directors Recommendation

     135  

ADJOURNMENT OF POPE MEETING TO SOLICIT ADDITIONAL PROXIES

     136  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     137  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF OPCO UNIT AND RAYONIER SHARE OWNERSHIP

     144  

RAYONIER OPERATING COMPANY LLC INFORMATION

     175  

DIRECTOR COMPENSATION

     237  

OWNERSHIP OF AND TRADING IN RAYONIER’S SHARES

     239  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION—RAYONIER INC.

     245  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION—RAYONIER OPERATING COMPANY LLC

     260  

DESCRIPTION OF RAYONIER CAPITAL STOCK

     275  

COMPARISON OF RIGHTS OF COMMON EQUITY HOLDERS OF RAYONIER AND RAYONIER, L.P. AND UNITHOLDERS OF POPE

     279  

VALIDITY OF SECURITIES TO BE ISSUED

     286  

EXPERTS

     286  

HOUSEHOLDING OF PROXY MATERIALS

     287  

WHERE YOU CAN FIND MORE INFORMATION

     287  

Pope:

     287  

Rayonier:

     287  

AUDITED CONSOLIDATED STATEMENTS OF INCOME AND BALANCE SHEETS OF RAYONIER OPERATING COMPANY LLC

     FIN-1  

 

Annex A    Agreement and Plan of Merger, dated as of January 14, 2020
   Amendment No. 1 to Agreement and Plan of Merger, dated as of April 1, 2020
Annex B    Voting and Support Agreement of Maria M. Pope and Affiliates dated January 14, 2020
Annex C    Voting and Support Agreement of Gordon P. Andrews and Affiliates dated January 14, 2020
Annex D    Form of Amended and Restated Agreement of Limited Partnership of Rayonier, L.P.
Annex E    Opinion of Centerview Partners, LLC, dated as of January 14, 2020
Annex F    Form of Tax Protection Agreement

 

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EXPLANATORY NOTE

This proxy statement/prospectus combines disclosure in respect of Rayonier Inc., a North Carolina corporation, and Rayonier, L.P., a Delaware limited partnership, referred to as Opco, which entity will, after giving effect to the mergers described in the accompanying proxy statement/prospectus, be the successor in interest to Rayonier Operating Company LLC, referred to as ROC. Rayonier is a registrant in respect of the shares of Rayonier common stock and Opco is a registrant in respect of the units of limited partnership interests of Opco, referred to as Opco units, in each case to be offered in connection with the merger and as described in this registration statement on Form S-4. Unless stated otherwise or the context otherwise requires, each reference to “Rayonier” means Rayonier Inc. and each reference to “Opco” means Rayonier, L.P., as a successor in interest to ROC.

Rayonier elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, referred to as the Code, commencing with its taxable year ended December 31, 2004. Rayonier is structured as an umbrella partnership REIT under which substantially all of its business is currently conducted through ROC and, after the merger, will be conducted through Opco. Rayonier is the general partner of Opco. After giving effect to the merger and assuming Pope unitholders elect to receive Opco units up to the available equity amount, Rayonier will indirectly own an approximate 91% ownership interest in Opco, with the remaining 9% ownership interest owned by limited partners of Opco. As the sole general partner of Opco, Rayonier will have exclusive control of the day-to-day management of Opco.

Rayonier and Opco will be operated as one business. The management of Opco will consist of the same members as the management of Rayonier. As general partner with control of Opco, Rayonier expects to consolidate Opco for financial reporting purposes, and Rayonier will have no material assets or liabilities other than its investment in Opco.

There are a few important differences between Rayonier and Opco in the context of how Rayonier expects to operate as a consolidated company. The primary difference is that Rayonier itself does not, and after giving effect to the mergers does not expect to, conduct business, other than through acting as the general partner of Opco and issuing equity or equity-related instruments from time to time. ROC currently holds, directly or indirectly, substantially all of Rayonier’s assets. After giving effect to the mergers, Opco, as successor-in-interest to ROC, will continue to conduct substantially all of Rayonier’s business and will be structured as a partnership with no publicly traded equity.


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REFERENCES TO ADDITIONAL INFORMATION

This proxy statement/prospectus incorporates important business and financial information about Pope and Rayonier from other documents that Pope and Rayonier have filed with the U.S. Securities and Exchange Commission, referred to as the SEC, and that are contained in or incorporated by reference into this proxy statement/prospectus. For a listing of documents incorporated by reference into this proxy statement/prospectus, please see the section entitled “Where You Can Find More Information” beginning on page 287 of this proxy statement/prospectus. This information is available for you to review at the SEC’s public reference room located at 100 F Street, N.E., Room 1580, Washington, DC 20549, and through the SEC’s website at www.sec.gov.

You may request copies of this proxy statement/prospectus and any of the documents incorporated by reference into this proxy statement/prospectus or other information concerning Rayonier, without charge, by telephone or written request directed to: Investor Relations at 1 Rayonier Way, Wildlight, FL 32097, telephone (904) 357-9100.

You may request copies of this proxy statement/prospectus and any of the documents incorporated by reference into this proxy statement/prospectus or other information concerning Pope, without charge, by telephone or written request directed to Pope’s Investor Relations Department at 19950 Seventh Ave., NE, Poulsbo, Washington 98370, telephone (360) 697-6626; or MacKenzie Partners, Pope’s proxy solicitor, at 1407 Broadway, 27th Floor, New York, New York 10018, or toll-free at (800) 322-2885.

In order for you to receive timely delivery of the documents in advance of the special meeting to be held on May 5, 2020, you must request the information no later than April 28, 2020, which is five business days prior to the date of the special meeting.

 

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ABOUT THIS PROXY STATEMENT/PROSPECTUS

This proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the SEC by Rayonier and Opco (File No. 333-237246), constitutes a prospectus of Rayonier and Opco under Section 5 of the Securities Act of 1933, as amended, referred to as the Securities Act, with respect to Rayonier shares and Opco units to be issued to Pope unitholders pursuant to the merger agreement. This document also constitutes a proxy statement of Pope under Section 14(a) of the Securities Exchange Act of 1934, as amended, referred to as the Exchange Act. It also constitutes a notice of meeting with respect to the special meeting, at which Pope unitholders will be asked to consider and vote upon the approval of the merger agreement and the transactions contemplated thereby.

Rayonier and Opco have supplied all information contained or incorporated by reference into this proxy statement/prospectus relating to Rayonier, Opco, ROC, Rayonier Operating Company Holdings, LLC, Pacific GP Merger Sub I, LLC, Pacific GP Merger Sub II, LLC, Pacific LP Merger Sub III, LLC, and Pope has supplied all such information relating to Pope, Pope EGP, Inc. and Pope MGP, Inc.

You should rely only on the information contained in or incorporated by reference into this proxy statement/prospectus. Rayonier, Opco and Pope have not authorized anyone to provide you with information that is different from that contained in or incorporated by reference into this proxy statement/prospectus. This proxy statement/prospectus is dated April 6, 2020, and you should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than such date. Further, you should not assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither the mailing of this proxy statement/prospectus to Pope unitholders nor the issuance by Rayonier of shares of its common stock or by Opco of units representing limited partnership interests of Opco pursuant to the merger agreement will create any implication to the contrary.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND POPE MEETING

The following questions and answers are intended to briefly address some commonly asked questions regarding the merger, the merger agreement and the special meeting. These questions and answers may not address all questions that may be important to you as a Pope unitholder. Please refer to the section entitled “Summary” beginning on page 17 of this proxy statement/prospectus and the more detailed information contained elsewhere in this proxy statement/prospectus, the annexes to this proxy statement/prospectus and the documents referred to in this proxy statement/prospectus, which you should read carefully and in their entirety. You may obtain the information incorporated by reference into this proxy statement/prospectus without charge by following the instructions under the section entitled “Where You Can Find More Information” beginning on page 287 of this proxy statement/prospectus.

 

Q:

What is the merger?

 

A:

Rayonier, Opco and Pope have agreed to a business combination under the terms of the merger agreement, pursuant to which Opco (which will be the operating company of Rayonier) will acquire Pope through a merger of Merger Sub 3 with and into Pope, with Pope surviving such merger as an indirect wholly owned subsidiary of Opco. As a limited partner of Pope, you are being asked to approve the merger.

Concurrently with the merger, Rayonier will acquire MGP, the managing general partner of Pope, and EGP, the equity general partner of Pope.

 

Q:

What will I receive in the merger?

 

A:

Each holder of a unit representing limited partnership interests of Pope, referred to as Pope units, outstanding immediately prior to the merger effective time (other than Pope units held by Rayonier, Opco or certain of their controlled affiliates) will, at the option of its holder, have the right to elect to receive for each Pope unit and subject to proration as described below:

 

   

3.929 Rayonier shares, referred to as the stock election consideration;

 

   

3.929 Opco units, referred to as the Opco election consideration; or

 

   

$125.00 in cash, referred to as the cash election consideration.

Pope unitholders that do not make a valid election will receive the stock election consideration.

 

Q:

Are the elections subject to proration?

 

A:

Yes. Pope unitholders’ elections will be subject to proration so that approximately 70% of the Pope units converted into merger consideration will be exchanged for Rayonier shares or Opco units and approximately 30% of the Pope units converted into merger consideration will be exchanged for cash. Specifically, the proration will ensure the aggregate amount of Rayonier shares and Opco units, on the one hand, and cash, on the other hand, that will be issued in the merger will equal the amounts issued as if every Pope unit converted into merger consideration would receive 2.751 Rayonier shares or Opco units and $37.50 in cash. If stock election consideration and Opco election consideration are oversubscribed, then to reduce the effect of such proration, Rayonier can, in its discretion, add additional equity (and decrease the amount of cash) payable to the Pope unitholders making the stock election and the Opco election. Pope unitholders that make the cash election will have the right to elect, in the event that the cash election consideration is oversubscribed and is therefore subject to proration, whether each Pope unit for which they have made a cash election is prorated into (i) a combination of cash and Rayonier shares or (ii) a combination of cash and Opco units, referred to as the proration election. Pope unitholders may make a different proration election for each Pope unit for which they make a cash election. If a Pope unitholder does not make a valid proration election by the election deadline and the cash election consideration is oversubscribed, then all of such holder’s Pope units for which a cash election was made shall be converted into a combination of cash and Rayonier shares.

 

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Q:

Why am I receiving this proxy statement/prospectus and proxy card?

 

A:

Pope is holding a special meeting to ask its unitholders to consider and vote upon a proposal to approve the merger agreement and the transactions contemplated thereby, including the merger. Pope unitholders are also being asked to consider and vote upon (i) a proposal to approve, by advisory (non-binding) vote, the merger-related executive compensation and (ii) a proposal to grant authority to proxy holders to vote in favor of adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

This proxy statement/prospectus includes important information about the merger, the merger agreement (a copy of which is attached as Annex A to this proxy statement/prospectus) and the special meeting. Pope unitholders should read this information carefully and in its entirety. The enclosed voting materials allow unitholders who are limited partners to vote their units (or, in the case of Pope unitholders who are not limited partners, to direct MGP to vote their Pope units) without attending the special meeting in person. Your vote is important. You are encouraged to vote as soon as possible.

 

Q:

What is the vote required to approve each proposal at the special meeting?

 

A:

Approval of the merger requires that limited partners (including MGP acting in its capacity as limited partner of record for Pope units held by assignees) holding a majority of the Pope units issued and outstanding as of the record date vote in favor of approval of the merger agreement. If you fail to submit a proxy or to vote in person at the special meeting, including a vote cast by means of the virtual meeting facility, described below, or abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will not be counted as a vote “FOR” and will thus have the same effect as a vote against the merger agreement and the merger. Accordingly, your vote is important and you are encouraged to vote as soon as possible.

If you own Pope units but have not been admitted as a limited partner, the Pope limited partnership agreement generally provides that you are an “assignee” for purposes of your ownership of Pope units. This means that you hold the economic rights associated with those Pope units, but unless you are admitted as a limited partner, you do not have the right to vote your Pope units directly. Instead, assignees are being asked to direct MGP to vote their Pope units as instructed in their proxy, and MGP, in its capacity as managing general partner and limited partner of record for all Pope units held by assignees, and as required by the merger agreement, will vote those Pope units in accordance with those instructions.

The proposal to approve the merger-related executive compensation requires that a majority of the votes cast at the special meeting are voted in favor of the proposal; however, such vote is advisory (non-binding). If you fail to submit a proxy or to vote in person at the special meeting, or abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will not be counted as “FOR” or “AGAINST” and will not have an effect on the advisory (non-binding) vote to approve the merger-related executive compensation except to the extent it results in there being insufficient Pope units present at the special meeting to establish a quorum.

The approval of adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement requires that a majority of the votes cast at the special meeting are voted in favor of the proposal, whether or not a quorum is present. If you fail to submit a proxy or to vote in person at the special meeting, or abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will not be counted as “FOR” or “AGAINST” and will thus not have an effect on the vote to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

See the section entitled, “Information About the Special Meeting—Record Date and Quorum” beginning on page 56 of this proxy statement/prospectus.

 

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Q:

Who may attend the special meeting? Are there procedures for attending?

 

A:

Only unitholders of record at the close of business on the record date, or their legal proxy holders are entitled to attend the special meeting or any adjournments or postponements thereof. Unitholders of record as of the record date that are admitted as substituted limited partners prior to the special meeting will be considered limited partners of record as of the record date and will be able to attend the special meeting. In light of the ongoing COVID-19, or coronavirus, pandemic, MGP amended the Pope limited partnership agreement effective as of March 29, 2020, to permit Pope to conduct meetings of unitholders by Internet or other electronic means, and to provide that such participation is equivalent for all purposes to attendance in person at any such meeting. While Pope will conduct the special meeting in person, unitholders wishing to attend are strongly encouraged to attend by registering at the Internet website http://www.virtualshareholdermeeting.com/POPE2020 using the 16-digit control number found on the accompanying proxy card, referred to as the “virtual meeting facility,” and references in this proxy statement/prospectus to in-person attendance at the special meeting includes attendance by means of the virtual meeting facility. Pope unitholders are further advised that, as of the date of this proxy statement/prospectus, the State of Washington, where the special meeting will occur, remains under an executive order that prohibits the conduct of non-essential businesses and restricts public gatherings, regardless of the number of people in attendance. Before attempting to attend the special meeting in person, Pope unitholders are strongly advised to consider any and all legal restrictions on in-person attendance, and are further cautioned that the Seattle, Washington, area has been identified as one of the regions most substantially affected by the pandemic.

To be admitted to the special meeting, to the extent in-person attendance is permissible under applicable laws, regulations, ordinances and executive orders governing public gatherings and the conduct of business in effect on the date of the special meeting, you must present valid proof of ownership of Pope units as of March 30, 2020, or a valid proxy. All in-person attendees must also provide a form of government-issued photo identification, such as a driver’s license or passport. In addition, if you hold your Pope units in street name, such as through a bank, brokerage firm or other nominee, you must provide proof of ownership of your Pope units, such as a the voting instruction card from your broker or other nominee or an account statement showing your ownership as of the record date. Additionally, attendance via the virtual meeting facility will permit Pope unitholders to vote their units during the special meeting if they so desire. If you arrive at the special meeting without the required items, Pope will admit you only if it is able to verify that you are a unitholder as of close of business on the record date, and even then only if attendance is permissible under then-applicable law.

 

Q:

Must I become a limited partner to vote my Pope units?

 

A:

No. If you hold Pope units but have not been admitted as a limited partner, the Pope limited partnership agreement provides that you are an “assignee” with respect to your Pope units. If you are an assignee, you should complete and sign the enclosed proxy card, and MGP, in its capacity as managing general partner and limited partner of record for all Pope units held by assignees, and as required by the merger agreement, will vote your Pope units in accordance with your instructions.

 

Q:

Who is entitled to vote at the special meeting?

 

A:

Only unitholders that are limited partners as of March 30, 2020, the record date, or are admitted as substituted limited partners as of the record date in connection with this solicitation, or their legal proxy holders, are entitled to vote at the special meeting or any adjournments thereof, unless such adjournment is for more than 45 days, in which event MGP is required to set a new record date. As of the close of business on the record date, there were 4,367,215 Pope units outstanding and entitled to vote. Each limited partner, including each substituted limited partner, is entitled to one vote for each unit held by such limited partner on the record date on each of the proposals presented in this proxy statement.

If you are a unitholder and a limited partner as of the record date (that is, if you held Pope units in your own name in the unit transfer records maintained by Pope’s transfer agent, Computershare Limited) you may

 

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vote in person at the special meeting or by proxy. Whether or not you intend to attend the special meeting, you are encouraged to vote now, online, by phone or proxy card to ensure that your vote is counted.

If you are an assignee as of the record date, then you may direct MGP to vote your Pope units as instructed in your proxy, and MGP, in its capacity as managing general partner and limited partner of record for all Pope units held by assignees, and as required by the merger agreement, will vote those Pope units in accordance with your instructions.

Pope unitholders may vote their Pope units (or, in the case of assignees, may direct MGP to vote their Pope units) at the special meeting using the virtual meeting facility. However, whether or not you intend to attend the special meeting, you are encouraged to vote now, either online, by phone or by mailing your proxy card to ensure that your vote is counted.

If you are the beneficial owner of units held in “street name” as of the record date (that is, if you held Pope units through your bank, brokerage firm or other nominee) then these materials are being forwarded to you by your broker. You may direct such nominee how to vote your Pope units by following the instructions on the form provided by such nominee. If you wish to attend the special meeting and vote in person, and assuming in-person attendance is lawful as of the meeting date, you may attend the special meeting but may not be able to vote in person unless you first obtain a legal proxy issued in your name from your broker. Attendance via the virtual meeting facility is accomplished by entering the 16-digit control number found on the accompanying proxy card, and such attendance will permit a Pope unitholder to vote or direct the voting of the related Pope units during the special meeting.

A list of limited partners entitled to vote at the special meeting will be open to the examination of any limited partner during ordinary business hours for a period of ten days before the special meeting at Pope’s corporate offices, 19950 Seventh Ave., NE, Poulsbo, Washington 98370 and at the place of the special meeting during the special meeting. Pope unitholders are reminded that, as of the date of this proxy statement/prospectus, the State of Washington, where Pope’s offices are located, remains under an executive order that prohibits the conduct of non-essential businesses and restricts public gatherings, regardless of the number of people in attendance. Before attempting to inspect the list of limited partners entitled to attend and vote at the special meeting, Pope unitholders are strongly advised to consider any and all legal restrictions on non-essential travel and business activities.

 

Q:

How does the Pope board recommend that I vote at the special meeting?

 

A:

The Pope board unanimously recommends that Pope unitholders vote “FOR” the approval of the merger agreement, the merger and related transactions, “FOR” the approval, by advisory (non-binding) vote, of the merger-related executive compensation and “FOR” adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement. See the section entitled “The Merger—Recommendation of the Pope Special Committee; Recommendation of the Pope Board of Directors; Pope’s Reasons for the Merger” beginning on page 91 of this proxy statement/prospectus.

 

Q:

What is the difference between holding units as a unitholder of record and as a beneficial owner?

 

A:

You are a “limited partner of record” if your limited partner units are registered directly in your name with Pope’s transfer agent, Computershare. As the limited partner of record, you have the right to vote in person at the special meeting. You may also vote by Internet or telephone, as described in the notice and below under the heading “How do I vote?”

You are deemed to beneficially own Pope units in “street name” if your units are held by a bank, brokerage firm or other nominee or other similar organization. Your bank, brokerage firm or other nominee will send you, as the beneficial owner, a package describing the procedure for voting your units. You should follow the instructions provided by them to vote your units. You may not vote your units in person at the special

 

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meeting unless you obtain a “legal proxy” from your bank, brokerage firm or other nominee that holds your units, giving you the right to vote the shares at the special meeting. Please take note of the restrictions on in-person attendance described elsewhere in this proxy statement/prospectus if you are considering attending the special meeting in person.

 

Q:

What is the difference between a unitholder and a limited partner?

 

A:

Any person who owns Pope units, whether they hold them directly, by holding depositary receipts relating to such units or hold such units in street name, such as through a bank, brokerage firm or other nominee, is a unitholder for purposes of the special meeting. However, under the Pope limited partnership agreement, only persons who have been admitted as a limited partner may directly vote their units. If you are not a limited partner of record, you are being asked to direct MGP to vote your Pope units as instructed in your proxy, and MGP, in its capacity as managing general partner and limited partner of record for all Pope units held by assignees, will vote those Pope units in accordance with your instructions.

 

Q:

Am I being asked to vote to approve the GP mergers?

 

A:

The merger agreement also contemplates that, substantially concurrent with the merger effective time, each of MGP and EGP, the general partners of Pope, will be acquired by merger subsidiaries of Rayonier for an aggregate consideration of $10,000,000 in cash payable to their respective stockholders, subject to certain adjustments set forth in the merger agreement and described in the section entitled “Interests of Pope’s Directors and Executive Officers in the Merger” beginning on page 128. These mergers, referred to as the GP mergers, only require the consent of a majority of the stockholders of each of MGP and EGP, which consents were delivered promptly after the execution of the merger agreement and are irrevocable.

Accordingly, and consistent with the governing documents of each of Pope, MGP and EGP, Pope is only seeking your vote with respect to the approval of the merger agreement, the merger and the related transactions, together with a proposal to approve, by advisory (non-binding) vote, the merger-related executive compensation and a proposal to grant authority to proxy holders to vote in favor of adjournment of the special meeting. No additional or specific approvals are being sought in respect of the GP mergers.

 

Q:

Why did the Pope board approve the merger agreement and the transactions contemplated by the merger agreement, including the merger?

 

A:

To review the Pope board’s reasons for approving and recommending approval of the merger agreement and the transactions contemplated by the merger agreement, including the merger, see the section entitled “The Merger—Recommendation of the Pope Special Committee; Recommendation of the Pope Board of Directors; Pope’s Reasons for the Merger” beginning on page 91.

See the section entitled “Merger—Per Share Merger Consideration” beginning on page 59 of this proxy statement/prospectus for a further description of the merger consideration and proration procedures.

 

Q:

What is the value of the merger consideration?

 

A:

The exact value of the merger consideration that Pope unitholders receive will depend on the election a Pope unitholder makes, the aggregate elections of other Pope unitholders and the value of the Rayonier shares or Opco units at the time of the merger. The number of Pope unitholders electing certain types of consideration will not be known at the time of the special meeting or at the time that elections are made, and may change the type of consideration a unitholder receives. Likewise, the price of Rayonier shares and the value of the Opco units will not be known at the time of the special meeting and may be less than the current price or the price at the time of the special meeting.

Assuming each Pope unit is converted into 2.751 Rayonier shares and $37.50 in cash, the value of the merger consideration was $127.51, based on the closing price of Rayonier common stock on January 14,

 

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2020, the date of the merger agreement, and was $98.43, based on the closing price of Rayonier common stock on April 3, 2020, the trading day prior to the date of this proxy statement/prospectus. However, because the merger agreement provides for a fixed exchange ratio for the equity component, the actual value you receive will vary depending on the trading price of Rayonier shares until the effective time of the merger. You are urged to obtain current market quotations for shares of Rayonier shares and Pope units.

Rayonier shares are listed on the NYSE and therefore have an active quoted price, but the Opco units will not be listed on any exchange, will have restrictions on their transferability and are not expected to have an active quoted price. Pursuant to the Opco limited partnership agreement, holders of Opco units will have redemption rights, which will enable them to cause Opco to redeem their Opco units in exchange for cash or, at Rayonier’s option, Rayonier shares on a one-for-one basis. These redemption rights, however, cannot be exercised by an Opco limited partner more than once per quarter, and a redemption request must be made no less than 60 days prior to the redemption date, so, if a holder will receive Rayonier shares on the redemption date, the market price of the Rayonier shares will not be known at the time that the holder makes its redemption request.

 

Q:

What happens if I am eligible to receive a fraction of a Rayonier share or a fractional Opco unit as part of the per Pope unit merger consideration?

 

A:

If you elect to receive Rayonier shares or Opco units and the aggregate number Rayonier shares or Opco units that you are entitled to receive as part of the merger consideration includes a fraction of a Rayonier share or a fraction of an Opco unit, you will receive cash in lieu of that fractional share or Opco unit, as the case may be. See the section entitled “The Merger Agreement—Certain Effect of Merger” beginning on page 106 of this proxy statement/prospectus.

 

Q:

What will holders of restricted Pope unit awards receive in the merger?

 

A:

If the merger is completed, each outstanding and unvested restricted Pope unit award will be converted into 3.929 restricted Rayonier shares, except as discussed below, with such awards having substantially the same terms and vesting schedule that were previously applicable to the restricted Pope unit awards. Restricted Pope unit awards held by directors, including Mr. Ringo, will become 100% vested immediately prior to the merger effective time, and such units will be treated the same as other Pope units in the merger. Converted awards that are held by employees whose employment terminates under certain circumstances between the merger effective time and the second anniversary thereof generally will vest in full to the extent not previously vested. For a more complete summary of the treatment of restricted Pope unit awards pursuant to the merger agreement, see the section entitled “The Merger Agreement—Treatment of Pope Equity Compensation” beginning on page 108 of this proxy statement/prospectus.

 

Q:

What will happen to Pope as a result of the merger?

 

A:

If the merger is completed, Opco, which will be the operating company of Rayonier, and ROC, which will be a wholly owned subsidiary of Opco, will together directly or indirectly own all of the general partner interests and limited partner interests of Pope. As a result of the merger, Pope will no longer be a publicly held company. Following the merger, Pope units will be delisted from the Nasdaq and deregistered under the Exchange Act, and the Pope units will no longer be traded on the Nasdaq or any other public market.

 

Q:

What equity stake will Pope unitholders hold in Rayonier immediately following the merger?

 

A:

Based on the number of issued and outstanding Rayonier shares and Pope units as of January 14, 2020, and assuming that Pope unitholders elect to receive Rayonier shares and Opco units up to the available equity amount, Pope unitholders as of immediately after the closing of the merger will hold, in the aggregate, approximately 9% of the issued and outstanding Rayonier shares and Opco units, collectively.

 

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Q:

What are the expected U.S. federal income tax consequences of the merger to Pope unitholders?

 

A:

Although for state law purposes Pope will become an indirect wholly owned subsidiary of Opco in the merger, for U.S. federal income tax purposes Opco will be treated as a continuation of Pope (and Opco shall not exist) following the merger pursuant to U.S. Treasury regulations promulgated under Section 708 of Code.

As a result, U.S. holders (as defined in the discussion under the heading “Material U.S. Federal Income Tax Consequences of the Merger”) that receive Opco units in the merger should not recognize any income, gain or loss with respect to the Opco units that they receive as part of the exchange, except to the extent that any net decrease in such holder’s share of partnership liabilities pursuant to Section 752 of the Code exceeds such holder’s adjusted tax basis in the Pope units exchanged for Opco units at the closing of the merger. However, it is not anticipated that gain or loss generally should be recognized by a U.S. holder solely as a result of a decrease in such holder’s share of partnership liabilities. A U.S. holder that receives Opco units in the merger will recognize gain to the extent that the amount of cash received in lieu of fractional units (if any) exceeds such holder’s adjusted tax basis allocable to such portion of Pope units sold.

On the other hand, the merger will be a taxable transaction for any U.S. holder to the extent that such holder receives cash or Rayonier shares in the merger. Each U.S. holder that receives cash or Rayonier shares (and any cash it receives in lieu of fractional Rayonier shares) in exchange for its Pope units pursuant to the merger will recognize gain or loss in an amount equal to the difference between (1) the sum of (A) the amount of any cash received, (B) the fair market value of the Rayonier shares received and (C) such U.S. holder’s share of Pope’s liabilities immediately prior to the merger effective time attributable to its Pope units exchanged for cash and/or Rayonier shares and (2) such U.S. holder’s adjusted tax basis in Pope units exchanged therefor (which includes such U.S. holder’s share of Pope’s liabilities attributable to such Pope units immediately prior to the merger effective time). Gain or loss recognized by a U.S. holder will generally be taxable as capital gain or loss. However, a portion of this gain or loss, which portion could be substantial, will be separately computed and taxed as ordinary income or loss under Section 751 of the Code to the extent attributable to assets giving rise to depreciation recapture or other “unrealized receivables” or to “inventory items” owned by Pope and its subsidiaries.

The U.S. federal income tax consequences of the merger to a U.S. holder will depend on such holder’s own personal tax situation. Accordingly, you are strongly urged to consult your own tax advisor for a full understanding of the particular tax consequences of the merger. In addition, please read the discussion under the heading “Material U.S. Federal Income Tax Consequences of the Merger—Tax Consequences of the Merger to U.S. Holders.”

 

Q:

What are some considerations in determining whether I elect to receive Rayonier shares or Opco units?

 

A:

The merger will be a taxable transaction for any U.S. holder of Pope units to the extent that such holder receives cash or Rayonier shares. Rayonier shares are listed on the NYSE under the symbol “RYN,” and, therefore, Rayonier shares can be purchased and sold on a public trading market and are generally freely transferable.

A U.S. holder of Pope unit that receives Opco units in the merger should not recognize any income, gain or loss with respect to the Opco units that they receive in the merger (except to the extent that any net decrease in such holder’s share of partnership liabilities pursuant to Section 752 of the Code exceeds such holder’s adjusted tax basis in the Pope units exchanged for Opco units at the closing of the merger). However, the Opco units will not be listed on any exchange, will have restrictions on their transferability and are not expected to have an active quoted price. Pursuant to the Opco limited partnership agreement, holders of Opco units will have redemption rights, which will enable them to cause Opco to redeem their Opco units in exchange for cash or, at Rayonier’s option, Rayonier shares on a one-for-one basis. These redemption rights, however, cannot be exercised by a limited partner more than once per quarter, and a redemption request

 

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must be made no less than 60 days prior to the redemption date, so, if a holder will receive Rayonier shares on the redemption date, the market price of the Rayonier shares will not be known at the time that the holder makes its redemption request.

 

Q:

How do I make an election for the form of merger consideration that I prefer?

 

A:

Pope unitholders should carefully review and follow the instructions in the election form and related documentation, which will be mailed substantially concurrently with this proxy statement/prospectus, to Pope unitholders of record. Each Pope unitholder may specify in the election form the number of Pope units with respect to which the unitholder elects to receive either the cash election consideration, stock election consideration or Opco election consideration. A Pope unitholder that submits an election form is not required to elect the same form of merger consideration for all of his, her or its Pope units. Pope units for which a valid election is not received by the election deadline will receive the stock election consideration.

Because of proration mechanics in the merger agreement, Pope unitholders may not receive all of their consideration in the form they elect. Under the merger agreement, Pope unitholders’ elections will be subject to proration so that approximately 70% of the Pope units converted into merger consideration will be exchanged for Rayonier shares or Opco units and approximately 30% of the Pope units converted into merger consideration will be exchanged for cash. These proration procedures will ensure that the aggregate amount of Rayonier shares and Opco units, on the one hand, and cash, on the other hand, that will be issued in the merger will equal the amounts issued as if every Pope unit converted into merger consideration would receive 2.751 Rayonier shares or Opco units and $37.50 in cash. If stock election consideration and Opco election consideration are oversubscribed, then to reduce the effect of such proration, Rayonier can, in its discretion, add additional equity (and decrease the amount of cash) payable to the Pope unitholders making the stock election and the Opco election.

In addition, the election form will enable Pope unitholders that make the cash election to elect, in the event that the cash election consideration is oversubscribed and is therefore subject to proration, whether each Pope unit for which they have made a cash election is prorated into (i) a combination of cash and Rayonier shares or (ii) a combination of cash and Opco units, referred to as the proration election. Pope unitholders may make a different proration election for each Pope unit for which they make a cash election. If a Pope unitholder does not make a valid proration election by the election deadline and the cash election consideration is oversubscribed, then all of such holder’s Pope units for which a cash election was made shall be converted into a combination of cash and Rayonier shares.

An exchange agent appointed by Rayonier will handle the distribution of consideration to Pope unitholders, provided such unitholders deliver to such exchange agent properly completed election forms prior to the election deadline.

See the section entitled “The Merger Agreement—Exchange and Payment Procedures” beginning on page 111 of this proxy statement/prospectus for additional information on exchange and payment procedures.

 

Q:

Will my Rayonier shares acquired in the merger receive a dividend?

 

A:

After the closing of the merger, if you elect Rayonier shares as your merger consideration, you will be a holder of Rayonier shares, and you will receive the same dividends on Rayonier shares that all other holders of Rayonier shares will receive based on a dividend record date that occurs after the merger is completed.

Rayonier currently pays regular quarterly dividends and anticipates paying dividends on its common stock in the foreseeable future. Under the terms of the merger agreement, during the period before completion of the merger, Rayonier is not permitted to pay any dividends on or make any distributions other than its regular cash dividends not to exceed $0.27 per share. Pursuant to the merger agreement, Rayonier and Pope will coordinate with the other with respect to the declaration of any dividend in respect of Rayonier shares or Pope units and the record dates and payment dates relating thereto, in order to ensure that Pope unitholders shall not receive both a distribution from Pope and a dividend from Rayonier, or fail to receive one dividend, in any calendar quarter with respect to their Pope units and any Rayonier shares that any such holder receives in exchange therefor in the merger.

 

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See the section entitled “Comparative Per Share Market Price and Dividend Information” beginning on page 35 for a comparison of the historical dividend practices of the two companies.

 

Q:

Why am I being asked to consider and vote on a proposal to approve, by advisory (non-binding) vote, the merger-related executive compensation?

 

A:

Under SEC rules, Pope is required to seek an advisory (non-binding) vote with respect to the compensation that may be paid or become payable to its named executive officers that is based on, or otherwise relates to, the merger.

 

Q:

What will happen if Pope unitholders do not approve the compensation proposal?

 

A:

Approval of the compensation that may be paid or become payable to Pope’s named executive officers that is based on, or otherwise relates to, the merger is not a condition to completion of the merger. The vote is an advisory vote and will not be binding on Pope or the surviving company in the merger. If the merger is completed, the merger-related executive compensation may be paid to Pope’s named executive officers to the extent payable in accordance with the terms of their compensation agreements and arrangements even if Pope unitholders do not approve, by advisory (non-binding) vote, the merger-related executive compensation.

 

Q:

Do any of Pope’s directors or executive officers have interests in the merger that may differ from those of Pope unitholders?

 

A:

Pope’s directors and executive officers have certain interests in the merger that may be different from, or in addition to, the interests of Pope unitholders generally. The Pope board was aware of and considered these interests, among other matters, in evaluating the merger agreement and the mergers and in recommending that Pope unitholders approve the merger agreement. For a description of these interests, refer to the section entitled “Interests of Pope’s Directors and Executive Officers in the Merger” beginning on page 128.

 

Q:

If my Pope units are held in “street name” by my bank, brokerage firm or other nominee, will my bank, brokerage firm or other nominee automatically vote those shares for me?

 

A:

Your bank, brokerage firm or other nominee will only be permitted to vote your Pope units if you instruct your bank, brokerage firm or other nominee how to vote. You should follow the procedures provided by your bank, brokerage firm or other nominee regarding the voting of your Pope units.

Banks, brokerage firms and other nominees are precluded from exercising their voting discretion with respect to non-routine matters, such as the approval of the merger agreement, the proposal to approve, by advisory (non-binding) vote, the merger-related executive compensation and adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement. As a result, absent specific instructions from the beneficial owner of such units, banks, brokerage firms and other nominees are not empowered to vote such units. A so-called “broker non-vote” results when banks, brokerage firms and other nominees return a valid proxy but do not vote on a particular proposal because they do not have discretionary authority to vote on the matter and have not received specific voting instructions from the beneficial owner of such units.

If you do not instruct your broker on how you wish your units to be voted (or, in the case of Pope units held by assignees, how to direct MGP to vote your units) those units will not be counted as voting “FOR” the merger and will (i) have the same effect as a vote against the merger agreement and the merger, (ii) will not have an effect on the advisory (non-binding) vote to approve the merger-related executive compensation except to the extent it results in there being insufficient Pope units present at the special meeting to establish a quorum and (iii) not have an effect on the vote to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

 

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Q:

When and where is the special meeting?

 

A:

The special meeting will be held on Tuesday, May 5, 2020, at 11:00 a.m. local time, at the offices of Davis Wright Tremaine LLP, 920 Fifth Ave., Suite 3300, Seattle, Washington 98104. To attend the special meeting in person, an admission card or proof of ownership of Pope units and limited partner status as of the record date is required. All Pope unitholders planning to attend the special meeting can request an admission card and register to attend by contacting the Pope Investor Relations Department at (360) 697-6626. In light of the ongoing COVID-19, or coronavirus, pandemic, MGP amended the Pope limited partnership agreement effective as of March 29, 2020, to permit Pope to conduct meetings of unitholders by Internet or other electronic means, and to provide that such participation is equivalent for all purposes to attendance in person at any such meeting. While Pope will conduct the special meeting in person, unitholders wishing to attend are strongly encouraged to attend by registering at the Internet website http://www.virtualshareholdermeeting.com/POPE2020 using the 16-digit control number found on the accompanying proxy card. We refer to this process as the “virtual meeting facility,” and references in this proxy statement/prospectus to in-person attendance at the special meeting includes attendance by means of the virtual meeting facility. Pope unitholders are further advised that, as of the date of this proxy statement/prospectus, the State of Washington remains under an executive order that prohibits the conduct of non-essential businesses and restricts public gatherings, regardless of the number of people in attendance. Before attempting to attend the special meeting in person, Pope unitholders are strongly advised to consider any and all legal restrictions on in-person attendance, and are further cautioned that the Seattle, Washington, area has been identified as one of the regions most substantially affected by the pandemic.

 

Q:

How many votes do I have?

 

A:

Each Pope unitholder is entitled to one vote for each unit of Pope held of record as of the record date.

As of the close of business on the record date, there were 4,367,215 Pope units outstanding. As summarized above, there are some important distinctions between Pope units held of record and those owned beneficially in street name as well as some important distinctions between how your Pope units will be voted if you are a limited partner or an assignee.

 

Q:

What constitutes a quorum for the special meeting?

 

A:

The presence, in person or represented by proxy, of more than 50% of the outstanding Pope units.

 

Q:

How do I vote if I am a record holder, Pope assignee or my units are held in street name?

 

A:

Unitholder of Record. If you are a unitholder of record, you can vote in the following ways:

 

   

By Internet: by following the Internet voting instructions on the proxy card at any time up until 11:59 p.m. eastern standard time on May 4, 2020 at www.proxyvote.com. If you vote by Internet, you need not return your proxy card;

 

   

By Telephone: by following the telephone voting instructions included in the proxy card at any time up until 11:59 p.m. eastern standard time on May 4, 2020 by calling (800) 690-6903. If you vote by telephone, you need not return your proxy card;

 

   

By Mail: by completing, signing and dating the enclosed proxy card and returning it in the self-addressed envelope provided with the proxy materials. You must sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as an officer of a corporation, executor or trustee), you must indicate your name and title; or

 

   

By attending the meeting using the virtual meeting facility and voting your Pope units during the meeting. You may access the virtual meeting facility by registering at the Internet website http://www.virtualshareholdermeeting.com/POPE2020 using the 16-digit control number found on the accompanying proxy card.

 

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Pope assignee. If you are a Pope assignee, i.e. you hold Pope units but have not been admitted to Pope as a limited partner, you can direct MGP, in its capacity as limited partner of record for Pope units held by assignees, to vote your Pope units using the steps outlined above, indicating how you wish your units to be voted and returning it in the self-addressed envelope provided with the proxy materials. You must sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as an officer of a corporation, executor or trustee), you must indicate your name and title.

Beneficial Owner. If your units are held in street name, your plan trustee or your bank, broker or other nominee should give you instructions for voting your Pope units.

If you satisfy the admission requirements to the special meeting, as described above under the heading “When and where is the special meeting?” you may vote your units in person at the meeting. If you decide to attend the special meeting and vote in person, your vote by ballot will revoke any proxy previously submitted. Even if you plan to attend the special meeting, you are encouraged to vote in advance by Internet, telephone or mail so that your vote will be counted in the event you later decide not to attend the special meeting. You are reminded that, as of the date of this proxy statement/prospectus, the State of Washington remains under an executive order that prohibits the conduct of non-essential businesses and restricts public gatherings, regardless of the number of people in attendance. Before attempting to attend the special meeting in person, Pope unitholders are strongly advised to consider any and all legal restrictions on in-person attendance. Attendance using the virtual meeting facility will have the same effect as attending in person.

 

Q:

How can I change or revoke my vote?

 

A:

If you are a unitholder of record, you may change your vote or revoke your proxy by:

 

   

executing and delivering to Pope’s executive offices, to the attention of Pope’s corporate secretary, or its transfer agent, Computershare, a proxy card relating to the same units bearing a later date than the original proxy card;

 

   

giving notice of revocation in writing to the Pope secretary, at 19950 Seventh Avenue NE, Suite 200, Poulsbo, Washington 98370 (by mail or overnight delivery), prior to the time the special meeting begins; or

 

   

voting in person or through the virtual meeting facility at the special meeting.

Please note, however, that under the rules of the national stock exchanges, any Pope unitholder whose units are held in street name by a member brokerage firm may revoke his, her or its proxy and vote his, her or its units in person at the special meeting only in accordance with applicable rules and procedures of those exchanges, as employed by the street name holder’s brokerage firm. In addition, if you hold your units in street name, you must have a valid proxy from the record holder of the Pope units to vote (or, in the case of Pope units held by assignees, to direct MGP to vote) in person or through the virtual meeting facility at the special meeting.

 

Q:

If a unitholder gives a proxy, how are the Pope units voted?

 

A:

Regardless of the method you choose to vote, the individuals named on the enclosed proxy card will vote your Pope units in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your Pope units should be voted “FOR” or “AGAINST” or to “ABSTAIN” from voting on all, some or none of the specific items of business to come before the special meeting.

If you properly sign your proxy card but do not mark the boxes showing how your units should be voted on a matter, the Pope units represented by your properly signed proxy will be voted “FOR” the approval of the merger agreement, the merger and the related transactions, “FOR” the proposal to approve, by advisory

 

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(non-binding) vote, the merger-related executive compensation, and “FOR” adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

 

Q:

What should I do if I receive more than one set of voting materials?

 

A:

If you hold Pope units in “street name” and also directly as a record holder or otherwise or if you hold Pope units in more than one brokerage account, you may receive more than one set of voting materials relating to the special meeting. Please complete, sign, date and return each proxy card (or cast your vote by telephone or Internet as provided on your proxy card) or otherwise follow the voting instructions provided in this proxy statement/prospectus in order to ensure that all of your Pope units are voted. If you hold your units in “street name” through a bank, brokerage firm or other nominee, you should follow the procedures provided by your bank, brokerage firm or other nominee to vote your units.

 

Q:

What happens if I sell my Pope units before the special meeting?

 

A:

The record date is earlier than both the date of the special meeting and the merger effective time. If you transfer your Pope units after the record date but before the special meeting, you will, unless the transferee requests a proxy from you, retain your right to vote at the special meeting but will transfer the right to receive the merger consideration for such Pope units to the person to whom you transfer your units. In order to receive the merger consideration, you must hold your Pope units at the merger effective time.

 

Q:

Who will solicit and pay the cost of soliciting proxies?

 

A:

Pope has engaged MacKenzie Partners at an estimated cost of $12,500, plus reimbursement of reasonable expenses, to assist in the solicitation of proxies from brokers, nominees, institutions and individuals. Proxies may also be solicited on Pope’s behalf by Pope’s directors, officers or employees (for no additional compensation). Arrangements will also be made with custodians, nominees and fiduciaries for forwarding a notice or printed proxy materials, as applicable, to beneficial owners of units held of record by such custodians, nominees and fiduciaries, and Pope will reimburse such custodians, nominees and fiduciaries for reasonable expenses incurred in connection therewith.

 

Q:

What do I need to do now?

 

A:

Even if you plan to attend the special meeting in person, after carefully reading and considering the information contained in this proxy statement/prospectus, including the annexes attached hereto and other information incorporated herein by reference, please vote promptly to ensure that your units are represented at the special meeting. Each Pope unitholder as of the record date may vote (or, in the case of Pope units held by assignees, direct MGP to vote) his, her or its Pope units as described above under the heading “How do I vote?”

 

Q:

Where can I find the voting results of the special meeting?

 

A:

The preliminary voting results will be announced at the special meeting. In addition, within four business days following certification of the final voting results, Pope intends to file the final voting results with the SEC on a Current Report on Form 8-K.

 

Q:

Am I entitled to exercise appraisal rights instead of receiving the merger consideration for my units?

 

A:

No. Appraisal rights are not available in connection with the merger under the Delaware Revised Uniform Limited Partnership Act, or the “DRULPA”, under the merger agreement or under the Pope limited partnership agreement. For additional information, please see the merger agreement attached as Annex A to the proxy statement, and Pope limited partnership agreement.

 

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Q:

When is the merger expected to be consummated?

 

A:

The parties currently anticipate that the merger will close within several business days after the special meeting, but the parties cannot be certain when or if the conditions of the merger will be satisfied (or if permissible under applicable law, waived). The merger cannot be consummated until the conditions to closing of the merger are satisfied (or if permissible under applicable law, waived).

 

Q:

What are the conditions to completion of the merger?

 

A:

In addition to the approval of the merger proposal by Pope unitholders as described above, completion of the merger is subject to the satisfaction of a number of other conditions, including the accuracy of representations and warranties under the merger agreement (subject to the materiality standards set forth in the merger agreement) and Pope’s and Rayonier’s performance of their respective obligations under the merger agreement in all material respects. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the merger, see the section entitled “The Merger Agreement—Conditions to Completion of the Merger” beginning on page 124, of this proxy statement/prospectus.

 

Q:

What if I hold depositary receipts?

 

A:

For purposes of this proxy statement and the merger agreement, depositary receipts representing Pope units are treated as indistinguishable from the Pope units themselves, and a unitholder includes a holder of depositary receipts.

 

Q:

Who can help answer my questions?

 

A:

If you need assistance in completing your proxy card or have questions regarding the special meeting, please contact the firm assisting us with the solicitation of proxies, MacKenzie Partners, as follows:

 

   

Unitholders in the U.S. and Canada call toll-free: (800) 322-2885

 

   

Unitholders in other locations dial direct: (212) 929-5500

 

   

Banks, brokers and other nominees call collect: (212) 929-5500

 

Q:

Are there any risks that I should consider in deciding whether to vote for the approval of the merger agreement?

 

A:

Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page 39 of this proxy statement/prospectus. You also should read and carefully consider the risk factors of Rayonier and Pope contained in the documents that are incorporated by reference into this proxy statement/prospectus.

 

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SUMMARY

The following summary highlights selected information in this proxy statement/prospectus and may not contain all the information that may be important to you as a Pope unitholder. Accordingly, you are encouraged to read carefully this entire proxy statement/prospectus, its annexes and the documents referred to in this proxy statement/prospectus. Each item in this summary includes a page reference directing you to a more complete description of that topic. You may obtain the information incorporated by reference into this proxy statement/prospectus without charge by following the instructions under the section entitled “Where You Can Find More Information” beginning on page 287 of this proxy statement/prospectus.

Parties to the Merger (Page 53)

Rayonier Inc.

1 Rayonier Way

Wildlight, Florida 32097

(904) 357-9100

Rayonier Inc., a North Carolina corporation, is a leading timberland REIT with assets located in some of the most productive softwood timber growing regions in the U.S. and New Zealand. The focus of Rayonier’s business is to invest in timberlands and to actively manage them to provide current income and attractive long-term returns to its shareholders. As of December 31, 2019, Rayonier owned, leased or managed approximately 2.6 million acres of timberlands located in the U.S. South (1.84 million acres), U.S. Pacific Northwest (379,000 acres) and New Zealand (414,000 gross acres, or 295,000 net plantable acres). In addition, Rayonier engages in the trading of logs from New Zealand and Australia to Pacific Rim markets, primarily to support its New Zealand export operations. Rayonier has an added focus to maximize the value of its land portfolio by pursuing higher and better use land sales opportunities to the extent consistent with the provisions of the Code governing REITs.

Rayonier shares are listed on the NYSE under the symbol “RYN.”

Rayonier Operating Company LLC

c/o Rayonier Inc.

1 Rayonier Way

Wildlight, Florida 32097

(904) 357-9100

Rayonier Operating Company LLC, referred to as ROC, is a Delaware limited liability company and a wholly owned subsidiary of Rayonier. ROC holds, directly or indirectly, substantially all of Rayonier’s assets and conducts substantially all of Rayonier’s business. ROC currently does not have any publicly traded equity. Prior to the closing of the merger, Rayonier will contribute all of its interest in ROC to Rayonier, L.P., and in connection therewith Rayonier, L.P. will become Rayonier’s operating company and successor-in-interest to ROC.

Rayonier, L.P.

c/o Rayonier Inc.

1 Rayonier Way

Wildlight, Florida 32097

(904) 357-9100

Rayonier, L.P., referred to as Opco, is a Delaware limited partnership. Rayonier is Opco’s sole general partner, and, as of the date of this proxy statement/prospectus, 100% of Rayonier, L.P.’s limited partner interests



 

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are held by Rayonier Operating Company Holdings, LLC, a wholly owned subsidiary of Rayonier. Opco currently does not have any publicly traded equity. Prior to the closing of the merger, Rayonier will contribute all of its interest in ROC to Opco, and in connection therewith Opco will become Rayonier’s operating company and successor-in-interest to ROC.

Rayonier Operating Company Holdings, LLC

c/o Rayonier Inc.

1 Rayonier Way

Wildlight, Florida 32097

(904) 357-9100

Rayonier Operating Company Holdings, LLC, referred to as Opco Holdings, is a Delaware limited liability company, a wholly owned subsidiary of Rayonier and the initial and sole limited partner of Opco. Opco Holdings has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the merger agreement.

Pacific GP Merger Sub I, LLC

c/o Rayonier Inc.

1 Rayonier Way

Wildlight, Florida 32097

(904) 357-9100

Pacific GP Merger Sub I, LLC, referred to as Merger Sub 1, is a Delaware limited liability company and a wholly owned subsidiary of Rayonier formed solely for the purpose of facilitating the merger of Merger Sub 1 and MGP, referred to as GP merger 1. Merger Sub 1 has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the merger agreement. By operation of GP merger 1, Merger Sub 1 will be merged with and into MGP, with Merger Sub 1 surviving such merger as a wholly owned subsidiary of Rayonier.

Pacific GP Merger Sub II, LLC

c/o Rayonier Inc.

1 Rayonier Way

Wildlight, Florida 32097

(904) 357-9100

Pacific GP Merger Sub II, LLC, referred to as Merger Sub 2, is a Delaware limited liability company and a wholly owned subsidiary of Rayonier formed solely for the purpose of facilitating the merger of Merger Sub 2 and EGP, referred to as GP merger 2. Merger Sub 2 has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the merger agreement. By operation of GP merger 2, Merger Sub 2 will be merged with and into EGP, with Merger Sub 2 surviving such merger as a wholly owned subsidiary of Rayonier.

Pacific LP Merger Sub III, LLC

c/o Rayonier Inc.

1 Rayonier

Wildlight, Florida 32097

(904) 357-9100

Pacific LP Merger Sub III, LLC, referred to as Merger Sub 3, is a Delaware limited liability company and a wholly owned subsidiary of ROC formed solely for the purpose of facilitating the merger. Merger Sub 3 has not carried on any activities or operations to date, except for those activities incidental to its formation and



 

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undertaken in connection with the transactions contemplated by the merger agreement. By operation of the merger, Merger Sub 3 will be merged with and into Pope, with Pope surviving such merger as a wholly owned subsidiary of ROC and an indirect wholly-owned subsidiary of Opco.

Pope Resources, a Delaware Limited Partnership

19950 Seventh Avenue NE, Suite

200 Poulsbo, Washington 98370

(360) 697-6626

Pope Resources, a Delaware Limited Partnership, referred to as Pope, was formed in 1985 as a result of the spinoff of certain timberlands and development properties from Pope & Talbot, Inc. Pope currently operates in four primary business segments: (1) Partnership Timber, (2) Funds Timber, (3) Timberland Investment Management, and (4) Real Estate. Operations in Pope’s two timber segments consist of growing, managing, harvesting, and marketing timber from Pope’s 119,000 acres of direct timberland ownership, plus another 3,500 acres under timber deeds, in Washington (Partnership Timber) and Pope’s private equity timber funds’ 141,000 acres (as of December 31, 2019) of timberland in Washington, Oregon, and California that Pope co-owns with third-party investors (Funds Timber). Pope’s Timberland Investment Management segment is engaged in organizing and managing private equity timber funds using capital invested by third parties and Pope. Pope’s Real Estate segment’s operations are focused on a portfolio of approximately 1,500 acres in the west Puget Sound region of Washington, most of which are legacy timberlands that have become suitable as development property owing to the expansion of the Puget Sound metropolitan and suburban areas. Recently, Pope has acquired and developed a number of other properties for sale, either independently or by partnering with other experienced real estate developers. This segment’s activities consist of efforts to enhance the value of Pope’s land by obtaining the entitlements and, in some cases, building the infrastructure necessary to enable further development, and then selling those properties, ordinarily to commercial and residential developers. Pope’s Real Estate operations also include ownership and management of commercial properties, including Port Gamble, Washington, now an historic town. Port Gamble was established by Pope & Talbot in 1853 and was operated as a company town for over 165 years and served as the location for a lumber mill for most of that time. Pope is a publicly traded Delaware master limited partnership, and its units are listed on the Nasdaq Stock Market under the ticker symbol “POPE”. Pope is managed and operated by the officers of, and is subject to the oversight of the board of directors of, MGP. For purposes of this proxy statement, MGP’s officers and board of directors are referred to as Pope’s officers and board of directors, respectively. MGP’s principal executive office is located at 19950 Seventh Avenue NE, Suite 200, Poulsbo, WA 98370, and Pope’s telephone number is +1 (360) 697-6626.

Pope MGP, Inc.

19950 Seventh Avenue NE, Suite 200

Poulsbo, Washington 98370

(360) 697-6626

Pope MGP, Inc., referred to as MGP, is a Delaware corporation and serves as Pope’s managing general partner. MGP’s shares are not listed.

Pope EGP, Inc.

19950 Seventh Avenue NE, Suite 200

Poulsbo, Washington 98370

(360) 697-6626

Pope EGP, Inc., referred to as EGP, is a Delaware corporation and serves as Pope’s equity general partner. EGP’s shares are not listed.

The Merger and the Merger Agreement (Page 59 and Annex A)

The terms and conditions of the merger are contained in the merger agreement, as amended by amendment No. 1 to the merger agreement, a copy of which is attached as Annex A to this proxy statement/prospectus. You



 

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are encouraged to read the merger agreement and the amendment carefully and in its entirety, as it is the legal document that governs the merger and certain of the related transactions.

Pursuant to the merger agreement, three mergers will occur at closing. Merger Sub 1 will merge with and into MGP, with Merger Sub 1 surviving as a wholly owned subsidiary of Rayonier. Merger Sub 2 will merge with and into EGP, with Merger Sub 2 surviving as a wholly owned subsidiary of Rayonier. Merger Sub 3 will merge with and into Pope, with Pope surviving as a wholly owned subsidiary of ROC and an indirectly wholly owned subsidiary of Opco.

Merger Consideration (Page 59)

Each Pope unitholder (other than Rayonier, Opco or certain of their controlled affiliates) may elect to receive, for each Pope unit that they hold:

 

   

$125.00 in cash, referred to as the cash election;

 

   

3.929 Rayonier shares, referred to as the stock election; or

 

   

3.929 Opco units, referred to as the Opco election.

Pope unitholders that do not make a valid election will be treated as if they made the stock election. The elections are subject to proration as described below.

No fractional Rayonier shares or Opco units will be issued in the merger. Each Pope unitholder who otherwise would be entitled to receive a fraction of a Rayonier share or Opco unit pursuant to the merger will be paid an amount in cash (without interest) equal to such fractional part of a Rayonier share or Opco unit multiplied by the volume weighted average closing sale price per Rayonier share as reported on the NYSE as reported by Bloomberg, L.P. for the 10 consecutive trading days immediately preceding the date which is five trading days immediately prior to the closing date.

Elections and Proration (Page 59)

Pope unitholders’ elections will be subject to proration so that approximately 70% of the Pope units converted into merger consideration will be exchanged for Rayonier shares or Opco units and approximately 30% of the Pope units converted into merger consideration will be exchanged for cash. Specifically, the proration will ensure the aggregate amount of Rayonier shares and Opco units, on the one hand, and cash, on the other hand, that will be issued in the merger will equal the amounts issued as if every Pope unit converted into merger consideration would receive 2.751 Rayonier shares or Opco units and $37.50 in cash. If stock election consideration and Opco election consideration are oversubscribed, then to reduce the effect of such proration, Rayonier can, in its discretion, add additional equity (and decrease the amount of cash) payable to the Pope unitholders making the stock election and the Opco election. Pope unitholders that make the cash election will have the right to elect, in the event that the cash election consideration is oversubscribed and is therefore subject to proration, whether each Pope unit for which they have made a cash election is prorated into (i) a combination of cash and Rayonier shares or (ii) a combination of cash and Opco units, referred to as the proration election. Pope unitholders may make a different proration election for each Pope unit for which they make a cash election. If a Pope unitholder does not make a valid proration election by the election deadline and the cash election consideration is oversubscribed, then all of such holder’s Pope units for which a cash election was made shall be converted into a combination of cash and Rayonier shares.

Treatment of Pope Equity Compensation (Page 108)

Treatment of Restricted Pope Units

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number of restricted Pope units multiplied by 3.929. As discussed in “Interests of Pope’s Directors and Executive Officers in the Merger – Treatment of Equity and Equity-Based Awards” beginning at page 128, Pope directors and some executive employees of Pope hold restricted Pope units that will experience accelerated vesting in connection with or following the merger.

Treatment of Pope Equity Plans

Rayonier will assume all of the obligations outstanding under Pope’s existing equity plans, including the treatment of the converted equity awards upon a qualifying termination (as discussed in “Interests of Pope’s Directors and Executive Officers in the Merger – Treatment of Equity and Equity-Based Awards” beginning at page 128).

Financing of the Merger (Page 62)

Rayonier currently expects to finance the transactions contemplated by the merger agreement, including the merger, through a combination of cash on hand, borrowings under Rayonier’s existing credit agreement, dated as of August 5, 2015, among Rayonier, the subsidiary borrowers from time to time party thereto, the lenders from time to time party thereto, and CoBank, ACB, as administrative agent, referred to as the revolving credit facility, and issuances of Rayonier shares and Opco units. Rayonier, subject to market conditions, may also consider financing all or a portion of the cash consideration payable in connection with the merger through new debt financing.

Accounting Treatment (Page 62)

Rayonier prepares its financial statements in accordance with accounting principles generally accepted in the United States, referred to as GAAP. The merger will be accounted for using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Rayonier will be treated as the acquiror for accounting purposes.

Recommendation of the Pope Special Committee; Recommendation of the Pope Board of Directors; Pope’s Reasons for the Merger (Page 91)

On January 14, 2020, the Pope special committee, after receiving advice from Pope’s management and the Pope special committee’s outside financial and legal advisors, and after due and careful consideration, including of the terms and conditions of the merger agreement, the merger and the related transactions, unanimously (i) determined that the merger agreement, the merger and the related transactions were advisable and in the best interests of Pope and the unaffiliated Pope unitholders, (ii) approved the merger agreement and the consummation by Pope of the merger and the related transactions and (iii) recommended that the Pope board (A) approve the merger agreement and the consummation by Pope of the merger and the related transactions, (B) submit the merger agreement to the Pope unitholders for approval and (C) recommend that the Pope unitholders approve the merger agreement, the merger and the related transactions.

On January 14, 2020, the Pope board, after receiving advice from Pope’s management and its outside legal advisors and acting upon the recommendation of the Pope special committee, and after due and careful consideration, including of the terms and conditions of the merger agreement, the merger and the related transactions, unanimously (i) determined that the execution, delivery and performance of the merger agreement by Pope and the consummation by Pope of the merger and the related transactions were advisable to and in the best interests of Pope, (ii) authorized and approved the execution, delivery and performance by Pope of the merger agreement and the consummation by Pope of the merger and the related transactions (subject to receipt of the Pope unitholder approval), (iii) recommended that the Pope unitholders approve the merger agreement, the merger and the related transactions and (iv) resolved to submit the merger agreement to a vote at a meeting of the Pope unitholders and recommend approval of the merger agreement by the Pope unitholders.



 

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The Pope board therefore recommends a vote “FOR” the proposal to approve the merger agreement, the merger and the related transactions. The Pope board also recommends a vote “FOR” the nonbinding compensation proposal and “FOR” the adjournment proposal.

Certain factors considered by the Pope special committee and the Pope board in reaching their decisions to approve the merger agreement, the merger and the related transactions are described in the section entitled “The Merger – Recommendation of the Pope Special Committee; Recommendation of the Pope Board of Directors; Pope’s Reasons for the Merger,” beginning on page 91.

Opinion of the Pope Special Committee’s Financial Advisor (Page 97 and Annex E)

The Pope special committee retained Centerview Partners LLC, referred to in this proxy statement/prospectus as “Centerview,” as financial advisor to the Pope special committee in connection with a review of potential strategic options, including the proposed merger and the related transactions, which are collectively referred to as the “transaction” throughout this section and the summary of Centerview’s opinion below under the caption “Opinion of the Pope Special Committee’s Financial Advisor.” In connection with this engagement, the Pope special committee requested that Centerview evaluate the fairness, from a financial point of view, of the merger to the Pope unitholders (other than the affiliated Pope unitholders). For purposes of this proxy statement/prospectus “affiliated Pope unitholders” means (a) MGP, EGP, the holders of MGP common stock, the holders of EGP common stock and their respective affiliates and (b) Rayonier, Rayonier, L.P. and their respective affiliates. On January 13, 2020, at a meeting of the Pope special committee held to evaluate the transaction, Centerview rendered to the Pope special committee its oral opinion, which was subsequently confirmed by delivery of a written opinion dated January 14, 2020, that, as of such date and based upon and subject to the assumptions made, procedures followed, matters considered and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the merger consideration proposed to be paid to the Pope unitholders (other than the affiliated Pope unitholders) pursuant to the merger agreement was fair, from a financial point of view, to such unitholders.

The full text of Centerview’s written opinion, dated January 14, 2020, which describes the assumptions made, procedures followed, matters considered and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, is attached as Annex E and is incorporated herein by reference. Centerview’s financial advisory services and opinion were provided for the information and assistance of the Pope special committee (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the transaction and Centerview’s opinion addressed only the fairness, from a financial point of view, as of the date thereof, to the Pope unitholders (other than affiliated Pope unitholders) of the merger consideration to be paid to such holders pursuant to the merger agreement. Centerview’s opinion did not address any other term or aspect of the merger agreement or the transaction and does not constitute a recommendation to any holder of Pope units or any other person as to how such holder or other person should vote with respect to the transaction or otherwise act with respect to the transaction or any other matter, including without limitation whether any such holder of Pope units should elect to receive the cash election consideration, stock election consideration or the Opco election consideration or make no election with respect to the merger.

The full text of Centerview’s written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion.

For further information, see the section of this proxy statement/prospectus entitled “Opinion of the Pope Special Committee’s Financial Advisor” beginning on page 97 and Annex E to this proxy statement/prospectus.



 

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Information About Pope Meeting (Page 56)

The special meeting will be held on May 5, 2020, at 11:00 a.m. local time, at the offices of Davis Wright Tremaine LLP, 920 Fifth Avenue Suite 3300, Seattle, Washington 98104, and electronically via the virtual meeting facility that can be accessed by Pope unitholders by registering at the Internet website http://www.virtualshareholdermeeting.com/POPE2020 using the 16-digit control number found on the accompanying proxy card. At the special meeting, the Pope unitholders will be asked to consider and vote upon (i) a proposal to approve the merger agreement, the merger and the related transactions, (ii) a proposal to approve, by advisory (non-binding) vote, the merger-related executive compensation and (iii) a proposal for adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

Record Date and Quorum (Page 56)

You are entitled to receive notice of, and to vote at, the special meeting if you are an owner of record of Pope units as of the close of business on March 30, 2020, the record date. On the record date, there were 4,367,215 Pope units outstanding and entitled to vote. You will have one vote on all matters properly coming before the special meeting for each Pope unit that you owned on the record date.

The presence, in person or represented by proxy, of holders of a majority of all of the outstanding Pope units entitled to vote at the special meeting constitutes a quorum for the purposes of the special meeting.

Vote Required (Page 56)

Approval of the merger proposal requires that a majority of the Pope units issued and outstanding as of the record date vote in favor of approval of the merger agreement.

If you fail to submit a proxy or to vote in person at the special meeting, or if you abstain, or if you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will not be counted as “FOR” or “AGAINST” and will have the same effect as a vote against the merger agreement and the merger.

The proposal to approve the merger-related executive compensation requires that a majority of the votes cast at the special meeting are voted in favor of the proposal; however, such vote is advisory (non-binding) only. If you fail to submit a proxy or to vote in person at the special meeting, or abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will not be counted as “FOR” or “AGAINST” and will not have an effect on the approval of the merger-related executive compensation proposal except to the extent it results in there being insufficient Pope units present at the special meeting to establish a quorum.

The approval of adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement requires that a majority of the votes cast at the special meeting are voted in favor of the proposal, whether or not a quorum is present. If you fail to submit a proxy or to vote in person at the special meeting, or abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will not be counted as “FOR” or “AGAINST” and will not have an effect on the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.



 

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Proxies and Revocations (Page 57)

Any Pope unitholder of record entitled to vote at the special meeting may submit a proxy by telephone, over the Internet, by returning the enclosed proxy card in the accompanying prepaid reply envelope or may vote at the special meeting in person or by means of the virtual meeting facility.

If your Pope units are held in “street name” through a bank, brokerage firm or other nominee, you should instruct your bank, brokerage firm or other nominee on how to vote your Pope units using the instructions provided by your bank, brokerage firm or other nominee.

If you are a Pope assignee, i.e. you hold Pope units but have not been admitted to Pope as a limited partner, you can vote by completing, signing and dating the proxy card, and MGP, acting in its capacity as limited partner of record for Pope units held by assignees, will vote your units as you instruct.

You have the right to revoke a proxy, whether delivered over the Internet, by telephone or by mail, at any time before it is exercised, by (i) executing and delivering to the Pope secretary or transfer agent a proxy card relating to the same units bearing a later date than the original proxy card, (ii) if you are a unitholder of record or, if you are a beneficial owner, have a “legal proxy” from your bank, brokerage firm or other nominee that holds your units, attending the special meeting and voting in person or electronically via the virtual meeting facility that can be accessed by Pope unitholders by registering at the Internet website http://www.virtualshareholdermeeting.com/POPE2020 using the 16-digit control number found on the accompanying proxy card., or (iii) giving written notice of revocation to the Pope secretary, at 19950 Seventh Avenue NE, Suite 200, Poulsbo, Washington 98370, prior to the time the special meeting begins.

Voting Agreements with Certain Pope Unitholders (Page 108)

Concurrently with the execution of the merger agreement, Rayonier entered into a voting and support agreement with Maria M. Pope and certain of her affiliates, a copy of which is attached to this proxy statement/prospectus as Annex B, and a voting and support agreement with Gordon P. Andrews and certain of his affiliates, a copy of which is attached as Annex C, referred to individually as a “support agreement” and collectively as the “support agreements”, pursuant to which each of the named Pope unitholders have agreed, among other matters and upon the terms and subject to the conditions set forth in the relevant support agreement, to vote all of their Pope units in favor of the merger agreement and the transactions contemplated thereby, including the merger, and against any proposal that would reasonably be expected to (i) result in a breach of any covenant, representation or warranty or any other obligation of Pope contained in the merger agreement or (ii) prevent or impede, interfere with, delay, postpone or adversely affect the consummation of the transactions contemplated by the merger agreement, including the merger. As of the date of this proxy statement/prospectus, the named Pope unitholders hold 736,145 Pope units (excluding the Pope units held by MGP and EGP) in the aggregate, or approximately 17% of the voting power of Pope as of the date of this proxy statement/prospectus.

Interests of Pope’s Directors and Executive Officers in the Merger (Page 128)

Directors and executive officers of Pope have certain interests in the merger agreement and transactions contemplated thereby, including the merger, that may be different from or in addition to the interests of Pope unitholders generally. These interests include, among others, the cash consideration payable in connection with the GP mergers, potential severance benefits and other payments, the treatment of outstanding unit awards pursuant to the merger agreement and rights to ongoing indemnification and insurance coverage by the surviving company for acts or omissions occurring prior to the merger. The Pope board and the Pope special committee was aware of and considered those interests, among other matters, in reaching its decisions to (i) approve the merger and the other transactions contemplated thereby, (ii) approve and declare advisable the merger agreement, and (iii) resolve to recommend the approval of the merger agreement to Pope unitholders.



 

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Regulatory Approvals (Page 108)

Completion of the merger is conditioned upon, among other things, the expiration or early termination of the applicable waiting period under the HSR Act. Rayonier and Pope each filed their respective HSR Act notification forms on February 5, 2020 and received notice of early termination on February 26, 2020.

No Appraisal Rights

The Pope unitholders are not entitled to dissenters’ or appraisal rights in connection with the merger.

Conditions to Completion of the Merger (Page 124)

In addition to the approval of the merger agreement by Pope unitholders and the expiration or termination of the applicable waiting period under the HSR Act, each as described above, each party’s obligation to complete the merger is also subject to the satisfaction or waiver (to the extent permitted under applicable law) of certain other conditions, including the effectiveness of the registration statement on Form S-4 of which this proxy statement/prospectus forms a part (and the absence of any stop order, or pending proceedings seeking a stop order, by the SEC), approval of the listing on the NYSE of the Rayonier shares to be issued in the merger, the continued effectiveness of the written consents of the general partner stockholders in respect of the GP mergers, the absence of an injunction prohibiting the merger, the receipt of certain tax opinions, the accuracy of the representations and warranties of the other party under the merger agreement (generally subject to the materiality standards set forth in the merger agreement), the performance in all material respects by the other party of its respective covenants and obligations under the merger agreement and delivery of officer certificates by the other party certifying satisfaction of the two preceding conditions.

The parties cannot be certain when, or if, the conditions to the merger will be satisfied or waived, or that the merger will be completed.

No Solicitation (Page 118)

As more fully described in this proxy statement/prospectus and in the merger agreement, and subject to the exceptions summarized below, Pope, MGP and EGP agree that they will not, will cause their subsidiaries not to, and will instruct and use their reasonable best efforts to cause their respective directors, officers, employees and other representatives not to, directly or indirectly, (i) initiate, solicit, knowingly encourage or knowingly facilitate the submission of any alternative proposal or any inquiry, proposal or offer that could reasonably be expected to lead to an alternative proposal, or (ii) enter into or participate in any discussions or negotiations regarding, or furnish to any person any non-public information with respect to, or that could reasonably be expected to lead to, any alternative proposal.

Under the terms of the merger agreement, Pope, MGP and EGP each agreed to immediately cease any discussions or negotiations with any person that may have been ongoing with respect to any alternative proposal as of January 14, 2020.

If, prior to obtaining the Pope unitholder approval, following the receipt of a bona fide written alternative proposal that was not solicited in violation of the terms of the merger agreement, the Pope board determines in good faith, after consultation with its outside financial advisor and outside legal counsel, that such proposal is or could reasonably be expected to lead to, a superior proposal, the Pope board may, in response to such a proposal, furnish information with respect to Pope to the person making such a proposal and engage in discussions or negotiations with such person, except that prior to furnishing any such nonpublic information relating to Pope or entering into negotiations, Pope must give Rayonier written notice of the person making the proposal, execute with that person a confidentiality agreement with terms no less favorable in the aggregate to Pope than the



 

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provisions of the confidentiality agreement in effect between Rayonier and Pope, and provide Rayonier with any non-public information about Pope that Pope had not previously provided to Rayonier.

No Change in Recommendation or Entry into Alternative Acquisition Agreement (Page 119)

Subject to certain exceptions described below, the Pope board may not:

 

   

effect a Pope board change in recommendation; or

 

   

cause or permit Pope or any of its subsidiaries to enter into a merger agreement, acquisition agreement, memorandum of understanding, option agreement or other similar agreements providing for, with respect to, or in connection with an alternative proposal;

However, at any time before the Pope unitholder approval is obtained, if (i) an unsolicited written alternative proposal is made by a third-party, which was not solicited in violation of the merger agreement and is not withdrawn; or an intervening event (as defined in the merger agreement) occurs; (ii) in the case of an alternative proposal, the Pope board concludes in good faith, after consultation with its outside legal counsel and outside financial advisors, that such proposal constitutes a superior proposal (as defined in the merger agreement); and (iii) the Pope board concludes in good faith, after consultation with Pope’s outside legal counsel, that the failure to effect a partnership change in recommendation would be reasonably likely to be inconsistent with its duties under Delaware law and the Pope limited partnership agreement, then, subject to the provisions described in the next paragraph, the Pope board may effect a partnership change in recommendation.

Prior to making any Pope board change in recommendation, the Pope board must (i) provide Rayonier at least three business days’ prior written notice of its intention to effect a partnership change in recommendation (including, in the case of an alternative proposal, copies of the proposed definitive agreement providing for the alternative proposal) and (ii) negotiate in good faith with Rayonier regarding any adjustments to the terms and conditions of the merger agreement so that, as applicable, the alternative proposal ceases to constitute a superior proposal or the intervening event ceases to require a partnership change in recommendation (in each case, in the reasonable determination of the Pope board, after consultation with its financial advisor and outside legal counsel).

Whether or not there is a partnership change in recommendation, unless the merger agreement is terminated in accordance with its terms, the Pope board must submit the merger agreement for approval by Pope unitholders at the special meeting.

Termination of the Merger Agreement (Page 126)

Termination Rights

The merger agreement may be terminated and the merger abandoned at any time prior to closing, whether before or after any approval of the merger by the Pope unitholders, in the following ways:

 

   

by mutual written consent of Pope and Rayonier;

 

   

by either Rayonier or Pope if there is in effect a final non-appealable order of a governmental authority of competent jurisdiction restraining, enjoining or otherwise prohibiting the consummation of the transactions contemplated by the merger agreement. However, Pope or Rayonier will not be able to terminate the merger agreement for the above reason if such order was primarily due to the failure of such party to perform its obligations under the merger agreement;



 

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by either Pope or Rayonier if the other party has materially breached or materially failed to perform any representations, warranties, covenants or agreements contained in the merger agreement and such breach or failure (i) would result in the failure of specified conditions to closing and (ii) is not curable or, if capable of being cured, is not cured by the earlier of the outside date or within 30 days following receipt by the breaching party of notice by the other party of such breach or failure. However, Pope or Rayonier will not be able to terminate the merger agreement for the above reason if such party is then in material breach of any of its representations, warranties, covenants or agreements under the merger agreement;

 

   

by either Pope or Rayonier if closing does not occur by October 14, 2020, referred to as the outside date, which date shall automatically be extended to January 14, 2021 if as of the initial outside date all of the conditions to closing shall have been satisfied or waived (or capable of being satisfied) except for conditions in respect of receipt of required regulatory approvals. However, Pope or Rayonier will not be able to terminate the merger agreement for the above reason so long as the failure to close by the outside date is the result of such party’s failure to perform or comply in all material respects with its obligations under the merger agreement;

 

   

by either Pope or Rayonier if the special meeting has concluded and the Pope unitholder approval has not been obtained;

 

   

by Rayonier if, prior to the special meeting, a Pope board change in recommendation has occurred; and

 

   

by either Pope or Rayonier if after all conditions to closing the merger have been satisfied and the closing of the merger has not occurred within three business days of those requirements being satisfied, such party has provided five business days’ notice that it is prepared to close the merger and the other party fails to close within such five business day period.

Termination Fee

Pope will pay Rayonier a termination fee of $20 million if the merger agreement is terminated in certain circumstances involving a Pope board change in recommendation occurring or other circumstances involving Pope accepting an alternative proposal.

In no event will the termination fee be payable more than once.

U.S. Federal Income Tax Consequences (Page 137)

Although for state law purposes Pope will become an indirect wholly owned subsidiary of Opco in the merger, for U.S. federal income tax purposes, Opco will be treated as a continuation of Pope (and Opco shall not exist) following the merger pursuant to U.S. Treasury regulations promulgated under Section 708 of the Code.

As a result, U.S. holders (as defined in the discussion under the heading “Material U.S. Federal Income Tax Consequences of the Merger”) that receive Opco units in the merger should not recognize any income, gain or loss with respect to the Opco units that they receive as part of the exchange, except to the extent that any net decrease in such holder’s share of partnership liabilities pursuant to Section 752 of the Code attributable to such U.S. Holder’s Pope units exchanged for Opco units exceeds such holder’s adjusted tax basis in the Pope units exchanged therefor at the closing of the merger. However, it is not anticipated that gain or loss should generally be recognized by a U.S. holder solely as a result of a decrease in such holder’s share of partnership liabilities. A U.S. holder that receives Opco units in the merger will recognize gain to the extent that the amount of cash received in lieu of fractional units (if any) exceeds such holder’s adjusted tax basis allocable to such portion of Pope units sold.



 

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On the other hand, the merger will be a taxable transaction for any U.S. holder of Pope units to the extent that such holder receives cash or Rayonier shares. Each U.S. holder that receives cash or Rayonier shares (and any cash it receives in lieu of fractional Rayonier shares) in exchange for its Pope units pursuant to the merger will recognize gain or loss in an amount equal to the difference between (1) the sum of (A) the amount of any cash received, (B) the fair market value of the Rayonier shares received and (C) such U.S. holder’s share of Pope’s liabilities immediately prior to the merger effective time attributable to such U.S. holder’s Pope units exchanged for cash and/or Rayonier shares and (2) such U.S. holder’s adjusted tax basis in Pope units exchanged therefor (which includes such U.S. holder’s share of Pope’s liabilities attributable to such Pope units immediately prior to the merger effective time). Gain or loss recognized by a U.S. holder will generally be taxable as capital gain or loss. However, a portion of this gain or loss, which portion could be substantial, will be separately computed and taxed as ordinary income or loss under Section 751 of the Code to the extent attributable to assets giving rise to depreciation recapture or other “unrealized receivables” or to “inventory items” owned by Pope and its subsidiaries.

The U.S. federal income tax consequences of the merger to a U.S. holder will depend on such holder’s own personal tax situation. Accordingly, you are encouraged to consult your own tax advisor for a full understanding of the particular tax consequences of the merger. In addition, please read the discussion under the heading “Material U.S. Federal Income Tax Consequences of the Merger—Tax Consequences of the Merger to U.S. Holders.”

Comparison of Unitholders’/Shareholders’ Rights (Page 279)

The rights of Pope unitholders are governed by the Pope limited partnership agreement and by Delaware law, including the DRULPA. Should you elect to or you do receive Rayonier shares, your rights as a shareholder of Rayonier will be governed by Rayonier’s amended and restated articles of incorporation and by-laws, referred to as the Rayonier charter and the Rayonier by-laws, respectively, and by North Carolina corporate law, including the North Carolina Business Corporation Act, or the NCBCA. Your rights under the Rayonier charter and Rayonier by-laws will differ in some respects from your rights under the Pope limited partnership agreement. Likewise, if you elect to receive Opco units, your rights as a unitholder of Opco will be governed by the Opco limited partnership agreement that will be adopted prior to the merger. Your rights under the Opco limited partnership agreement will different in some respects from your rights under the Pope limited partnership agreement.

Risk Factors (Page 39)

You should consider all the information contained in or incorporated by reference into this proxy statement/prospectus in deciding how to vote for the proposals presented in this proxy statement/prospectus. In particular, you should consider the factors described under “Risk Factors.”



 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF RAYONIER INC.

The following table presents selected historical consolidated financial data for Rayonier as of and for the years ended December 31, 2019, 2018, 2017, 2016 and 2015. This information has been derived from Rayonier’s audited consolidated financial statements.

The information should be read in conjunction with the historical audited consolidated financial statements of Rayonier and the related notes, including those contained in its Annual Report on Form 10-K for the year ended December 31, 2019, and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for such Annual Report that is incorporated by reference into this proxy statement/prospectus.

For more information, see the section entitled “Where You Can Find More Information” beginning on page 287 of this proxy statement/prospectus.

 

     As of and For the Year Ended December 31,  
($ in millions except per share data)    2019     2018     2017     2016     2015  

Statement of Income Data:

          

Revenues

   $ 711.556   $ 816.138   $ 819.596   $ 815.915   $ 568.800

Cost of Sales

     (558.350     (605.259     (568.253     (526.439     (441.718
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Margin

     21.53     25.84     30.67     35.48     22.34

Selling and Administrative Expense

     (41.646     (41.951     (40.245     (42.785     (45.750

Other Operating Income (Expense)

     (4.533     1.140     4.393     9.086     (3.548
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Operating Costs and Expenses

     (604.529     (646.070     (604.105     (560.138     (491.016

Operating Income

     107.027     170.068     215.491     255.777     77.784

Interest Expense

     (31.716     (32.066     (34.071     (32.245     (31.699

Interest Income

     5.307     4.564     1.840     (0.698     (3.003
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other Income (Expense), Net

     (26.409     (27.502     (32.231     (32.943     (34.702

Income Before Income Taxes

     80.618     142.566     183.260     222.834     43.082

Income Tax Provision

     (12.940     (25.236     (21.681     (5.064     0.859
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive Income

     36.809     97.970     176.178     252.447     4.462
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive Income Attributable to Rayonier Inc.

   $ 27.663   $ 89.039   $ 161.403   $ 242.892   $ 17.489
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Per Common Share Data:

          

Basic Earnings Per Share

   $ 0.46   $ 0.79     $ 1.17     $ 1.73     $ 0.37  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted Earnings Per Share

   $ 0.46   $ 0.79   $ 1.16   $ 1.73   $ 0.37
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance Sheet Data:

          

Total Current Assets

   $ 125.975   $ 207.853   $ 183.527   $ 164.804   $ 105.685

Total Assets

     2,860.996     2,780.666     2,858.481     2,685.760     2,315.938

Total Current Liabilities

     151.186     63.541     68.548     91.966     59.457

Total Long-Term Debt

     973.129     972.567     1,022.004     1,030.205     830.554

Total Shareholder’s Equity and Noncontrolling Interests

     1,537.642     1,654.550     1,692.940     1,496.752     1,361.740


 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF RAYONIER OPERATING COMPANY LLC

The following table presents selected historical consolidated financial data for ROC, as predecessor-in interest to Opco, as of and for the years ended December 31, 2019, 2018, 2017, 2016 and 2015. This information has been derived from ROC’s audited consolidated financial statements.

The information should be read in conjunction with the historical audited consolidated financial statements of ROC and the related notes elsewhere in this proxy statement/prospectus and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in this proxy statement/prospectus starting at page 192.

 

     As of and For the Year Ended December 31,  
($ in millions)    2019     2018     2017     2016     2015  

Statement of Income Data:

          

Revenues

   $ 711.556   $ 816.138   $ 819.596   $ 815.915   $ 568.800

Cost of Sales

     (558.350     (605.259     (568.253     (526.439     (441.718
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Margin

     21.53     25.84     30.67     35.48     22.34

Selling and Administrative Expense

     (41.646     (41.951     (40.245     (42.785     (45.750

Other Operating Income (Expense)

     (4.533     1.152     4.393     9.086     (3.548
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Operating Costs and Expenses

     (604.529     (646.058     (604.105     (560.138     (491.016

Operating Income

     107.027     170.080     215.491     255.777     77.784

Interest Expense

     (19.160     (27.498     (32.548     (29.984     (28.473

Interest Income

     7.134     5.904     3.194     0.984     (1.315
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other Income (Expense), Net

     (12.026     (21.594     (29.354     (29.000     (29.788

Income Before Income Taxes

     95.001     148.486     186.137     226.777     47.996

Income Tax Provision

     (12.940     (25.236     (21.681     (5.064     0.859
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive Income

     51.192     103.890     179.055     256.390     9.376  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive Income Attributable to Rayonier Operating Company LLC

   $ 42.046   $ 94.959   $ 164.280   $ 246.835     $ (3.651
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance Sheet Data:

          

Total Current Assets

   $ 125.674   $ 207.492   $ 134.963   $ 143.351     $ 103.214  

Total Assets

     2,860.695     2,780.303     2,809.915     2,664.305       2,313.465  

Total Current Liabilities

     148.143     60.493     124.721     137.106       93.694

Total Long-Term Debt

     648.958     648.764     1,007.285     1,015.530     772.572  

Total Member’s Equity and Noncontrolling Interests

     1,864.555     1,981.038     1,611.920     1,453.832     1,392.012  


 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF POPE

The following table presents selected historical consolidated financial data for Pope as of and for the years ended December 31, 2019, 2018, 2017, 2016, and 2015. This information has been derived from Pope’s audited financial statements.

You should read this information in conjunction with Pope’s consolidated financial statements and related notes thereto included in Pope’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in such Annual Report, which is incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 287 of this proxy statement/prospectus.

 

     As of and For the Year Ended December 31,  
($ in millions except per unit data)    2019     2018     2017     2016     2015  

Statement of Income Data:

          

Revenues

   $ 109.903     $ 103.554     $ 99.823     $ 80.428     $ 78.028  

Cost of Sales

     (79.184     (58.087     (57.984     (47.273     (46.604
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Margin

     27.95     43.91     41.91     41.22     40.27

Selling and Administrative Expense

     (12.139     (7.217     (5.742     (5.076     (4.972

Total Operating Costs and Expenses

     (34.804     (32.831     (24.334     (28.529     (19.644
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating Income

     (3.998     12.636       30.052       5.621       10.677  

Interest Expense

     (5.800     (5.322     (4.965     (4.150     (3.854

Interest Income

     0.003       0.132       0.003       0.011       0.024  

Other Income (Expense), Net

     (5.797     (4.895     (4.471     (3.406     (2.970
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income Before Income Taxes

     (9.795     7.741       25.581       2.215       7.707  

Income Tax Provision

     (0.159     (0.104     (1.176     (0.252     (0.207
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive Income

     (9.954     7.637       24.405       1.963       7.500  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive Income Attributable to Unitholders

   $ 2.435     $ 6.821     $ 17.891     $ 5.942     $ 10.943  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Per Common Unit Data:

          

Basic Earnings Per Unit

   $ 0.52     $ 1.54     $ 4.10     $ 1.35     $ 2.51  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted Earnings Per Unit

   $ 0.52     $ 1.54     $ 4.10     $ 1.35     $ 2.51  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance Sheet Data:

          

Total Current Assets

   $ 17.011     $ 20.366     $ 18.030     $ 32.206     $ 17.396  

Total Assets

     493.549       508.249       380.673       399.050       370.056  

Total Current Liabilities

     36.714       9.981       9.762       21.048       16.740  

Total Long-Term Debt

     128.751       151.241       127.328       125.291       84.537  

Total Partners’ Capital and Noncontrolling Interests

     318.993       338.600       240.626       248.464       263.066  


 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

The following table shows selected unaudited pro forma condensed consolidated financial information about the combined financial condition and operating results of Rayonier and Pope after giving effect to the merger. The unaudited pro forma condensed consolidated financial information assumes that the merger is accounted for as a business combination with Rayonier treated as the acquirer. The unaudited pro forma condensed consolidated balance sheet data has been prepared as if the merger occurred on December 31, 2019. The unaudited pro forma condensed consolidated statement of operations data has been prepared as if the merger had occurred on January 1, 2019. The summary unaudited pro forma condensed consolidated financial information listed below has been derived from and should be read in conjunction with (i) the more detailed unaudited pro forma condensed combined financial statements, including the notes thereto, appearing elsewhere in this proxy statement/prospectus and (ii) the condensed consolidated financial statements and the related notes of both Rayonier and Pope contained in their respective Annual Reports on Form 10-K for the year ended December 31, 2019, all of which are incorporated by reference into this proxy statement/prospectus. For more information, see “Unaudited Pro Forma Condensed Combined Financial Data” and “Where You Can Find More Information.”

The unaudited pro forma condensed consolidated financial information is presented for illustrative purposes only and is not necessarily indicative of the combined operating results or financial position that would have occurred if the merger had been consummated on the dates indicated and in accordance with the assumptions described herein, nor is it necessarily indicative of the future operating results or financial position of the combined company. The unaudited pro forma condensed consolidated statement of operations data does not give effect to any transaction or integration costs relating to the merger. In addition, as explained in more detail in the accompanying notes to the unaudited pro forma condensed combined financial information, the preliminary allocation of the pro forma purchase price reflected in the unaudited pro forma condensed consolidated financial information is subject to adjustment and may vary significantly from the definitive allocation of the final purchase price that will be recorded subsequent to completion of the merger. The determination of the final purchase price will be based on the number of Pope units outstanding and the trading price of Rayonier shares at closing.

RAYONIER INC.

Selected Unaudited Pro Forma Condensed Combined Financial Data

 

($ in millions)

   For the year ended
December 31, 2019
 

Operating Data:

  

Sales

   $ 821.5  

Cost of Sales

     (679.2
  

 

 

 

Gross Margin

     17.3
  

 

 

 

Net Income

     29.2  
  

 

 

 

Net Income Attributable to Rayonier, Inc.

   $ 31.6  
  

 

 

 

Balance Sheet Data:

  

Cash and cash equivalents

   $ 71.3  

Total Assets

   $ 3,905.7  

Total Liabilities

     1,700.4  

Total Noncontrolling Interest and Shareholders Equity

     2,205.3  


 

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RAYONIER OPERATING COMPANY LLC

Selected Unaudited Pro Forma Condensed Combined Financial Data

 

($ in millions)

   For the year ended
December 31, 2019
 

Operating Data:

  

Sales

   $ 821.5  

Cost of Sales

     (679.2
  

 

 

 

Gross Margin

     17.3
  

 

 

 

Net Income

     29.2  
  

 

 

 

Net Income Avaliable to Unitholders

   $ 33.0  
  

 

 

 

Balance Sheet Data:

  

Cash and cash equivalents

   $ 71.3  

Total Assets

     3,905.7  

Total Liabilities

     1,700.4  

Total Capital

     2,070.8  


 

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COMPARATIVE PER SHARE DATA

The following tables set forth historical per share or unit information of Rayonier and Pope, respectively, and preliminary unaudited pro forma condensed combined per share information after giving effect to the merger with Pope by Rayonier under the acquisition method of accounting. You should not rely on this information as being indicative of the historical results that would have been achieved had the companies always been combined or the future results that Rayonier will experience after the acquisition of Pope. The preliminary unaudited pro forma condensed combined per share data has been derived from and should be read in conjunction with the “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 260 and the related notes included in this proxy statement/prospectus beginning on page 262. The historical per share or unit data has been derived from the historical consolidated financial statements of Rayonier and Pope as of and for the periods indicated, incorporated by reference in this proxy statement/prospectus.

 

     Year Ended
December 31,
2019
 

Rayonier Historical Per Share Data

  

Earnings per share—basic

   $ 0.46  

Earnings per share—diluted

   $ 0.46  

Cash dividends declared per common share

   $ 1.08  

Book value per share

   $ 11.13  

 

     Year Ended
December 31,
2019
 

Pope Historical Per Unit Data

  

Earnings per unit—basic

   $ 0.52  

Earnings per unit—diluted

   $ 0.52  

Cash distributions declared per unit

   $ 4.00  

Book value per unit

   $ 9.90  

 

     Year Ended
December 31,
2019
 

Unaudited Pro Forma Combined Per Share Data for Rayonier

  

Earnings per share—basic

   $ 0.23  

Earnings per share—diluted

   $ 0.23  

Cash dividends declared per common share

   $ 1.08  

Book value per share(1)

   $ 11.85  

 

(1)

Based on the pro ration of cash, Rayonier common stock and Opco units issued in the merger would be equal to the amounts issued if every Pope unit received 2.751 shares of Rayonier common stock and $37.50 in cash.

 

     Year Ended
December 31,
2019
 

Unaudited Pro Forma Combined Per Unit Data for Pope (1)

  

Earnings per unit—basic

   $ 0.64  

Earnings per unit—diluted

   $ 0.64  

Cash dividends declared per unit

   $ 2.97  

Book value per unit

   $ 32.59  

 

(1)

The Pope unaudited pro forma equivalent data was calculated by multiplying the combine company unaudited pro forma data by the share exchange ratio.



 

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COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

Pope units trade on the NASDAQ under the symbol “POPE” and Rayonier shares trades on the NYSE under the symbol “RYN.” The following table sets forth the high and low reported sale prices per Pope unit of Pope units and Rayonier shares, and the cash dividends declared per unit/share for the periods indicated.

Pope

 

Quarter Data

   High Trading Price      Low Trading Price      Dividend Paid  

Third Quarter 2015 Fiscal Year

   $ 70.50      $ 59.95      $ 0.70  

Fourth Quarter 2015 Fiscal Year

   $ 68.72      $ 58.15      $ 0.70  

First Quarter 2016 Fiscal Year

   $ 68.77      $ 51.50      $ 0.70  

Second Quarter 2016 Fiscal Year

   $ 70.06      $ 57.15      $ 0.70  

Third Quarter 2016 Fiscal Year

   $ 68.95      $ 62.66      $ 0.70  

Fourth Quarter 2016 Fiscal Year

   $ 67.95      $ 63.90      $ 0.70  

First Quarter 2017 Fiscal Year

   $ 75.72      $ 64.95      $ 0.70  

Second Quarter 2017 Fiscal Year

   $ 79.50      $ 68.75      $ 0.70  

Third Quarter 2017 Fiscal Year

   $ 76.00      $ 68.36      $ 0.70  

Fourth Quarter 2017 Fiscal Year

   $ 73.44      $ 69.30      $ 0.70  

First Quarter 2018 Fiscal Year

   $ 71.00      $ 66.60      $ 0.70  

Second Quarter 2018 Fiscal Year

   $ 73.50      $ 68.52      $ 0.70  

Third Quarter 2018 Fiscal Year

   $ 73.50      $ 70.05      $ 0.80  

Fourth Quarter 2018 Fiscal Year

   $ 73.25      $ 62.50      $ 1.00  

First Quarter 2019 Fiscal Year

   $ 71.70      $ 63.50      $ 1.00  

Second Quarter 2019 Fiscal Year

   $ 70.27      $ 65.50      $ 1.00  

Third Quarter 2019 Fiscal Year

   $ 87.00      $ 65.50      $ 1.00  

Fourth Quarter 2019 Fiscal Year

   $ 98.72      $ 69.50      $ 1.00  

First Quarter 2020 Fiscal Year through March 31, 2020

   $ 138.99      $ 71.30      $ 1.00  

Rayonier

 

Quarter Data

   High Trading Price      Low Trading Price      Dividend Paid  

Third Quarter 2015 Fiscal Year

   $ 26.49      $ 21.84      $ 0.25  

Fourth Quarter 2015 Fiscal Year

   $ 24.83      $ 21.83      $ 0.25  

First Quarter 2016 Fiscal Year

   $ 24.80      $ 17.85      $ 0.25  

Second Quarter 2016 Fiscal Year

   $ 26.37      $ 24.01      $ 0.25  

Third Quarter 2016 Fiscal Year

   $ 28.16      $ 25.50      $ 0.25  

Fourth Quarter 2016 Fiscal Year

   $ 28.47      $ 25.24      $ 0.25  

First Quarter 2017 Fiscal Year

   $ 29.86      $ 26.54      $ 0.25  

Second Quarter 2017 Fiscal Year

   $ 29.47      $ 26.84      $ 0.25  

Third Quarter 2017 Fiscal Year

   $ 29.75      $ 27.71      $ 0.25  

Fourth Quarter 2017 Fiscal Year

   $ 31.91      $ 28.78      $ 0.25  

First Quarter 2018 Fiscal Year

   $ 36.31      $ 30.38      $ 0.25  

Second Quarter 2018 Fiscal Year

   $ 39.73      $ 34.66      $ 0.27  

Third Quarter 2018 Fiscal Year

   $ 39.68      $ 33.38      $ 0.27  

Fourth Quarter 2018 Fiscal Year

   $ 32.97      $ 26.30      $ 0.27  

First Quarter 2019 Fiscal Year

   $ 31.80      $ 26.39      $ 0.27  

Second Quarter 2019 Fiscal Year

   $ 33.92      $ 27.87      $ 0.27  

Third Quarter 2019 Fiscal Year

   $ 31.35      $ 25.83      $ 0.27  

Fourth Quarter 2019 Fiscal Year

   $ 33.09      $ 26.66      $ 0.27  

First Quarter 2020 Fiscal Year through March 31, 2020

   $ 33.10      $ 15.96      $ 0.27  


 

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On January 14, 2020, the last full trading day before the public announcement of the merger agreement, the closing sale price of a Pope unit on the NASDAQ was $93.45. On April 3, 2020, the last practicable trading day before the mailing of this proxy statement/prospectus, the closing sale price of a Pope unit on the NASDAQ was $89.06.

On January 14, 2020, the last full trading day before the public announcement of the merger agreement, the closing sale price of a Rayonier share on the NYSE was $32.75. On April 3, 2020, the last practicable trading day before the mailing of this proxy statement/prospectus, the closing sale price of a Rayonier share on the NYSE was $22.15. Opco units are not publicly traded.

As of April 3, 2020, the last date prior to mailing this proxy statement/prospectus for which it was practicable to obtain this information for Pope, there were approximately 198 registered Pope unitholders. As of April 2, 2020, the last date prior to mailing of this proxy statement/prospectus for which it was practicable to obtain this information for Rayonier, there were approximately 5,312 registered holders of Rayonier shares.



 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained or incorporated by reference in this proxy statement/prospectus are “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally are accompanied by words such as “will,”, “expect,” “outlook,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” or other similar words, phrases or expressions and variations or negatives of these words. Forward-looking statements by their nature address matters that are, to different degrees, uncertain, such as statements regarding the estimated or anticipated future results of Rayonier or Opco, and of the combined company following Rayonier’s business combination with Pope, the anticipated benefits of the proposed combination, including estimated synergies, the expected timing of completion of the merger and other statements that are not historical facts. These statements are based on the current expectations of Rayonier and Pope management and are not predictions of actual performance.

These statements are subject to a number of risks and uncertainties regarding Rayonier’s, Opco’s and Pope’s respective businesses and the proposed business combination, which could cause actual future results and financial performance to vary significantly from those anticipated in such statements. The forward-looking statements include assumptions about Rayonier’s, Rayonier, L.P.’s and Pope’s operations, such as cost controls and market conditions, and certain plans, activities or events which Rayonier, Rayonier, L.P., and Pope expects will or may occur in the future and relate to, among other things, the business combination transaction involving Rayonier and Pope, the benefits, results, effects and timing of the proposed transaction, future financial and operating results, and the combined company’s plans, objectives, expectations (financial or otherwise) and intentions.

These risks and uncertainties related to the proposed merger include, among others: (i) the ability of the parties to successfully complete the proposed acquisition on anticipated terms and timing, including obtaining required unitholder and regulatory approvals, anticipated tax treatment, unforeseen liabilities, future capital expenditures, revenues, expenses, earnings, synergies, economic performance, indebtedness, financial condition, losses, future prospects, business and management strategies for the management, expansion and growth of the new combined company’s operations and other conditions to the completion of the acquisition; (ii) risks relating to the integration of Pope’s operations and employees into Rayonier and the possibility that the anticipated synergies and other benefits of the proposed acquisition will not be realized or will not be realized within the expected timeframe; (iii) the outcome of any legal proceedings related to the proposed mergers; (iv) access to available financing, including for the refinancing of Pope’s and Rayonier’s debt on a timely basis and reasonable terms; (v) the loss of key senior management or other associates; (vi) the cyclical and competitive nature of the industries in which the parties operate; (vii) fluctuations in demand for, or supply of, Rayonier’s, ROC’s and Pope’s forest products and real estate offerings; (viii) entry of new competitors into Rayonier’s, ROC’s and Pope’s markets; changes in global economic conditions and world events; fluctuations in demand for Rayonier’s, ROC’s and Pope’s products in Asia, and especially China; (ix) various lawsuits relating to matters arising out of Rayonier’s previously announced internal review and restatement of Rayonier’s consolidated financial statements; (x) the uncertainties of potential impacts of climate-related initiatives; (xi) the cost and availability of third party logging and trucking services; (xii) the geographic concentration of a significant portion of the combined company’s timberland; (xiii) the ability to identify, finance and complete timberland acquisitions; (xiv) changes in environmental laws and regulations regarding timber harvesting, delineation of wetlands, and endangered species, that may restrict or adversely impact the ability to conduct business, or increase the cost of doing so; (xv) adverse weather conditions, natural disasters and other catastrophic events such as hurricanes, wind storms and wildfires, which can adversely affect timberlands and the production, distribution and availability of products; (xvi) interest rate and currency movements; (xvii) Rayonier’s, Opco’s or Pope’s capacity to incur additional debt; (xviii) changes in tariffs, taxes or treaties relating to the import and export of timber products or those of the products of competitors; (xix) changes in key management and personnel; (xx) the



 

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ability to meet all necessary legal requirements for Rayonier to continue to qualify as a real estate investment trust and changes in tax laws that could adversely affect beneficial tax treatment; (xxi) the cyclical nature of the real estate business generally; (xxii) a delayed or weak recovery in the housing market; (xxiii) the lengthy, uncertain and costly process associated with the ownership, entitlement and development of real estate, especially in Florida, which also may be affected by changes in law, policy and political factors beyond Rayonier’s, Opco’s and Pope’s control; (xxiv) unexpected delays in the entry into or closing of real estate transactions; (xxv) changes in environmental laws and regulations that may restrict or adversely impact the ability to sell or develop properties; (xxvi) the timing of construction and availability of public infrastructure; (xxvii) and the availability of financing for real estate development and mortgage loans; (xxviii) the effect of the COVID-19 pandemic and related economic consequences, including the potential effects of such events on the market for timber products and general economic and political conditions (including debt and equity capital markets); (xxix) the potential impact of the announcement of the proposed transaction or consummation of the proposed transaction on relationships, including with employees and customers; (xxx) the unfavorable outcome of any legal proceedings that have been or may be instituted against Rayonier, Opco or Pope; (xxxi) the amount of the costs, fees, expenses and charges related to the proposed transaction and the actual terms of the financings that may be obtained in connection with the proposed transaction; and (xxxii) the risk that the stock price of Rayonier shares may change prior to the merger effective time.

Consequently, all of the forward-looking statements made by Pope, Rayonier or Rayonier, L.P. contained or incorporated by reference in this proxy statement/prospectus are qualified by factors, risks and uncertainties, including, but not limited to, those set forth under the headings titled “Risk Factors” beginning on page 39 of this proxy statement/prospectus and those set forth under the headings “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” in Pope’s and Rayonier’s annual and quarterly reports and other filings with the SEC that are incorporated by reference into this proxy statement/prospectus. See the section entitled “Where You Can Find More Information” beginning on page 287 of this proxy statement/prospectus.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Pope, Rayonier and Opco undertake no obligation, except as may be required by law, to update or revise any forward-looking statements, even if experience or future changes make it clear that projected results expressed or implied in such statements will not be realized. As a result of these risks and others, actual results could vary significantly from those anticipated herein, and Pope’s, Rayonier’s and Opco’s financial condition and results of operations could be materially adversely affected.



 

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RISK FACTORS

In addition to the other information contained or incorporated by reference into this proxy statement/prospectus, including the matters addressed in “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 37 of this proxy statement/prospectus, Pope unitholders should carefully consider the following risk factors in determining whether to vote for the approval of the merger agreement. Because Pope unitholders may receive Rayonier shares and Opco units in the merger, they should also consider the risks associated with each of the businesses of Rayonier and Pope because these risk factors may affect the operations and financial results of the combined company. Rayonier and Opco will be operated as one business, and, after the closing of the merger, Pope will be part of that business. These risk factors may be found under Item 1A. “Risk Factors” in Rayonier’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, Pope’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and in future Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q filed by Pope and Rayonier and incorporated by reference into this proxy statement/prospectus. All of the “Risk Factors” in Rayonier’s annual and quarterly reports, and incorporated herein by reference, apply equally to the ownership of Rayonier shares and Opco units. See the section entitled “Where You Can Find More Information” beginning on page 287 of this proxy statement/prospectus.

Risks Relating to the Merger

Because the amount of consideration is fixed and the elections that will be made by other unitholders is not yet known, you cannot be sure what merger consideration you will receive.

Each Pope unitholder (other than Rayonier, ROC or certain of their controlled affiliates) may elect to receive, for each Pope unit that they hold: (i) $125.00 in cash, referred to as the cash election; (ii) 3.929 Rayonier shares, referred to as the stock election; or (iii) 3.929 Opco units, referred to as the Opco election. Pope unitholders that do not make a valid election will be treated as if they made the stock election.

Pope unitholders’ elections will be subject to proration so that approximately 70% of the Pope units that will be converted into merger consideration will be exchanged for Rayonier shares or Opco units and approximately 30% of the Pope units that will be converted into merger consideration will be exchanged for cash. Accordingly, the aggregate amount of Rayonier shares and Opco units, on the one hand, and cash, on the other hand, that will be issued in the merger will equal the amounts issued as if every Pope unit converted into merger consideration would receive 2.751 Rayonier shares or Opco units and $37.50 in cash.

As a result of this proration and the fact that it will depend on the number of elections that are made by the Pope unitholders and whether the election that you make is oversubscribed, you will not know the precise merger consideration that you will receive at the time that you make an election.

The aggregate number of Rayonier shares and Opco units that will be issued in the merger is fixed and will not change based on the market price of Rayonier shares. Pope unitholders cannot be certain of the market value of the consideration they will receive in exchange for their Pope units to the extent that they receive Rayonier shares or Opco units in the merger or the value of Rayonier shares or Opco units thereafter.

In connection with the merger, Pope unitholders will receive, at their election, the cash election consideration, the stock election consideration or the Opco election consideration. The stock election consideration and Opco election consideration provide for a fixed number of Rayonier shares or Opco units for each Pope unit. In addition, if the cash election is oversubscribed, Pope unitholders that make the cash election will also receive a fixed number of Rayonier shares or Opco units. Because the number of Rayonier shares being offered in the merger will not vary based on the market value of Rayonier shares, the market value of the merger consideration that you will receive in the merger that is based on the value of Rayonier shares will vary based on the price of such stock at the time you receive the merger consideration. The market price of Rayonier shares

 

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may decline after the date of this proxy statement/prospectus, after you elect your preferred form of merger consideration and/or after the merger is completed. There will be no trading market for Opco units, but to the extent that some value the Opco units as being equal to the market value of Rayonier shares, the number of Opco units being offered in the merger similarly will not vary based on the market value of Rayonier shares and the value of the Opco units may decline after the date of this proxy statement/prospectus, after you elect your preferred form of merger consideration and/or after the merger is completed.

A decline in the market price of Rayonier shares could result from a variety of factors, some of which are beyond Rayonier’s control, including, among other things, those factors described below under the risk factor entitled “—The market price of Rayonier shares after the merger will continue to fluctuate and may be affected by factors different from those affecting shares of Pope units currently.”

See “Comparative Per Share Market Price and Dividend Information” of this proxy statement/prospectus. You are urged to obtain current market quotations for Rayonier shares and Pope units.

The market price of Rayonier shares after the merger will continue to fluctuate and may be affected by factors different from those currently affecting shares of Pope units.

The trading price of Rayonier shares has fluctuated in the past. The trading price of Rayonier shares could fluctuate significantly in the future and could be negatively affected in response to various factors, including:

 

   

market conditions in the broader stock market in general, as well as conditions in markets outside of the United States in which Rayonier operates;

 

   

the effect of the COVID-19 pandemic and related economic consequences, including the potential effects of such events on the market for timber products and debt and equity capital markets;

 

   

Rayonier’s ability to make investments with attractive risk-adjusted returns;

 

   

market perception of Rayonier’s current and projected financial condition, potential growth, future earnings and future cash dividends;

 

   

announcements Rayonier makes regarding dividends;

 

   

actual or anticipated fluctuations in Rayonier’s quarterly financial and operating results;

 

   

actions by rating agencies;

 

   

short sales of Rayonier shares;

 

   

any decision to pursue a distribution or disposition of a meaningful portion of Rayonier’s assets;

 

   

issuance of new or changed securities analysts’ reports or recommendations;

 

   

market perception or media coverage of Rayonier or other similar companies;

 

   

the outlook of the markets and industries in which Rayonier competes;

 

   

major reductions in trading volumes on the exchanges on which Rayonier operates;

 

   

legislative or regulatory developments, including changes in the status of Rayonier’s regulatory approvals or licenses; and

 

   

litigation and governmental investigations involving Rayonier.

Upon completion of the merger, Pope unitholders may become holders of Rayonier shares. The market price of Rayonier shares may fluctuate significantly following consummation of the merger and holders of Rayonier shares could lose the value of their investment in Rayonier shares if, among other things, the combined company is unable to achieve the expected growth in earnings, or if the operational cost savings estimates in connection

 

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with the integration of Rayonier’s and Pope’s businesses are not realized, or if the transaction costs relating to the merger are greater than expected. The market price also may decline if the combined company does not achieve the perceived benefits of the merger as rapidly or to the extent anticipated by financial or industry analysts or if the effect of the merger on the combined company’s financial position, results of operations or cash flows is not consistent with the expectations of financial or industry analysts. In addition, Rayonier’s business differs from that of Pope, and accordingly, the results of operations of the combined company and the market price of Rayonier shares after the completion of the merger may be affected by factors different from those currently affecting the independent results of operations of each of Rayonier’s and Pope’s businesses. For a discussion of the businesses of Rayonier and Pope and of some important factors to consider in connection with those businesses, see the documents incorporated by reference into this proxy statement/prospectus and referred to under “Where You Can Find More Information” beginning on page 287 of this proxy statement/prospectus.

When the market price of a stock has been volatile or has decreased significantly in the past, holders of that stock have, at times, instituted securities class action litigation against the company that issued the stock. If any of Rayonier’s shareholders brought a lawsuit against Rayonier, Rayonier could incur substantial costs defending, settling or paying any resulting judgments related to the lawsuit. Such a lawsuit could also divert the time and attention of Rayonier’s management from Rayonier’s business and reduce Rayonier’s share price.

Sales of Rayonier shares after the completion of the merger may cause the market price of Rayonier shares to fall.

Rayonier could issue approximately 17.3 million shares, including share equity awards, in connection with the merger, based on the number of outstanding shares, including restricted Pope units as of January 14, 2020. Many Pope unitholders may decide not to hold the Rayonier shares they may receive in the merger. Other Pope unitholders, such as funds with limitations on their permitted holdings of stock in individual issuers, may be required to sell the Rayonier shares that they may receive in the merger. Such sales of Rayonier shares could have the effect of depressing the market price for Rayonier shares and may take place promptly following the merger.

In addition, in the future Rayonier may issue additional securities to raise capital. Rayonier may also acquire interests in other companies by using a combination of cash and Rayonier shares and Opco units or just Rayonier shares and/or Opco units. Rayonier may also issue securities convertible into Rayonier shares.

Any of these events may dilute your ownership interest in Rayonier and have an adverse impact on the price of Rayonier shares.

Completion of the merger is subject to conditions, and if these conditions are not satisfied or waived, the merger will not be completed.

The obligations of Rayonier and Pope to complete the merger are subject to satisfaction or waiver of a number of conditions, including approval of the merger agreement by the Pope unitholders, the accuracy of the representations and warranties of the other party under the merger agreement (subject to the materiality standards set forth in the merger agreement) and the performance by the other party of its respective obligations under the merger agreement in all material respects. See the section entitled “The Merger Agreement—Conditions to Completion of the Merger” beginning on page 124 of this proxy statement/prospectus.

The failure to satisfy any required condition could delay the completion of the merger for a significant period of time or prevent it from occurring. If the merger is not completed, Pope’s ongoing business may be materially adversely affected and, without realizing any of the benefits of having completed the merger, Pope will be subject to a number of risks, including the following:

 

   

the market price of Pope units could decline;

 

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if the merger agreement is terminated and the Pope board seeks another business combination, Pope unitholders cannot be certain that they will be able to find a party willing to enter into a transaction on terms equivalent to or more attractive than the terms that Rayonier has agreed to in the merger agreement;

 

   

time and resources, financial and other, committed by Pope’s management to matters relating to the merger could otherwise have been devoted to pursuing other beneficial opportunities for Pope;

 

   

Pope may experience negative reactions from the financial markets or from Pope’s customers or employees; and

 

   

Pope will be required to pay its respective costs relating to the merger, including legal, accounting, financial advisory, financing and printing fees, whether or not the merger is completed.

In addition, if the merger is not completed, either party could be subject to litigation related to any failure to complete the merger or related to any enforcement proceeding commenced against either party to perform its obligations under the merger agreement. The materialization of any of these risks could materially and adversely impact the parties’ ongoing business.

Similarly, any delay in completing the merger could, among other things, result in additional transaction costs, loss of revenue or other negative effects associated with uncertainty about completion of the merger and cause Pope not to realize some or all of the benefits that Pope expects to achieve if the merger is successfully completed within their expected timeframe. There can be no assurance that the conditions to the closing of the merger will be satisfied or waived or that the merger will be consummated. See the risk factor entitled “—Failure to complete the merger could negatively impact the unit price and the future business and financial results of Pope” below.

Each party is subject to business uncertainties while the proposed merger is pending, which could adversely affect each party’s or the combined company’s business and operations.

In connection with the pendency of the merger, it is possible that some customers, suppliers and other persons with whom Rayonier or Pope have a business relationship may delay or defer certain business decisions or might decide to seek to terminate, change or renegotiate their relationships with Rayonier or Pope, as the case may be, as a result of the merger, which could negatively affect Rayonier’s or Pope’s respective revenues, earnings and cash flows, regardless of whether the merger is completed. If the merger is completed, such terminations, changes or renegotiations could negatively affect the revenues, earnings and cash flows of the combined company.

These risks may be exacerbated by delays or other adverse developments with respect to the completion of the merger.

Pope’s executive officers and directors have interests in the merger that may be different from, or in addition to, your interests as a Pope unitholder.

When considering the recommendation of the Pope board that Pope unitholders approve the merger agreement, Pope unitholders should be aware that directors and executive officers of Pope have certain interests in the transactions contemplated by the merger agreement, including the merger, that may be different from, or in addition to, the interests of Pope unitholders and Rayonier shareholders generally. These interests include, among others, the cash consideration payable in connection with the GP mergers, potential severance benefits and other payments, treatment of outstanding equity awards pursuant to the merger agreement and Pope’s equity plan and rights to ongoing indemnification and insurance coverage by the surviving company for acts or omissions occurring prior to the merger. See the section entitled “Interests of Pope’s Directors and Executive Officers in the Merger” beginning on page 128 of this proxy statement/prospectus for a more detailed description of these interests. As a result of these interests, these directors and executive officers of Pope might be more likely to

 

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support and to vote in favor of the proposals described in this proxy statement/prospectus than if they did not have these interests. Pope unitholders should consider whether these interests might have influenced these directors and executive officers to recommend approval of the merger agreement.

The merger agreement limits Pope’s ability to pursue alternatives to the merger and may discourage other companies from trying to acquire Pope for greater consideration than what Rayonier has agreed to pay.

The merger agreement contains provisions that make it more difficult for Pope to sell its business to a person other than Rayonier. These provisions include a general prohibition on Pope soliciting any acquisition proposal or offer for an alternative transaction. In some circumstances upon termination of the merger agreement, Pope may be required to pay to Rayonier a termination fee of $20 million. Further, there are only limited exceptions to Pope’s agreement that the Pope board will not withdraw or modify in a manner adverse to Rayonier the recommendation of the Pope board in favor of the approval of the merger agreement.

These provisions might discourage a third-party that has an interest in acquiring all or a significant part of Pope from considering or proposing that acquisition, even if that party were prepared to pay consideration with a higher per Pope unit cash or market value than the market value proposed to be received or realized in the merger, or might result in a potential competing acquiror proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee.

Certain voting agreements between Pope unitholders and Rayonier may discourage other companies from trying to acquire Pope for greater consideration than what Rayonier has agreed to pay.

As a condition to entering into the merger agreement with Pope, Rayonier required certain Pope unitholders holding approximately 17% of Pope’s outstanding units as of January 14, 2020 to agree to support and vote in favor of the merger agreement at the special meeting. Unless the merger agreement is terminated and subject to certain limited exceptions, these unitholders have irrevocably agreed to vote in favor of the merger agreement at the special meeting. This fact might discourage a third-party that has an interest in acquiring all or a significant part of Pope from considering or proposing that acquisition, even if that party were prepared to pay consideration with a higher per Pope unit cash or market value than the market value proposed to be received or realized in the merger, or might result in a potential competing acquirer proposing to pay a lower price than it might otherwise have proposed to pay because the likelihood of receiving majority support for its proposal from Pope unitholders will be decreased by the support agreements.

Failure to complete the merger could negatively affect the unit price and the future business and financial results of Pope.

If the mergers are not completed for any reason, including as a result of Pope’s unitholders failing to approve the merger agreement, the ongoing business of Pope may be adversely affected and, without realizing any of the benefits of having completed the merger, Pope would be subject to a number of risks, including the following:

 

   

Pope may experience negative reactions from the financial markets, including negative impacts on its unit price;

 

   

Pope may experience negative reactions from its customers, suppliers and employees;

 

   

the merger agreement places certain restrictions on the conduct of Pope’s businesses prior to completion of the merger. Such restrictions, the waiver of which is subject to the consent of Rayonier (not to be unreasonably withheld, conditioned or delayed), may prevent Pope from making certain acquisitions or taking certain other specified actions during the pendency of the merger that may be beneficial to Pope (see the section entitled “The Merger Agreement—Conduct of Businesses of Pope and Rayonier Prior to Completion of the Merger” beginning on page 115 of this proxy statement/prospectus for a description of the restrictive covenants applicable to Pope); and

 

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matters relating to the merger (including integration planning) will require substantial commitments of time and resources by Pope management, which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to Pope as an independent company.

In addition to the above risks, Pope may be required, under certain circumstances, to pay to Rayonier a termination fee of $20 million, which may adversely affect Pope’s financial results. Further, Pope could be subject to litigation related to any failure to complete the merger or related to any enforcement proceeding commenced against Pope to perform its obligations under the merger agreement. If the merger is not completed, these risks may materialize and may adversely affect Pope’s businesses, financial condition, financial results and unit price.

The Rayonier shares or Opco units to be received by Pope unitholders as a result of the merger will have rights different from the Pope units.

Upon completion of the merger, Pope unitholders will no longer be unitholders of Pope but may instead become holders of Rayonier shares or Opco units, and their rights as shareholders or unitholders will be governed by the terms of the Rayonier charter and by-laws and by North Carolina corporate law or by Opco’s limited partnership agreement and the DRULPA, as applicable. The terms of the Rayonier charter and by-laws or Rayonier, L.P. limited partnership agreement are in some respects different from the terms of the Pope limited partnership agreement, which currently govern the rights of Pope unitholders. See the section entitled “Comparison of Shareholders’/Unitholders’ Rights” beginning on page 279 of this proxy statement/prospectus for a discussion of the different rights associated with Rayonier shares and Opco units.

After the merger, Pope unitholders will have a significantly lower ownership and voting interest in Rayonier than they currently have in Pope and therefore may exercise less influence over management.

Based on the number of shares of Pope units outstanding as of January 14, 2020, and the number of Rayonier shares outstanding as of January 14, 2020, it is expected that, immediately after completion of the merger, former Pope unitholders will own approximately 9% of the outstanding Rayonier shares (including Opco units exchangeable into Rayonier shares) immediately after the completion of the merger. Consequently, former Pope unitholders may have less influence over the management and policies of Rayonier than they currently have over the management and policies of Pope.

The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus is preliminary and the actual financial condition and results of operations after the merger may differ materially.

The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what Rayonier’s and Opco’s actual financial condition or results of operations would have been had the merger and the related financing transactions been completed on the dates indicated. The unaudited pro forma condensed combined financial information reflects adjustments, which are based upon assumptions, preliminary estimates and accounting reclassifications, to record the Pope identifiable assets acquired and liabilities assumed at fair value and the resulting goodwill recognized. The purchase price allocation reflected in the unaudited pro forma condensed combined financial information in this proxy statement/prospectus is preliminary, and final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of Pope as of the date of the completion of the merger. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in the unaudited pro forma condensed combined financial information in this proxy statement/prospectus. For more information, see “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 245.

 

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The unaudited prospective financial information of Pope included in this proxy statement/prospectus involves risks, uncertainties and assumptions, many of which are beyond the control of Pope. As a result, it may not prove to be accurate and is not necessarily indicative of current values or future performance.

The unaudited prospective financial information of Pope contained in “The Merger—Certain Unaudited Prospective Financial Information” and referred to in “The Merger—Opinion of the Pope Special Committee’s Financial Advisor” involves risks, uncertainties and assumptions and is not a guarantee of future performance. The future financial results of Pope may materially differ from those expressed in the unaudited prospective financial information due to factors that are beyond Pope’s ability to control or predict. Pope cannot provide any assurance that Pope’s unaudited prospective financial information will be realized or that Pope’s future financial results will not materially vary from the unaudited prospective financial information. The unaudited prospective financial information covers multiple years, and the information by its nature becomes subject to greater uncertainty with each successive year. The unaudited prospective financial information does not reflect Pope’s current estimates and does not take into account any circumstances or events occurring after the date it was prepared.

More specifically, the unaudited prospective financial information:

 

   

necessarily makes numerous assumptions, many of which are beyond the control of Pope and may not prove to be accurate;

 

   

does not necessarily reflect revised prospects for Pope’s business, changes in general business or economic conditions, or any other transaction or event that has occurred or that may occur and that was not anticipated at the time the unaudited prospective financial information was prepared;

 

   

is not necessarily indicative of current values or future performance, which may be significantly more favorable or less favorable than is reflected in the unaudited prospective financial information; and

 

   

should not be regarded as a representation that the unaudited prospective financial information will be achieved.

The unaudited prospective financial information was not prepared with a view toward public disclosure or compliance with published guidelines of the SEC or the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information or GAAP and does not reflect the effect of any proposed or other changes in GAAP that may be made in the future.

Lawsuits may be filed against Pope, Rayonier and their and their affiliates’ directors and officers challenging the merger agreement and transactions contemplated thereby, including the merger, and an adverse ruling in such lawsuits may prevent the merger from becoming effective or from becoming effective within the expected timeframe.

Rayonier and Pope and their respective directors and officers may be named as defendants in putative class action lawsuits brought by purported Pope unitholders challenging the transactions contemplated by the merger agreement, including the merger, and seeking, among other things, equitable relief to enjoin consummation of the merger, rescission of the merger and/or rescissionary damages. Under the terms of the merger agreement, one of the conditions to the completion of the merger is that no injunction by any court of competent jurisdiction or other governmental authority will be in effect that restrains, prohibits or makes illegal the consummation of the transactions contemplated by the merger agreement, including the merger. As such, if any such lawsuits are filed and any potential plaintiffs are successful in obtaining an injunction prohibiting the consummation of the transactions contemplated by the merger agreement, including the merger, then such injunction may prevent the merger from becoming effective or from becoming effective within the expected timeframe.

As of the date of this proxy statement/prospectus, two putative stockholder class action lawsuits have been filed by purported Pope unitholders challenging the disclosures made in connection with the merger. The

 

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lawsuits seek to enjoin the merger, to recover damages if the merger is consummated, attorneys’ fees, and other relief. Additional lawsuits arising out of the merger may be filed in the future. For a more detailed description of litigation in connection with the merger, see “The Merger—Litigation Relating to the Merger” beginning on page 109 of this proxy statement/prospectus.

The outcome of these lawsuits or any other lawsuit that may be filed challenging the merger is uncertain. One of the conditions to the closing of the merger is that no governmental authority has issued or entered any order after the date of the merger agreement having the effect of enjoining or otherwise prohibiting the consummation of the merger. Accordingly, if these lawsuits or any future lawsuit is successful in obtaining any order enjoining consummation of the merger, then such order may prevent the merger from being consummated, or from being consummated within the expected time frame, and could result in substantial costs to Pope and Rayonier, including but not limited to, costs associated with the indemnification of directors and officers. Any such injunction or delay in the merger being completed may adversely affect Pope’s or Rayonier’s business, financial condition, results of operations, and cash flows.

Uncertainties associated with the merger may cause a loss of management personnel and other key employees of Pope or Rayonier, which could adversely affect the future business and operations of the combined company following the merger.

Rayonier and Pope are dependent on the experience and industry knowledge of their respective officers and other key employees to execute their respective business plans. The combined company’s success after the merger will depend in part upon its ability to retain key management personnel and other key employees of Rayonier and Pope. Current and prospective employees of Rayonier and Pope may experience uncertainty about their future roles with the combined company following the merger, which may materially adversely affect the ability of each of Rayonier and Pope to attract and retain key personnel during the pendency of and after the merger. Accordingly, no assurance can be given that the combined company will be able to retain key management personnel and other key employees of Rayonier and Pope.

Completion of the merger may trigger change in control or other provisions in certain agreements to which Pope is a party.

The completion of the merger may trigger change in control or other provisions in certain agreements to which Pope is a party. If Rayonier or Pope are unable to negotiate waivers of those provisions, the counterparties may exercise their rights and remedies under the agreements, potentially terminating the agreements or seeking monetary damages. Even if Rayonier or Pope are able to negotiate waivers, the counterparties may require a fee for such waivers or seek to renegotiate the agreements on terms less favorable to Pope.

Risks Relating to Business of the Combined Company

You should consider the risks associated with each of the businesses of Rayonier and Pope found under Item 1A. “Risk Factors” in Rayonier’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, Pope’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and in future Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q filed by Pope and Rayonier, all of which are incorporated by reference into this proxy statement/prospectus. All of the risks associated with the business of Rayonier set forth in such Annual Report apply equally to the ownership of Rayonier shares and Opco units. See the section entitled “Where You Can Find More Information” beginning on page 287 of this proxy statement/prospectus.

Recent social, geopolitical and securities markets effects associated with the COVID-19 pandemic may pose risks to Pope, Rayonier, or both.

Both Pope and Rayonier conduct significant portions of their operations outside the United States, with Rayonier having timberlands in New Zealand and both companies having substantial portions of their sales derived from Japan, Korea and China. The recent, rapid expansion of COVID-19, commonly known as

 

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coronavirus, has created significant uncertainties in U.S. and global markets and has been associated with a substantial increase in price volatility among publicly traded securities. In particular, Pope derived some 6% of its fiscal 2019 sales from exports to China, where COVID-19 was initially discovered and where its effects have been most pronounced. Further, there have been a significant number of reported cases of coronavirus in the United States, with the Puget Sound region of Washington State, where a substantial majority of Pope’s timberlands, and a significant portion of Rayonier’s timberlands, are located having among the highest incident of both infection and deaths of any region in the United States. The ultimate risk posed by coronavirus remains highly uncertain; however, reports as of the date of this proxy statement/prospectus suggest that COVID-19 spreads more quickly and has a higher mortality rate than flu-like epidemics of the recent past. COVID-19 therefore poses a material risk to the business, financial condition and results of operation of both Pope and Rayonier and potentially could create risks for the combined company, including:

 

   

risks to the capital markets that may delay or prevent the completion of any securities offering that Rayonier may seek to use to finance the merger;

 

   

effects on key employees, including operational management personnel and those charged with preparing, monitoring and evaluating the companies’ financial reporting and internal controls;

 

   

declines in production owing to the effects on contract logging operations, transportation and other critical third-party providers;

 

   

declines in demand resulting from adverse impacts of the disease on building construction, particularly in critical markets such as China; and

 

   

increasing or protracted volatility in the prices of both Rayonier’s and Pope’s equity securities.

These factors, together or in combination with other events or occurrences not yet known or anticipated, could adversely affect the value of the merger consideration or could delay or prevent the consummation of the merger and the related transactions.

Combining the two companies may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the merger may not be realized.

Rayonier and Pope have operated and, until the completion of the merger, will continue to operate, independently. The success of the merger, including anticipated benefits and cost savings, will depend, in part, on Rayonier’s ability to successfully combine and integrate Pope’s business with Rayonier’s existing business.

The merger will involve the integration of Pope’s business with Rayonier’s existing business, which is a complex, costly and time-consuming process. It is possible that the pendency of the merger and/or the integration process could result in material challenges, including, without limitation:

 

   

the diversion of management’s attention from ongoing business concerns and performance shortfalls at one or both of the companies as a result of the devotion of management’s attention to the merger;

 

   

managing a larger combined company;

 

   

maintaining employee morale and retaining key management and other employees;

 

   

attracting and recruiting prospective employees;

 

   

the possibility of faulty assumptions underlying expectations regarding the integration process;

 

   

retaining existing business and operational relationships and attracting new business and operational relationships;

 

   

consolidating corporate and administrative infrastructures and eliminating duplicative operations and inconsistencies in standards, controls, procedures and policies;

 

   

coordinating geographically separate organizations;

 

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unanticipated issues in integrating information technology, communications and other systems;

 

   

litigation challenging the merger; and

 

   

unforeseen expenses or delays associated with the merger.

Many of these factors will be outside of the combined company’s control and any one of them could result in delays, increased costs, decreases in revenues and diversion of management’s time and energy from ongoing business concerns, which could materially affect the combined company’s financial position, results of operations and cash flows.

If Rayonier experiences difficulties with the integration process, the anticipated benefits of the merger may not be realized fully or at all, or may take longer to realize than expected. These integration matters could have an adverse effect on (i) each of Rayonier and Pope during this transition period and (ii) the combined company for an undetermined period after completion of the merger. In addition, the actual cost savings of the merger could be less than anticipated.

In addition, certain risks associated with Rayonier’s industry and business described herein and in Rayonier’s public filings may become more significant following consummation of the merger, including, but not limited to, risks relating to: the cyclical and competitive nature of the industries in which Rayonier operates; fluctuations in demand for, or supply of, forest products and real estate offerings; entry of new competitors into Rayonier’s markets; changes in global economic conditions and world events; fluctuations in demand for Rayonier’s products in Asia, and especially China; the uncertainties of potential impacts of climate-related initiatives; the cost and availability of third party logging and trucking services; the geographic concentration of a significant portion of Rayonier’s timberland; Rayonier’s ability to identify, finance and complete timberland acquisitions; changes in environmental laws and regulations regarding timber harvesting, delineation of wetlands, and endangered species, that may restrict or adversely impact Rayonier’s ability to conduct its business, or increase the cost of doing so; adverse weather conditions, natural disasters and other catastrophic events such as hurricanes, wind storms and wildfires, which can adversely affect Rayonier’s timberlands and the production, distribution and availability of Rayonier’s products; the cyclical nature of the real estate business generally; a delayed or weak recovery in the housing market; the lengthy, uncertain and costly process associated with the ownership, entitlement and development of real estate, especially in Florida, which also may be affected by changes in law, policy and political factors beyond Rayonier’s control; unexpected delays in the entry into or closing of real estate transactions; changes in environmental laws and regulations that may restrict or adversely impact Rayonier’s ability to sell or develop properties; the timing of construction and availability of public infrastructure; and the availability of financing for real estate development and mortgage loans.

The combined company is expected to incur substantial expenses related to the completion of the merger and the integration of Rayonier and Pope.

Rayonier and Pope have incurred, and expect to continue to incur, a number of non-recurring costs associated with the merger and combining the operations of the two companies. The substantial majority of non-recurring expenses will be comprised of transaction costs related to the merger.

Rayonier also will incur transaction fees and costs related to formulating and implementing integration plans. Rayonier continues to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the merger and the integration of the two companies’ businesses. Although Rayonier expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow Rayonier to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all. See the risk factor entitled “—Combining the two companies may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the merger may not be realized” above.

 

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The combined company may incur adverse tax consequences if Rayonier has failed or fails to qualify as a REIT for U.S. federal income tax purposes.

Rayonier has operated in a manner that it believes has allowed it to qualify as a REIT for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2004. Rayonier intends to continue to operate in the same manner through the time of the merger, and the combined company also intends to continue to operate so as to qualify for REIT status. It is a condition to the closing of the merger that Pope receives a written tax opinion of counsel to the effect that, beginning with Rayonier’s taxable year ended December 31, 2004 and through the closing date, Rayonier has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code, and Rayonier’s proposed method of organization and operation will enable Rayonier to continue to satisfy the requirements for qualification and taxation as a REIT under the Code. Rayonier, however, has not requested nor plans to request a ruling from the Internal Revenue Service (“IRS”) that it qualifies as a REIT. Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within the control of Rayonier may have affected its ability to qualify as a REIT.

If, notwithstanding the opinion described above, Rayonier fails to qualify as a REIT, or is determined to have failed to qualify as a REIT in a prior year, Rayonier would face serious tax consequences that would substantially reduce the funds available for distribution to its shareholders:

 

   

Rayonier would be subject to U.S. federal, state and local income tax on its net income at regular corporate rates for the years it did not qualify as a REIT (and, for such years, would not be allowed a deduction for dividends paid to shareholders in computing its taxable income) and the combined company would succeed to the liability for such taxes;

 

   

unless Rayonier was entitled to relief under certain U.S. federal income tax laws, it could not re-elect REIT status until the fifth calendar year after the year in which it failed to qualify as a REIT; and

 

   

the combined company would succeed to any earnings and profits, or E&P, accumulated by Rayonier for tax periods in which it did not qualify as a REIT and the combined company would have to pay a special dividend and/or employ applicable deficiency dividend procedures (including interest payments to the IRS) to eliminate such earnings and profits to maintain its REIT qualification.

If there is an adjustment to Rayonier’s taxable income or dividends paid deductions, the combined company could elect to use the deficiency dividend procedure to maintain Rayonier’s REIT status. That deficiency dividend procedure could require the combined company to make significant distributions to its shareholders and to pay significant interest to the IRS.

As a result of these factors, Rayonier’s failure to qualify as a REIT could impair the combined company’s ability after the merger to expand its business and raise capital and could materially adversely affect the value of the combined company’s stock.

If Opco (as a continuation of Pope for U.S. federal income tax purposes) failed to qualify as a partnership for U.S. federal income tax purposes, Rayonier would cease to qualify as a REIT and suffer other adverse consequences.

Rayonier believes that Opco (as a continuation of Pope for U.S. federal income tax purposes) will be treated as a partnership for U.S. federal income tax purposes. As a partnership, Opco will not be subject to U.S. federal income tax on its income. Instead, each of its partners, including Rayonier and the holders of Opco units, will be allocated, and may be required to pay tax with respect to, its share of Opco’s income. No assurance can be given, however, that the IRS will not challenge the status of Opco or any other subsidiary that is intended to be treated as a partnership for U.S. federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating Opco as an entity taxable as a corporation for U.S. federal income tax purposes,

 

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Rayonier would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, Rayonier would likely cease to qualify as a REIT. Also, the failure of Opco or any subsidiary partnership to qualify as a partnership for U.S. federal income tax purposes could cause such entity to become subject to U.S. federal, state and local corporate income tax, which would reduce significantly the amount of cash available for debt service and for distribution to its partners, including Rayonier and holders of Opco units.

The Tax Protection Agreement may limit Rayonier’s ability to sell or otherwise dispose of certain properties.

In connection with the merger, Opco, Rayonier and Pope will enter into a tax protection agreement in favor of certain large Pope unitholders, many of whom may be directors or officers of Pope. The tax protection agreement will require Opco to indemnify certain historic Pope unitholders for the time value of money (determined based on the prime rate plus 2%) in the event that Opco triggers, at any time during the five year period following the closing, a certain amount of U.S. federal, state and local income taxes with respect to such holder’s share of built-in gain with respect to the real property assets directly or indirectly owned by Pope immediately before the mergers, with certain exceptions. The tax protection agreement may make it economically prohibitive to sell such real property assets even though it may otherwise be in Rayonier shareholders’ best interests to do so.

Risks Relating to Ownership of Opco Units

Opco units will not be listed on any national exchange, may be illiquid and are subject to restrictions in the limited partnership agreement that will govern Opco and its units.

The merger agreement does not require Opco, and Opco does not intend, to list its units on a national securities exchange. As a result, Opco units may not trade and may be illiquid. Moreover, under the terms of the Opco limited partnership agreement, the Opco units will generally not be transferable without the approval of the Opco general partner, which approval the Opco general partner may withhold in its sole and absolute discretion, except in limited circumstances as described in the section titled “Description of Opco Units” on page 281. The Opco units may not ever be traded on a stock exchange or transferrable at prices Opco unitholders may find attractive, or at all.

Although holders of Opco units will have redemption rights, which will enable them to cause Opco to redeem their Opco units in exchange for cash or, at Rayonier’s option, Rayonier shares on a one-for-one basis, these redemption rights cannot be exercised by a limited partner more than once per quarter, and a redemption request must be made no less than 60 days prior to the redemption date. Therefore, a holder will not have knowledge of the market price of the Rayonier shares at the time that it makes a redemption request. For more information, see “Description of Rayonier, L.P. limited partner units” beginning on page 281 of this proxy statement/prospectus.

Opco is controlled by Rayonier, and Opco unitholders will have limited governance rights.

As a limited partnership, substantially all of Opco’s day-to-day affairs will be controlled by its general partner, Rayonier. Unlike the holders of common stock in a corporation, holders of Opco units will have only limited voting rights on matters affecting Opco’s business and operations and, therefore, limited ability to influence management’s decisions regarding Opco’s business and operations. The Opco limited partnership agreement also provides that, subject to limited exceptions, the Opco general partner may amend the provisions of the Opco limited partnership agreement without the approval of the Opco unitholders. As a result, the limited rights inuring to the benefit of the Opco unitholders, and the other terms and conditions in the Opco limited partnership agreement, may be changed by the Opco general partner in its sole discretion if such amendment is not one of the specified amendments requiring approval of the Opco unitholders (other than the Opco general partner), as described in the section titled “Description of Opco Units” on page 281.

Holders of Opco units also will not be able to directly elect its general partner or the directors thereof at any time. Stockholders of Rayonier, whose interests may differ from the Opco unitholders, will elect the directors of

 

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the Opco general partner, and Rayonier cannot be removed as the Opco general partner without its consent. Accordingly, if unitholders are dissatisfied with the performance of the Opco general partner, they will not be able to directly remove Opco’s general partner or its directors, or otherwise influence the management of the Opco general partner.

The redemption rights with respect to the Opco units are subject to significant limitations

Under the Opco limited partnership agreement, Opco unitholders will have the right to cause Opco to redeem their units for cash or, at the Opco general partner’s election, Rayonier shares on a one-for-one basis. This redemption right, however, is subject to significant limitations. Opco unitholders’ ability to cause the redemption for cash or exchange for Rayonier shares of their Opco units is subject to a 60-day delay, during which period, in the case of an exchange for Rayonier shares, the value of shares of Rayonier may decrease and the holder may be unable to either cancel the exchange or, once consummated, sell the Rayonier shares at an attractive price.

In addition, each holder of Opco units may effect a redemption or exchange for Rayonier shares no more than once per quarter, and the holder must submit for redemption at least 1,000 Opco units or, if such holder owns fewer than 1,000 Opco units, all the Opco units owned by such holder. The Opco general partner may also prohibit any redemptions for cash or exchange for Rayonier shares if such transactions, in the Opco general partner’s sole and absolute discretion, would, among other things, create a significant risk of specified adverse tax consequences for the Opco general partner. As a result, Opco unitholders may not be able to quickly and in the ordinary course exercise their redemption rights in response to market conditions and their investment objectives.

Opco’s general partner has limited duties to Opco and Opco unitholders, which may permit it to favor its stockholders over Opco unitholders.

To the extent that the Opco general partner has any duties (including fiduciary duties) to Opco and the Opco unitholders, under the terms of the Opco limited partnership agreement, the Opco limited partnership agreement provides that the Opco general partner cannot be liable for any actions taken in good faith reliance on the Opco limited partnership agreement. The Opco limited partnership agreement also limits the liability of the Opco general partner (including its affiliates, officers and directors) for any errors in judgments, mistakes of fact or law or acts or omissions if those errors, mistakes, acts or omissions were made in good faith. In addition, the Opco limited partnership agreement expressly provides that in the event there is a conflict between the interests of the stockholders of the Opco general partner and the Opco unitholders, the Opco general partner may, without liability, prioritize its stockholders over the Opco unitholders. As a result, the Opco general partner may from time to time and in the ordinary course take actions that disproportionately inure to the benefit of itself or its holders, or, subject to the terms of the Opco limited partnership agreement, are disproportionally adverse to Opco unitholders relative to stockholders of the Opco general partner, without any liability to the Opco unitholders, and, as described under the Risk Factor titled “— Opco is controlled by Rayonier and Opco’s unitholders will have limited governance rights”, the Opco unitholders will be significantly limited in their ability to affect the taking of such actions and generally not have any approval rights with respect thereto.

The Opco general partner can issue additional units without the consent of the Opco unitholders.

Under the Opco limited partnership agreement, the Opco general partner may from time to time issue additional units in one or more classes, or one or more series of any of such classes, with such designations, preferences and relative, participating, optional or other special rights, powers and duties as determined by the Opco general partner, in its sole and absolute discretion. These issuances may dilute the value of the Opco units to be issued as merger consideration, and Opco unitholders will not have any voting or approval rights with respect to such issuances, and therefore, the value of their units may decrease without their consent.

 

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If Opco failed to qualify as a partnership for U.S. federal income tax purposes, then the amount of cash available for distribution to holders of Opco units could be substantially reduced and Rayonier would cease to qualify as a REIT and suffer other adverse consequences.

Opco believes that it will be treated as a partnership for U.S. federal income tax purposes. As a partnership, Opco will not be subject to U.S. federal income tax on its income. Opco cannot assure you, however, that the IRS will not challenge its status as a partnership for U.S. federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating Opco as an entity taxable as a corporation for U.S. federal income tax purposes, Opco could be subject to significant entity-level taxation, which could substantially reduce its cash available for distribution to holders of Opco units. Additionally, Rayonier would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, Rayonier would likely cease to qualify as a REIT.

If the IRS makes audit adjustments to Opco’s income tax returns, it may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustments directly from Opco in which case the amount of cash available for distribution to holders of Opco units could be substantially reduced.

The Bipartisan Budget Act of 2015 changed the rules applicable to U.S. federal income tax audits of partnerships. Under the rules, among other changes and subject to certain exceptions, any audit adjustment to items of income, gain, loss, deduction, or credit of a partnership (and any partner’s distributive share thereof) is determined, and taxes, interest, or penalties attributable thereto could be assessed and collected, at the partnership level. In the event of an IRS audit, absent available elections, it is possible Opco could be required to pay additional taxes, interest and penalties as a result of an audit adjustment. If Opco is required to make any such payments of taxes, penalties and interest, its cash available for distributions to holders of Opco units could be substantially reduced.

 

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INFORMATION ABOUT RAYONIER AND OPCO

Rayonier Inc.

1 Rayonier Way

Wildlight, FL 32097

Rayonier Inc., referred to as Rayonier, a North Carolina corporation, is a leading timberland real estate investment trust with assets located in some of the most productive softwood timber growing regions in the U.S. and New Zealand. The focus of Rayonier’s business is to invest in timberlands and to actively manage them to provide current income and attractive long-term returns to its shareholders. As of December 31, 2019, Rayonier owned, leased or managed approximately 2.6 million acres of timberlands located in the U.S. South (1.84 million acres), U.S. Pacific Northwest (379,000 acres) and New Zealand (414,000 gross acres, or 295,000 net plantable acres). In addition, Rayonier engages in the trading of logs from New Zealand and Australia to Pacific Rim markets, primarily to support its New Zealand export operations. Rayonier has an added focus to maximize the value of its land portfolio by pursuing higher and better use land sales opportunities.

Rayonier common stock is publicly traded on the New York Stock Exchange under the symbol “RYN.”

Rayonier Operating Company LLC

c/o Rayonier Inc.

1 Rayonier Way

Wildlight, Florida 32097

(904) 357-9100

Rayonier Operating Company LLC, referred to as ROC, is a Delaware limited liability company and a wholly owned subsidiary of Rayonier. ROC holds, directly or indirectly, substantially all of Rayonier’s assets and conducts substantially all of Rayonier’s business. ROC currently does not have any publicly traded equity. Prior to the closing of the merger, Rayonier will contribute all of its interest in ROC to Rayonier, L.P., and in connection therewith Rayonier, L.P. will become Rayonier’s operating company and successor-in-interest to ROC.

Rayonier, L.P.

c/o Rayonier Inc.

1 Rayonier Way

Wildlight, Florida 32097

(904) 357-9100

Rayonier, L.P., referred to as Opco, is a Delaware limited partnership. Rayonier is Opco’s sole general partner, and, as of the date of this proxy statement/prospectus, 100% of Rayonier, L.P.’s limited partner interests are held by Rayonier Operating Company Holdings, LLC, a wholly owned subsidiary of Rayonier. Opco currently does not have any publicly traded equity. Prior to the closing of the merger, Rayonier will contribute all of its interest in ROC to Opco, and in connection therewith Opco will become Rayonier’s operating company and successor-in-interest to ROC.

Rayonier Operating Company Holdings, LLC

c/o Rayonier Inc.

1 Rayonier Way

Wildlight, Florida 32097

(904) 357-9100

Rayonier Operating Company Holdings, LLC, referred to as Opco Holdings, is a Delaware limited liability company, a wholly owned subsidiary of Rayonier and the initial and sole limited partner of Opco. Opco Holdings has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the merger agreement.

 

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Pacific GP Merger Sub I, LLC

c/o Rayonier Inc.

1 Rayonier Way

Wildlight, Florida 32097

(904) 357-9100

Pacific GP Merger Sub I, LLC, referred to as Merger Sub 1, is a Delaware limited liability company and a wholly owned subsidiary of Rayonier formed solely for the purpose of facilitating the merger of Merger Sub 1 and MGP, referred to as GP merger 1. Merger Sub 1 has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the merger agreement. By operation of GP merger 1, Merger Sub 1 will be merged with and into MGP, with Merger Sub 1 surviving such merger as a wholly owned subsidiary of Rayonier.

Pacific GP Merger Sub II, LLC

c/o Rayonier Inc.

1 Rayonier Way

Wildlight, Florida 32097

(904) 357-9100

Pacific GP Merger Sub II, LLC, referred to as Merger Sub 2, is a Delaware limited liability company and a wholly owned subsidiary of Rayonier formed solely for the purpose of facilitating the merger of Merger Sub 2 and EGP, referred to as GP merger 2. Merger Sub 2 has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the merger agreement. By operation of the GP merger 2, Merger Sub 2 will be merged with and into EGP, with Merger Sub 2 surviving such merger as a wholly owned subsidiary of Rayonier.

Pacific LP Merger Sub III, LLC

c/o Rayonier Inc.

1 Rayonier

Wildlight, Florida 32097

(904) 357-9100

Pacific LP Merger Sub III, LLC, referred to as Merger Sub 3, is a Delaware limited liability company and a wholly owned subsidiary of ROC. formed solely for the purpose of facilitating the merger. Merger Sub 3 has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the merger agreement. By operation of the merger, Merger Sub 3 will be merged with and into Pope, with Pope surviving such merger as a wholly owned subsidiary of ROC and an indirect wholly-owned subsidiary of Opco.

 

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INFORMATION ABOUT POPE

Pope Resources, A Delaware Limited Partnership

19950 Seventh Avenue NE, Suite 200

Poulsbo, Washington 98370

(360) 697-6626

Pope Resources, A Delaware Limited Partnership, referred to as Pope, and its subsidiaries operate in four primary business segments: (i) Partnership Timber, (ii) Funds Timber, (iii) Timberland Investment Management and (iv) Real Estate. Pope’s two timber segments consist of growing, managing, harvesting, and marketing timber from Pope’s 119,000 acres of direct timberland ownership, plus another 3,500 acres under timber deeds, in Washington (Partnership Timber) and Pope’s private equity timber funds’ 141,000 acres (as of December 31, 2019) of timberland in Washington, Oregon, and California that Pope co-own with third-party investors (Funds Timber). Pope’s Timberland Investment Management segment is engaged in organizing and managing private equity timber funds using capital invested by third parties and Pope. Pope’s Real Estate segment’s operations are focused on a portfolio of approximately 1,500 acres in the west Puget Sound region of Washington, most of which are legacy timberlands that have become suitable as development property owing to the expansion of the Puget Sound metropolitan and suburban areas.

Port Gamble was established by Pope & Talbot in 1853 and was operated as a company town for over 165 years and served as the location for a lumber mill for most of that time.

Pope units are listed on the NASDAQ under the symbol “POPE.”

Pope MGP, Inc.

19950 Seventh Avenue NE, Suite 200

Poulsbo, Washington 98370

(360) 697-6626

Pope MGP, Inc., referred to as MGP, is a Delaware corporation and serves as Pope’s managing general partner. MGP’s shares are not listed and the transfer of MGP’s shares are restricted by the shareholders’ agreement.

Pope EGP, Inc.

19950 Seventh Avenue NE, Suite 200

Poulsbo, Washington 98370

(360) 697-6626

Pope EGP, Inc, referred to as EGP, is a Delaware corporation and serves as Pope’s equity general partner. EGP’s shares are not listed and the transfer of EGP’s shares are restricted by the shareholders’ agreement.

 

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INFORMATION ABOUT THE SPECIAL MEETING

Time, Place and Purpose of the Pope Meeting

The special meeting will be held on Tuesday, May 5, 2020, at 11:00 a.m. local time, at the offices of Davis Wright Tremaine LLP, 920 Fifth Avenue Suite 3300, Seattle, Washington 98104, and electronically via the virtual meeting facility that can be accessed by Pope unitholders by registering at the Internet website http://www.virtualshareholdermeeting.com/POPE2020 using the 16-digit control number found on the accompanying proxy card. At the special meeting, Pope unitholders will be asked to consider and vote upon (i) a proposal to approve the merger agreement, the merger and the related transactions, (ii) a proposal to approve, by advisory (non-binding) vote, the merger-related executive compensation and (iii) a proposal for adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

Record Date and Quorum

The Pope board has determined that the record date for determining the Pope unitholders who are entitled to notice of, and to vote at, the special meeting, is March 30, 2020. Only Pope unitholders at the close of business on the record date will be entitled to notice of, and to vote at, the special meeting, unless a new record date is set in connection with any adjournment or postponement of the special meeting. As of the record date there were 4,367,215 Pope units issued and outstanding, which were held by approximately 3,000 beneficial owners. In order for the special meeting to be convened, there must be present, in person or by proxy, at least a majority of the Pope units outstanding as of the record date.

Vote Required

Approval of the merger proposal requires that a majority of the Pope units issued and outstanding as of the record date vote in favor of approval of the merger agreement, the merger and the related transactions. If you fail to submit a proxy or to vote in person at the special meeting, or abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will not be counted as “FOR” or “AGAINST” and will have the same effect as a vote against the merger agreement, the merger and the related transactions. Accordingly, your vote is important and you are encouraged to vote as soon as possible.

The proposal to approve the merger-related executive compensation requires that a majority of the votes cast at the special meeting are voted in favor of the proposal; however, such vote is advisory (non-binding) only. If you fail to submit a proxy or to vote in person at the special meeting, or abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will not be counted as “FOR” or “AGAINST” and will not have an effect on the advisory (non-binding) vote to approve the merger-related executive compensation except to the extent it results in there being insufficient Pope units present at the special meeting to establish a quorum.

The approval of adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement requires that a majority of the votes cast at the special meeting are voted in favor of the proposal, whether or not a quorum is present. If you fail to submit a proxy or to vote in person at the special meeting, or abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will not be counted as “FOR” or “AGAINST” and will not have an effect on the vote to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

 

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Proxies and Revocations

You may submit your proxy either by telephone, through the Internet or by mailing the enclosed proxy card, or, if you are a limited partner of record, you may vote in person at the special meeting.

 

   

To submit your proxy by telephone, dial (800) 690-6903 using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number from the enclosed proxy card. To submit your proxy through the Internet, visit http://www.proxyvote.com. You will be asked to provide the company number and control number from the enclosed proxy card. Proxies submitted by telephone or through the Internet must be received by 11:59 p.m., Eastern Time, on May 4, 2020.

 

   

To submit your proxy by mail, complete, date and sign each proxy card you receive and return it as promptly as practicable in the enclosed prepaid envelope. If you sign and return your proxy card, but do not mark the boxes showing how you wish to vote, your shares will be voted “FOR” the approval of the merger agreement, the merger and the related transactions, “FOR” the advisory vote on certain merger-related compensation to Pope’s executive officers, and “FOR” the proposal to adjourn the meeting if necessary to permit the solicitation of additional proxies.

 

   

By attending the meeting using the virtual meeting facility and voting your Pope units during the meeting. You may access the virtual meeting facility by registering at the Internet website http://www.virtualshareholdermeeting.com/POPE2020 using the 16-digit control number found on the accompanying proxy card.

 

   

If you intend to vote in person, please bring proper identification, together with proof that you are a record owner of Pope units. If your Pope units are held in “street name,” please bring acceptable proof of ownership, such as a letter from your broker or an account statement showing that you beneficially own such shares on the applicable record date. You are reminded that, as of the date of this proxy statement/prospectus, the State of Washington remains under an executive order that prohibits the conduct of non-essential businesses and restricts public gatherings, regardless of the number of people in attendance. Before attempting to attend the special meeting in person, Pope unitholders are strongly advised to consider any and all legal restrictions on in-person attendance. Attendance using the virtual meeting facility will have the same effect as attending in person.

Any proxy given by a Pope unitholder pursuant to this solicitation may be revoked at any time before the vote is taken at the special meeting in any of the following ways:

 

   

submitting a later proxy by telephone or through the Internet prior to 11:59 p.m., Eastern Time, on May 4, 2020;

 

   

filing with the Secretary of Pope, before the taking of the vote at the special meeting, a written notice of revocation bearing a later date than the proxy card;

 

   

duly executing a later dated proxy card relating to the same shares and delivering it to the Secretary of Pope before the taking of the vote at the special meeting; or

 

   

voting in person at the special meeting (or, in the case of Pope units held by assignees, attending in person and directing MGP to vote such units), although attendance at the special meeting will not by itself constitute a revocation of a proxy.

Any written notice of revocation or subsequent proxy card should be sent to Pope Resources, A Delaware Limited Partnership, 19950 Seventh Avenue NE, Poulsbo, Washington 98370, Attention: Secretary, or hand delivered to the Secretary of Pope before the taking of the vote at the special meeting.

IT IS IMPORTANT THAT YOU VOTE YOUR POPE UNITS PROMPTLY. WHETHER OR NOT YOU PLAN TO ATTEND POPE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE PRE-ADDRESSED

 

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POSTAGE-PAID ENVELOPE, OR FOLLOW THE INSTRUCTIONS ON THE PROXY CARD TO VOTE BY TELEPHONE OR INTERNET. UNITHOLDERS WHO ATTEND POPE MEETING MAY REVOKE THEIR PROXIES BY VOTING IN PERSON.

Expected Timing of the Merger

Although it is possible that factors outside the control of both Rayonier and Pope could result in the merger being completed at a different time, Rayonier and Pope currently expect the merger to close within several business days of the special meeting.

Solicitation of Proxies; Payment of Solicitation Expenses

Pope is soliciting proxies on behalf of the Pope board. Pope will bear the costs of soliciting proxies. Brokerage houses, fiduciaries, nominees and others will be reimbursed for their out-of-pocket expenses in forwarding proxy materials to Pope unitholders held in their names. In addition to the solicitation of proxies by use of the mails, proxies may be solicited from Pope’s unitholders by directors, officers and employees of Pope in person or by telephone, by facsimile, on the Internet or other appropriate means of communications. No additional compensation, except for reimbursement of reasonable out-of-pocket expenses, will be paid to Pope’s directors, officers or employees in connection with this solicitation. Pope also has retained MacKenzie Partners to solicit, and for advice and assistance in connection with the solicitation of, proxies for the special meeting at a cost of $12,500, plus out-of-pocket expenses. No portion of the amount that Pope has agreed to pay to MacKenzie Partners is contingent upon the approval or consummation of the merger. Any questions or requests for assistance regarding this proxy statement/prospectus may be directed to MacKenzie Partners as follows:

 

   

Unitholders in the U.S. and Canada call toll-free: (800) 322-2885

 

   

Unitholders in other locations dial direct: 1+ (212) 929-5500

 

   

Banks, brokers and other nominees call collect: (212) 929-5500

 

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THE MERGER

This section describes the merger. The description in this section and elsewhere in this proxy statement/prospectus is qualified in its entirety by reference to the complete text of the merger agreement, a copy of which is attached as Annex A, which is incorporated by reference into this proxy statement/prospectus. This summary does not purport to be complete and may not contain all of the information about the merger that is important to you. You are encouraged to read the merger agreement carefully and in its entirety. This section is not intended to provide you with any factual information about Pope, Rayonier or Opco. Such information can be found elsewhere in this proxy statement/prospectus and in the public filings Pope and Rayonier make with the SEC that are incorporated by reference into proxy statement/prospectus, as described in the section entitled “Where You Can Find More Information” beginning on page  287 of this proxy statement/prospectus.

The Merger

The merger agreement provides that, upon the satisfaction of certain conditions set forth in the merger agreement, Merger Sub 3 will merge with and into Pope, with Pope surviving as an indirect wholly owned subsidiary of Opco. In addition, substantially concurrently with the merger, the GP mergers will also occur, pursuant to which MGP and EGP will be acquired by Rayonier.

Merger Consideration

Each Pope unitholder (other than Rayonier, Opco or certain of their controlled affiliates) may elect to receive, for each Pope unit that they hold as of immediately prior to the effective time of the merger:

 

   

$125.00 in cash, without interest, referred to as the cash election consideration;

 

   

3.929 Rayonier shares, referred to as the stock election consideration; or

 

   

3.929 units of Opco, referred to as the Opco election consideration.

Pope unitholders that do not make a valid election will be treated as if they made the stock election. All elections will be subject to proration as described below under “—Elections and Proration.”

Pope unitholders that make the stock election or Opco election will not receive any fractional Rayonier shares or Opco units in connection with the merger. Each such Pope unitholder who otherwise would be entitled to receive a fraction of a Rayonier share or Opco unit pursuant to the merger will be paid an amount in cash (without interest) equal to such fractional part of a Rayonier share or Opco unit multiplied by the volume weighted average closing sale price per Rayonier share as reported on the NYSE as reported by Bloomberg, L.P. for the 10 consecutive trading days immediately preceding the date which is five trading days immediately prior to the closing date.

In addition, the merger agreement contemplates that Rayonier will acquire by merger each of Pope’s general partners, MGP and EGP, for an aggregate of $10,000,000 in cash described in greater detail in the section titled in the section entitled “Interests of Pope’s Directors and Executive Officers in the Merger” beginning on page 128.

Elections and Proration

Pope unitholders’ elections will be subject to proration so that approximately 70% of the Pope units converted into merger consideration (which product is referred to as the “available equity amount”) will be exchanged for Rayonier shares or Opco units and approximately 30% of the Pope units converted into merger consideration (which product is referred to as the “available cash amount”) will be exchanged for cash. Accordingly, the aggregate amount of Rayonier shares and Opco units, on the one hand, and cash, on the other

 

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hand, that will be issued in the merger will equal the amounts issued as if every Pope unit converted into merger consideration would receive 2.751 Rayonier shares or Opco units and $37.50 in cash.

If the stock election or Opco election is oversubscribed, Rayonier in its sole discretion may increase the amount of Rayonier equity that could be issued in the merger up to, but not to exceed, the aggregate amount of Rayonier shares or Opco units that Pope unitholders have elected to receive. In such case, the amount of cash made available in the merger will be correspondingly reduced.

Pope unitholders that make the cash election will have the right to elect, in the event that the cash election consideration is oversubscribed and is therefore subject to proration, whether each Pope unit for which they have made a cash election is prorated into (i) a combination of cash and Rayonier shares or (ii) a combination of cash and Opco units (such election, the “proration election”). Pope unitholders may make a different proration election for each Pope unit for which they make a cash election. If a Pope unitholder does not make a valid proration election by the election deadline and the cash election consideration is oversubscribed, then all of such holder’s Pope units for which a cash election was made shall be converted into a combination of cash and Rayonier shares.

Over-Election of Stock or Opco Units

If the aggregate number of Pope units making a stock election or Opco election is greater than the available equity amount, such Pope units, unless Rayonier in its sole discretion elects to increase the available equity amount to an amount equal to the aggregate stock elections and Opco elections, will be subject to proration and will receive less than the stated 3.929 Rayonier shares or Opco units per Pope unit. The amount of Rayonier shares or Opco units that each such Pope unit will receive will be equal to:

 

   

2.751, divided by

 

   

the aggregate percentage of Pope units for which a stock election or Opco election has been made.

The Pope units that do not receive the full stock election consideration or Opco election consideration as a result of proration will instead receive the cash election consideration, which on a per Pope unit basis will be equal to:

 

   

$37.50 – [$125.00 * (1 – the aggregate percentage of Pope units for which a stock election or Opco election has been made)], divided by

 

   

the aggregate percentage of Pope units for which a stock election or Opco election has been made.

If following proration a Pope unitholder would be entitled to receive a fractional number of Rayonier shares or Opco units, such unitholders will instead receive an amount in cash (without interest) equal to the amount of such fractional part multiplied by the volume weighted average closing sale price per share of Rayonier common stock as reported on the NYSE as reported by Bloomberg, L.P. for the 10 consecutive trading days immediately preceding the date which is five trading days immediately prior to the closing date.

Over-Election of Stock or Opco Units Example

For purposes of this example, assume the following:

 

   

there are 10,000,000 outstanding Pope units converted into merger consideration;

 

   

Pope unitholders make the cash election with respect to 1,000,000 (or 10%) of Pope units;

 

   

Pope unitholders make stock elections or Opco elections with respect to 9,000,000 (or 90%) of Pope units; and

 

   

the volume weighted average closing sale price per share of Rayonier common stock as reported on the NYSE as reported by Bloomberg, L.P. for the 10 consecutive trading days immediately preceding the date which is five trading days immediately prior to the closing date is $30.00.

 

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In this example, without proration, there would be an over-election of Rayonier shares and Opco units because the number of Pope units making the stock election and/or Opco election is 9,000,000, which is greater than 7,000,000, which is the available equity amount. Thus, a Pope unitholder who makes a stock election and/or Opco election for 100 Pope units would receive 305.667 Rayonier shares or Opco units, calculated as follows: 100 * 2.751 / 0.9, and an amount in cash equal to $2,777.78, calculated as follows: 100 * [$37.50 – ($125.00 * 0.1)] / 0.9. Because fractional shares of Rayonier shares or Opco units will be converted to cash, the number of Rayonier shares or Opco units such holder would be entitled to receive would be 305, with the additional 0.667 Rayonier shares or Opco units converted into $20.01 in cash, calculated as follows: 0.667 × $30.00.

See “Risk Factors—Because the amount of consideration is fixed and the elections other unitholders will make is not yet known, you cannot be sure what merger consideration you will receive.”

Over-Election of Cash

If the aggregate number of Pope units making a cash election is greater than the available cash amount, such Pope units will be subject to proration and will receive less than the stated $125.00 of cash per Pope unit. The amount of cash that each such Pope unit will receive will be equal to:

 

   

$37.50, divided by

 

   

the aggregate percentage of Pope units for which a cash election has been made.

The Pope units that do not receive the full cash election consideration as a result of proration will instead receive, at their election, the stock election consideration or Opco election consideration, which on a per Pope unit basis will be equal to:

 

   

2.751 – [3.929 * (1 – the aggregate percentage of Pope units for which a cash election has been made)], divided by

 

   

the aggregate percentage of Pope units for which a cash election has been made

If following proration a Pope unitholder would be entitled to receive a fractional number of Rayonier shares or Opco units, such unitholder will instead receive an amount in cash (without interest) equal to the amount of such fractional part multiplied by the volume weighted average closing sale price per share of Rayonier common stock as reported on the NYSE as reported by Bloomberg, L.P. for the 10 consecutive trading days immediately preceding the date which is five trading days immediately prior to the closing date.

Over-Election of Cash Example

For purposes of this example, assume the following:

 

   

there are 10,000,000 outstanding Pope units converted into merger consideration;

 

   

Pope unitholders make the cash election with respect to 4,000,000 (or 40%) of Pope units;

 

   

Pope unitholders make stock elections or Opco elections with respect to 6,000,000 (or 60%) of Pope units; and

 

   

the volume weighted average closing sale price per share of Rayonier common stock as reported on the NYSE as reported by Bloomberg, L.P. for the 10 consecutive trading days immediately preceding the date which is five trading days immediately prior to the closing date is $30.00.

In this example, without proration, there would be an over-election of cash because the number of Pope units making the cash election is 4,000,000, which is greater than 3,000,000, which is the available cash amount. Thus, a Pope unitholder who makes a cash election for 100 Pope units would receive $9,375.00 in cash, calculated as follows: 100 * $37.50 / 0.4, and, at such holder’s election, 98.400 Rayonier shares or Opco units, calculated as follows: 100 * [2.751 – (0.6 * 3.929)] / 0.4. Because fractional Rayonier shares or Opco units will be converted to cash, the number of Rayonier shares or Opco units such holder would be entitled to receive would be 98, with the additional 0.400 Rayonier shares or Opco units converted into $12.00 in cash, calculated as follows: 0.400 × $30.00.

 

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See “Risk Factors—Because the amount of consideration is fixed and the elections other unitholders will make is not yet known, you cannot be sure what merger consideration you will receive.”

Financing of the Merger

Rayonier currently expects to finance the transactions contemplated by the merger agreement, including the merger, through a combination of cash on hand, borrowings under Rayonier’s existing credit agreement, dated as of August 5, 2015, among Rayonier, the subsidiary borrowers from time to time party thereto, the lenders from time to time party thereto, and CoBank, ACB, as administrative agent, referred to as the revolving credit facility, issuances of Rayonier shares and Opco units. Rayonier, subject to market conditions, may also consider financing all or a portion of the cash consideration payable in connection with the merger through new debt financing.

Accounting Treatment

Rayonier prepares its financial statements in accordance with accounting principles generally accepted in the United States, referred to as GAAP. The merger will be accounted for using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Rayonier will be treated as the acquiror for accounting purposes.

Background of the Merger

Pope is a limited partnership controlled by its managing general partner, MGP. As a result, the board of directors of MGP, referred to as the Pope board of directors or the Pope board, serves as the board of Pope. Pope also has an equity general partner, EGP (EGP and MGP together are referred to as the Pope general partners), although EGP has no management function or power unless and until it becomes the managing general partner upon the occurrence of certain events specified in the Pope limited partnership agreement. Under Pope’s limited partnership agreement, the Pope general partners are collectively entitled to an annual management fee of $150,000. MGP and EGP are each owned equally by Maria Pope, Trustee of the PMG Trust UTA dated June 28, 2016, referred to as the Pope general partner shareholder, and the Emily T. Andrews 1987 Revocable Trust (referred to as the “Andrews general partner shareholder” and together with the Pope general partner shareholder, referred to as the GP shareholders, of which Gordon P. Andrews, a Pope board observer, is trustee. Collectively, Ms. Pope and Mr. Andrews beneficially own approximately 17% of Pope units, excluding the Pope units owned by MGP and EGP. A shareholders agreement, among the GP shareholders, MGP, EGP, Pope, and the Pope directors governs, among other things, the ownership of the Pope general partners and the composition of the Pope board and the election of its directors. Under the Pope limited partnership agreement, any merger of Pope must be approved by Pope’s managing general partner and, subject to certain exceptions, partners of record holding more than 50% of the Pope units held by all partners of record as described elsewhere in this proxy statement/prospectus.

Each of the Pope board of directors and Rayonier board of directors, acting independently and with the advice of their respective management teams and advisors, periodically reviews and assesses the performance, business, strategic direction and prospects of Pope and Rayonier, respectively, in light of the then-current industry, competitive and economic environment. As part of such assessment and review, each of the Rayonier board of directors and Pope board of directors have evaluated and considered various financial and strategic opportunities, including potential business combinations, as part of their long-term strategy to enhance value for their respective shareholders and unitholders.

In 2015, members of Rayonier senior management, including Mr. David L. Nunes, who was president and chief executive officer of Rayonier, held discussions with the Rayonier board of directors regarding a potential business combination with Pope. Mr. Nunes had joined Rayonier as chief operating officer on June 9, 2014, and became chief executive officer and president of Rayonier on June 27, 2014 following Rayonier’s previously

 

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announced separation of its performance fibers business. Prior to joining Rayonier, Mr. Nunes served as the president and chief executive officer of Pope since January 2002, and, prior to 2015, he beneficially owned approximately 92,550 Pope units. At a Rayonier board meeting held on July 17, 2015, the Rayonier board authorized Mr. Nunes to contact members of the Pope board or Pope management to determine whether Pope would be interested in a potential business combination.

Following this Rayonier board meeting, in late July 2015, Mr. Nunes contacted the late Mr. Peter Pope, a former member of the Pope board and, at the time, the Pope general partner shareholder, to express Rayonier’s interest in pursuing a potential business combination with Pope. The next day, Mr. Nunes and Mr. Pope had a phone call to exchange views on industry trends and issues and the performance, business, strategic direction and prospects of their respective companies and to discuss in greater detail the merits of a potential business combination of the two companies and the potential terms of such a combination. Mr. Nunes indicated to Mr. Pope that Rayonier planned to submit an indication of interest to outline the terms of a potential business combination.

On July 27, 2015, Ms. Pope, in her capacity as a Pope director, notified Mr. Nunes that the Pope board would review Rayonier’s transaction proposal. Later that day, Rayonier submitted a letter to Ms. Pope summarizing the terms of its non-binding transaction proposal, referred to as the Rayonier July 2015 proposal, which proposal had been reviewed by and authorized by the Rayonier board of directors. The Rayonier July 2015 proposal provided for an acquisition of Pope for $95.00 per unit (in the form of cash or units of Rayonier’s operating company (which, at the time, was Rayonier Operating Company LLC and, after the merger, will be Rayonier, L.P., each referred to as Opco in this section) and an aggregate of $20 million for the collective stock of the Pope general partners, referred to as the GP consideration. The GP consideration would be paid in Rayonier common stock and included the value of the Pope units owned by the Pope general partners. At Rayonier’s closing price on July 26, 2015, $95.00 per unit was equivalent to 3.9 Opco units for each Pope unit, based on the 1 to 1 exchange ratio between Opco units and Rayonier common stock. The Rayonier July 2015 proposal provided that the cash consideration in the transaction would be subject to a cap of $200 million in the aggregate (and subject to proration), although the proposal indicated flexibility as to the total mix of cash and equity consideration. The Rayonier July 2015 proposal also provided that Pope unitholders receiving Opco units would generally be eligible for tax-deferral for receipt of those units but would be subject to a one-year lockup before they could obtain liquidity for those units as a result of certain securities law restrictions.

On August 24, 2015, the Pope board met to discuss the Rayonier July 2015 proposal. At the meeting, also present were representatives of Munger Tolles & Olson LLP, referred to as Munger Tolles, then counsel to the Pope board, and Davis Wright Tremaine LLP, referred to as Davis Wright, counsel to Pope, along with a representative of Pope’s then financial advisor and other individuals who were then serving as Pope board observers. Representatives of Munger Tolles summarized the terms of the Rayonier July 2015 proposal and discussed certain legal matters with the Pope board, including their duties as directors under applicable law and Pope’s limited partnership agreement in the context of considering the acquisition proposal and associated issues and considerations in respect of the form and amount of the GP consideration. After discussion, the Pope board unanimously concluded that the Rayonier July 2015 proposal undervalued Pope. The Pope board also considered the then-ongoing SEC investigation of Rayonier in connection with its November 2014 restatement of interim consolidated financial statements, which investigation the SEC concluded in July 2016. The Pope board instructed Ms. Pope to inform Rayonier of the Pope board’s determination with respect to the Rayonier July 2015 proposal, which Ms. Pope did by letter on August 26, 2015.

Following the rejection from the Pope board, Mr. Nunes acquired beneficial ownership of additional shares from November 2015 through November 2016, as a result of which he beneficially owned approximately 100,600 Pope units. He subsequently acquired beneficial ownership of an additional 200 Pope units in each of November 2017 and January 2018. Beneficial ownership of Pope units for purposes of references to Mr. Nunes’ ownership excludes Pope units owned by Rayonier as further described elsewhere in this proxy statement/prospectus.

From time to time beginning in mid-2015, Mr. James H. Dahl, an investor who is one of the largest holders of Pope units, sent various communications to Pope in which he purported to represent the interests of a number

 

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of Pope unitholders, advocating that Pope consider a REIT conversion or a sale. As the Pope board had done from time to time, the Pope directors continued to assess periodically the ownership, governance and capital structure for Pope, but the Pope board did not make public statements or respond to Mr. Dahl’s comments about these matters.

As a part of the Pope board’s periodic assessment of strategic direction, on May 25, 2018, in executive session at a regular meeting of the Pope board, the Pope board considered Pope’s standalone plan as compared to various strategic alternatives to enhance unitholder value. Representatives from Munger Tolles, Davis Wright and Centerview Partners LLC, referred to as Centerview, then financial advisor to the Pope board, were in attendance. Also in attendance were the late Ms. Edith Tobin in her role as Pope board observer and Ms. Tobin’s husband, Mr. Joe Tobin. Mr. Andrews (Ms. Tobin’s brother) subsequently assumed Ms. Tobin’s Pope board observer role on January 1, 2019 and thereafter regularly attended Pope board meetings and update calls described below and thus is not separately identified as a participant. During the May 25th executive session, the Pope board evaluated a number of strategic alternatives, including increasing Pope’s quarterly distribution, converting to a REIT, and engaging in a sale transaction. After discussion, the Pope board concluded that Pope would focus on building long-term unitholder value by continuing to execute on management’s stand-alone plan.

On June 18, 2018, Mr. Dahl, together with Mr. William Dahl, filed a statement on Schedule 13D in which Mr. James Dahl advocated for, among other things, the Pope board and Pope general partners to explore a potential sale of Pope and engage immediately with any interested acquirers of Pope. After Mr. Dahl filed his initial Schedule 13D, he continued periodically to send email messages to Pope’s board and management and others seeking to promote a REIT conversion or a sale of Pope. These messages made comments critical of Pope’s board and management, particularly Ms. Pope, for failure to pursue a REIT conversion or sale.

At a Rayonier board meeting held on July 20, 2018, the Rayonier board determined that, in light of the filing on Schedule 13D made by Messrs. James Dahl and William Dahl and the fact that such public disclosure could invite other companies to submit proposals for Pope, Rayonier should re-affirm to Pope its interest in a potential business combination transaction. After discussion, the Rayonier board authorized Mr. Nunes to send a letter to Pope offering to acquire Pope for 2.75 shares of Rayonier common stock or Opco units for each Pope unit, and to acquire the Pope general partners for $20 million in shares of Rayonier common stock, including the value of the Pope units owned by the Pope general partners.

On July 20, 2018, Rayonier submitted to Pope a non-binding written proposal, referred to as the Rayonier July 2018 proposal, to acquire Pope for 2.75 shares of Rayonier common stock or, solely for Pope unitholders who were accredited investors, 2.75 Opco units, for each outstanding Pope unit, and to acquire the Pope general partners for $20 million in shares of Rayonier common stock. The consideration proposed to be paid in respect of the general partners included the value of the Pope units owned by the Pope general partners. At Rayonier’s closing price on July 19, 2018 of $36.80, 2.75 shares of Rayonier common stock implied a value of $101.20 per Pope unit. The Rayonier July 2018 proposal did not contemplate any cash consideration.

On August 5, 2018 and August 21-22, 2018, the Pope board, together with representatives of Centerview, Munger Tolles and Davis Wright, met to discuss the Rayonier July 2018 proposal and other strategic alternatives available to Pope to enhance long-term unitholder value, including increasing the quarterly distribution, a conversion to a REIT or a recapitalization transaction. Representatives of Centerview discussed the financial aspects of the Rayonier July 2018 proposal, including the offer price relative to Pope’s net asset value (based on market precedents for timberlands such as Pope’s and tree farm appraisals Pope management had received in the ordinary course). Representatives of Munger Tolles discussed the structure and other legal aspects of the Rayonier July 2018 proposal, as well as certain other legal matters, including the directors’ duties under applicable law and Pope’s limited partnership agreement in the context of considering an acquisition proposal along the terms set forth in the Rayonier July 2018 proposal. After discussion, the Pope board determined that the Rayonier July 2018 proposal undervalued Pope relative to its estimated net asset value and therefore was not in the best interest of Pope unitholders. The Pope board also determined to engage in a more extensive review of

 

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strategic alternatives to narrow the gap between Pope’s trading value and its estimated net asset value. As part of that effort, and in light of Pope management’s view that the bulk of Pope’s anticipated spending on its multi-year legacy environmental remediation expenses was nearly complete, at the August 22, 2018 meeting the Pope board approved a 14% increase in Pope’s quarterly distribution to $0.80 per unit from the prior quarterly distribution of $0.70 per unit.

On August 23, 2018, Pope issued a press release announcing the distribution increase and also announcing that it was engaged in an evaluation of its capital allocation strategy, business mix and organizational structure as part of a review of longer-term opportunities. That same day, Pope sent Rayonier a letter stating that, after due consideration, the Pope board determined that it was not interested in pursuing a potential business combination along the terms proposed in the Rayonier July 2018 proposal and did not believe that the transaction was in the best interest of the Pope unitholders.

On September 17, 2018, Rayonier sent a letter to Pope reiterating its interest in a business combination transaction between the two companies, as well to revise and clarify certain terms in the Rayonier July 2018 proposal. In the letter, Rayonier noted that, although its prior proposal contemplated an all equity transaction, it would be willing to include a significant portion of cash consideration, with the precise portion to be determined after discussion with Pope. Rayonier also noted that the Rayonier July 2018 proposal was based on publicly available information and that Rayonier may be able to offer additional value if it were given access to non-public due diligence materials.

The Pope board, with participation from management, Centerview and Munger Tolles, thereafter discussed Rayonier’s September 17th letter and determined that it did not change their prior determination with respect to the Rayonier July 2018 proposal. On September 24, 2018, Pope sent Rayonier a letter reaffirming that it was not interested in a potential business transaction with Rayonier on the basis of the Rayonier July 2018 proposal because, among other reasons, the Pope board determined that the offer undervalued Pope. The letter also noted that the Rayonier July 2018 proposal failed to offer tax-deferral to Pope’s non-accredited unitholders, who would not be eligible to elect Opco units under the Rayonier July 2018 proposal.

From August 2018 through March 2019, the Pope board and its financial and legal advisors reviewed and considered various strategic alternatives to maximize unitholder value, including increasing its quarterly distribution to unitholders, converting to a REIT and pursuing a recapitalization transaction. As a result of this strategic review, in October 2018 Pope approved an additional 25% increase in its quarterly distribution from $0.80 to $1.00 per unit (representing a cumulative increase of 43% when combined with the August 2018 increase) and a $2.0 million unit repurchase program. On March 4, 2019, Pope issued a press release announcing the conclusion of its strategic review process and its continued dedication to maximizing long-term unitholder value.

On May 28, 2019, Messrs. Dahl filed an amendment to their statement on Schedule 13D filing a letter in which Mr. Dahl announced his support for what he said was an unsolicited proposal by a public timber REIT to acquire Pope for more than $100 per Pope unit in a tax-efficient transaction, and in which he advocated for the Pope board and Pope general partners to immediately engage with any and all interested acquirers. At the time, no such acquisition proposal was pending.

On June 2, 2019, the Pope board held a meeting to discuss, among other things, the subject matter of the Schedule 13D amendment described above. At the meeting, with representatives of Centerview, Munger Tolles and Davis Wright present, the Pope board discussed whether it would be in the best interest of Pope’s unitholders to explore, on a confidential basis, a potential sale transaction, while acknowledging the GP shareholders’ preferences stated to the Pope board to remain invested in Pope’s assets and to receive consideration in an amount that fairly valued the control rights of the Pope general partners.

Representatives of Centerview provided their preliminary views of potential counterparties to contact for purposes of the Pope board’s initial outreach. Representatives of Munger Tolles provided an overview of the

 

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directors’ duties under applicable law and Pope’s limited partnership agreement in connection with a sale process. In light of the stated preferences of the GP shareholders, representatives of Munger Tolles also described the advisability of (i) establishing a special committee of independent directors to review, negotiate and determine the advisability of any potential business combination transaction involving consideration to the shareholders of the Pope general partners in respect of the Pope general partner interest or consideration to the shareholders of the Pope general partners or their affiliates in respect of their units that was different from the consideration available to other unitholders and (ii) conditioning the approval of any such transaction on the affirmative vote of a majority of Pope units held by Pope unitholders unaffiliated with MGP, EGP, the GP shareholders and their respective affiliates, referred to as the unaffiliated Pope unitholders and, in reference to the merger agreement, such term also excludes Rayonier, Rayonier, L.P. and their respective affiliates). After discussion, the Pope board authorized the initiation of contact with five parties for exploratory discussions to gauge their interest in a potential business combination with Pope. The parties were selected based on the likelihood that such parties had a strategic interest in timber assets, the financial capability to complete a transaction at a price that would maximize unitholder value and experience in acquiring public companies, as well as the likelihood that such parties could accommodate a transaction that would meet the stated preference of the GP shareholders to remain invested in Pope’s assets. The Pope board considered but determined not to include Rayonier in its initial outreach due to, among other reasons, the fact that Rayonier had previously submitted indications of interest which the Pope board determined undervalued Pope.

On June 7, 2019, Rayonier notified Pope by letter that it acquired 114,400 Pope units representing approximately 2.6% of the Pope units outstanding at that time. The letter also reiterated Rayonier’s interest in a potential business combination of the two companies and welcomed a discussion regarding a negotiated transaction.

In June 2019, at the direction of the Pope board, Centerview conducted its initial outreach to the five parties referenced above regarding a potential business combination transaction with Pope and the preference of the GP shareholders to remain invested in Pope’s assets. Two of those parties declined to pursue discussions regarding the opportunity. The other three parties, referred to as Party A, Party B and Party C, expressed interest in exploring an acquisition of Pope. In June 2019, Pope entered into confidentiality agreements with each of Party A, Party B and Party C. The confidentiality agreements each contained a standstill obligation that would automatically fall away upon certain specified events, including execution by Pope of a definitive acquisition agreement with a third party, referred to as the fall-away provision.

On June 21, 2019, at a meeting of the Pope board, also attended by representatives of Centerview, Munger Tolles and Davis Wright, representatives of Centerview provided an update to the Pope board about the status of discussions with the five parties. The Pope board discussed whether they should be expanding the list of parties included in this initial exploratory outreach based on the criteria previously discussed. With input from Centerview, the Pope board approved the addition of two new parties to the initial outreach list. On July 10, 2019, a representative of Munger Tolles contacted a representative of one such party, referred to as Party D, to raise the possibility of Party D’s acquisition of Pope, in light of a pre-existing business relationship between the two representatives. The representative of Party D expressed interest in pursuing the opportunity, and the next day Centerview had a preliminary discussion with Party D regarding the opportunity. Pope entered into a confidentiality agreement with Party D on July 18, 2019, containing a standstill obligation with the fall-away provision. It was determined that the second of the two parties conducted its timber investment activities through one of the other parties already in the process, so no independent contact was made to such party.

Parties A and C met with members of Pope management in late June 2019. Party B deferred scheduling a management presentation until its co-investor could execute a joinder to Party B’s confidentiality agreement, which it did on July 25, 2019.

On July 8, 2019, Party C informed Centerview that they considered a transaction challenging given their preliminary analysis showed per Pope unit values near current trading prices and their need for external financing for the potential transaction.

 

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On July 9, 2019, Party A submitted a non-binding written proposal to acquire Pope for $123.62 per Pope unit in cash, based on the assumptions set forth in such proposal, subject to completion of Party A’s due diligence and obtaining necessary internal approvals and approvals from its equity investors. Party A indicated that the GP shareholders and their affiliates and certain related parties could retain their equity in Pope, referred to as the rollover. Party A’s proposal did not expressly contemplate whether it would and, if so, on what terms it would, acquire the stock of the Pope general partners. Representatives of Party A also requested exclusivity in a conversation with representatives of Centerview.

On July 15, 2019, the Pope board met to discuss the status of discussions with the various parties and to consider Party A’s proposal. Also in attendance were representatives of Centerview, Munger Tolles and Davis Wright. Representatives of Centerview discussed the financial aspects of Party A’s proposal. Representatives of Munger Tolles discussed the structure and other legal aspects of Party A’s proposal, as well as certain governance matters for the Pope board’s consideration in light of the proposed rollover. Representatives of Munger Tolles also (i) reviewed the directors’ duties under applicable law and Pope’s limited partnership agreement in the context of a sale transaction, (ii) discussed with the Pope board various considerations relating to use of a special committee of independent directors and conditioning the approval of a proposal like Party A’s proposal on the affirmative vote of a majority of Pope units held by unaffiliated Pope unitholders and (iii) discussed the proposed resolutions of the Pope board to formally establish such a special committee, considerations for selecting directors to serve on the Pope special committee and the proposed powers and duties of the Pope special committee. After discussion, the Pope board came to the preliminary conclusion that Party A’s proposal represented an attractive per unit price and that it would be worthwhile to engage in further discussions with Party A regarding its proposal. The Pope board also supported the establishment of a special committee and the affirmative vote of a majority of Pope units held by unaffiliated Pope unitholders as irrevocable conditions to the consummation of a transaction with Party A, and instructed Munger Tolles to finalize the resolutions for the Pope board’s adoption with agreement on the content of the resolutions from Ms. Pope and Mr. Andrews, on behalf of the GP shareholders, and their respective legal advisors, Winston & Strawn LLP, referred to as Winston Strawn, counsel to the Pope general partner shareholder, and Orrick, Herrington & Sutcliffe LLP, referred to as Orrick, counsel to the Andrews general partner shareholder.

Around this time, Ms. Pope and Mr. Andrews, on behalf of the GP shareholders, discussed with members of the Pope board and Pope management the engagement of a financial advisor to the GP shareholders to provide them with financial advice in connection with a potential sale transaction, and reimbursement of expenses for their financial and legal advisors in connection with such a transaction, but it was determined that such issues would be addressed by the Pope special committee after its formation.

On July 23, 2019, with the approval of Ms. Pope and Mr. Andrews, on behalf of the GP shareholders, the Pope board adopted by unanimous written consent resolutions establishing a special committee of independent directors, referred to as the Pope special committee, consisting of Mr. Sandy McDade, Mr. John Conlin and Mr. Bill Brown, each of whom the Pope board determined to be independent of the GP shareholders and Pope management and to not otherwise have a material interest in the proposed transaction (other than by virtue of their ownership of Pope units). Pursuant to the resolutions, the Pope board delegated to the Pope special committee, among other things, the full power and authority of the Pope board, on behalf of, and acting solely in the interests of, the unaffiliated Pope unitholders, to take such actions as it may deem necessary or desirable to consider, negotiate and oversee the proposed transaction with Party A and one or more alternative transactions to a transaction with Party A. Pursuant to the resolutions, the Pope board further determined that it would not recommend to the Pope unitholders the Party A transaction or any alternative transaction without the prior approval of such transaction by the Pope special committee, and that the consummation of any such transaction would be irrevocably conditioned on the approval of such transaction (i) by the Pope special committee, (ii) a majority of the members of the Pope board who were not interested in the transaction as contemplated by Pope’s limited partnership agreement and (iii) the affirmative vote of a majority of Pope units held by unaffiliated Pope unitholders. In addition, the Pope board empowered the Pope special committee to retain independent advisors (whose fees would be paid by Pope) and authorized the Pope special committee to approve on Pope’s behalf

 

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reimbursement of expenses of advisors retained by the GP shareholders that may be incurred by the GP shareholders, as the Pope special committee deemed necessary or appropriate and in the interests of Pope unitholders or to the extent required under Pope’s limited partnership agreement. The resolutions also provided that the Pope special committee members would be entitled to receive a flat fee for their service on the Pope special committee, in light of the significant additional duties and responsibilities to be undertaken by them, of $2,000 per month, payable quarterly in arrears, which amounts were in line with retainer payments received by members of the Pope board for service on its standing committees.

From the date of the Pope special committee’s establishment on July 23, 2019 to the signing of the merger agreement with Rayonier on January 14, 2020, the Pope special committee held more than fifty meetings. Representatives of Centerview and Munger Tolles attended each of these meetings. With the assistance of its advisors, at these meetings the Pope special committee managed the transaction process, approved the solicitation of bids from seven new potential counterparties (both financial and strategic) in addition to the seven potential counterparties with whom contact was originally approved by the Pope board, oversaw the strategy with respect to negotiations with the various potential acquirers and with the GP shareholders, regularly received reports on the status of such negotiations, and instructed Centerview and Munger Tolles to take actions in respect of these matters, all with the goal of determining whether a value maximizing transaction for the unaffiliated Pope unitholders could be obtained on terms supported by the Pope special committee.

On July 24, 2019, the Pope special committee held its first meeting to discuss the engagement of advisors and address certain other organizational matters. With representatives of Munger Tolles present, the Pope special committee first discussed the advisability of retaining Munger Tolles as legal counsel to the Pope special committee. The Pope special committee considered the fact of Munger Tolles’ representation of the Pope board in connection with the transaction process and concluded that such work was consistent with the work to be undertaken by the Pope special committee and would not impair Munger Tolles’ ability to provide independent legal advice to the Pope special committee. The Pope special committee also considered retaining Morris, Nichols, Arsht & Tunnell LLP, referred to as Morris Nichols, as Delaware counsel to the Pope special committee. The Pope special committee considered Morris Nichols’ disclosure that it had done an immaterial amount of prior work for Pope, and the Pope special committee concluded that such work would not impair Morris Nichols’ ability to provide independent legal advice. The Pope special committee further considered whether to engage Centerview as the financial advisor to the Pope special committee or to engage a financial advisor which had no prior experience with Pope or the transaction process to date. After discussion, the Pope special committee determined that Centerview’s prior experience and familiarity with Pope, its assets and the ongoing discussions of the Pope board with respect to strategic alternatives for building long term value for unitholders would be valuable to the Pope special committee and would not impair Centerview’s ability to give independent financial advice. The Pope special committee resolved to engage Munger Tolles and Morris Nichols as its legal advisors and Centerview as its financial advisor. After their engagement by the Pope special committee, Munger Tolles and Centerview ceased their representation of the Pope board. The Pope special committee also resolved to appoint Mr. McDade as chairman of the Pope special committee. At this time, representatives of Centerview joined the meeting of the Pope special committee and presented a status update on the discussions with the various parties. Representatives of Munger Tolles also discussed with the Pope special committee the timing of discussions with Party A and other parties who may submit indications of interest regarding the terms of any rollover of the GP shareholders and their affiliates that other parties might propose, with a view to maximizing value to the unitholders who would receive cash consideration in such transactions.

Over the next week, representatives of Centerview had calls with representatives of Party A to discuss Party A’s proposal and valuation methodology, and Party A indicated optimism about its ability to increase the value to Pope unitholders of its proposal pending further due diligence. During this period, Party B and Party D attended separate due diligence sessions with members of Pope senior management and representatives of Centerview and continued their due diligence work.

Also in July 2019, the chief executive officer of another interested party, referred to as Party E, along with a representative of its financial advisor, reached out to Ms. Pope to express an interest in pursuing a combination of

 

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Party E and Pope which would result in Pope unitholders owning approximately 45% of the combined enterprise. Ms. Pope referred them to Centerview. On separate occasions in July and September 2019, a representative of Party E’s financial advisor reached out to Centerview to reiterate Party E’s interest in exploring such a combination with Pope. Centerview informed the Pope special committee and the Pope board of such communications, but the Pope special committee determined not to engage with Party E at that time given the relative attractiveness of a sale transaction with Party A and other potential acquirers in ongoing discussions, which would offer an immediate premium to Pope unitholders.

At various times in July and August 2019, Ms. Pope and Mr. Andrews, on behalf of the GP shareholders, communicated to the Pope special committee and its advisors that the GP shareholders wanted their own financial advisor to provide financial advice and to represent their interests in a potential sale transaction, including with respect to the rollover contemplated by Party A’s proposal. In those communications, Ms. Pope and Mr. Andrews also proposed that the GP shareholders would be reimbursed for all legal and financial advisory expenses incurred by them in connection with the transaction process. Pursuant to its authority, the Pope special committee considered these requests and engaged in negotiations with Ms. Pope and Mr. Andrews over the course of August and September 2019 with respect to terms on which the Pope special committee would be willing to approve such a reimbursement, including with respect to caps and the fee structure of the financial advisor selected by the GP shareholders. The Pope special committee discussed among itself and its advisors a potential fee structure that would align the incentives of the GP shareholders and their advisors with the incentives of the Pope special committee to consummate a transaction that was in the best interest of the unaffiliated Pope unitholders. Upon conclusion of these negotiations, the Pope special committee approved payment or reimbursement of transaction-related legal expenses for the GP shareholders up to $400,000 in total ($200,000 for each GP shareholder) and the fees of the financial advisor selected by the GP shareholders, which provided for payments up to $1,250,000, $850,000 of which would consist of success-based payments. Fundamental to the Pope special committee’s decision to approve these payments and reimbursements was the prospect that any acquirer of Pope likely would require the support of the GP shareholders in order to proceed with a transaction and, as a result, the GP shareholders’ support of the transaction process was important to ensure that a value maximizing transaction would be available to the unaffiliated Pope unitholders. Furthermore, as a condition to the engagement of the financial advisor to the GP shareholders, the Pope special committee required (and the financial advisor to the GP shareholders agreed) that any contact by such financial advisor with potential counterparties be pre-approved by, and coordinated through, the Pope special committee or its advisors. The payments and reimbursements by Pope described above were subsequently ratified by the Pope board on October 2, 2019.

On August 7, 2019, Party A submitted a revised non-binding written proposal to acquire Pope for $130.52 per unit in cash, based on the assumptions set forth in such proposal, subject to completion of Party A’s due diligence and obtaining necessary internal approvals and approvals from its equity investors. The revised proposal continued to contemplate a rollover of the units of the GP shareholders and their affiliates and did not indicate whether Party A would and, if so, on what terms, it would acquire the equity interests of the Pope general partners. On that same day, Party A submitted a due diligence request list to Centerview. On August 8, 2019, Party A was granted access to the virtual data room and engaged in due diligence throughout August and September 2019. Also during August and September 2019, representatives of Munger Tolles and representatives of Party A’s legal advisor had a series of calls regarding transaction structure, terms and process.

On August 26, 2019, Party D had a discussion with representatives of Centerview in which Party D communicated a preliminary indication of value of approximately $80.00 per unit. At a meeting of the Pope special committee on September 6, 2019, the Pope special committee determined that this preliminary value was significantly below the value needed to remain competitive in the transaction process and, accordingly, that discussions with Party D should discontinue unless and until Party D provided a competitive proposal that maximized value for Pope unitholders. At the direction of the Pope special committee, Centerview communicated this message to Party D. Party D declined to engage further in the transaction process.

 

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On September 19, 2019, Party B submitted a non-binding indication of interest presenting an offer of $82.00 per unit. Based on feedback from the Pope special committee, Centerview indicated to Party B that such an offer price was not likely to be competitive, and Party B declined to engage any further in the transaction process.

On September 25, 2019, Munger Tolles furnished Party A’s legal advisor a draft merger agreement.

In late September and early October 2019, with input from Centerview and Munger Tolles, the Pope special committee discussed the merits of contacting other potential acquirers, taking into account the criteria originally considered by the Pope board. As a result of these discussions, the Pope special committee determined to instruct Centerview to contact four additional parties, one of which included Rayonier.

On October 6, 2019 representatives of Centerview contacted Rayonier with an invitation to engage in the transaction process. On October 11, 2019, Rayonier signed a confidentiality agreement that contained a standstill obligation with the fall-away provision, after which it received preliminary due diligence materials. Representatives of Credit Suisse Securities (USA) LLC, Rayonier’s financial advisor (referred to as “Credit Suisse”) communicated to Centerview that Rayonier would be holding a board meeting on October 18, 2019 to consider the transaction opportunity.

Of the three other parties referenced above, (i) one declined to pursue the opportunity and did not sign a confidentiality agreement, (ii) the second expressed interest in exploring a potential transaction and signed a confidentiality agreement that contained a standstill obligation with the fall-away provision on September 26, 2019, after which it received preliminary due diligence materials but thereafter declined to engage further in the transaction process and (iii) the third agreed to meet with Centerview on October 31, 2019 to discuss the potential transaction, but following that meeting it too declined to continue to engage in discussions regarding a potential transaction.

On October 8, 2019, Munger Tolles received a markup of the merger agreement from Party A’s legal advisor which contemplated, among other things, a reverse termination fee payable by Party A as the sole monetary remedy against Party A for breach of the agreement due to Party A’s failure to close. On October 16, 2019, representatives from Centerview and Party A had an in-person meeting to discuss the potential transaction and the various open items. That same day, at a meeting of the Pope special committee, representatives of Munger Tolles addressed the material issues with Party A’s markup of the agreement. The Pope special committee discussed their concerns with a reverse termination fee payable by Party A in the event Party A failed to secure financing, among other scenarios, and the conditionality created by such proposal. The Pope special committee also discussed concerns the committee members and their advisors had with respect to the likelihood of Party A and the GP shareholders to agree on proposed rollover terms that would be acceptable to each of them and to the Pope special committee. On October 18, 2019, Munger Tolles and Party A’s legal advisor had a call to discuss merger agreement issues, including Party A’s reverse termination fee request. On that call Party A’s legal advisor indicated that a reverse termination fee was an important business term for Party A.

Throughout October 2019, representatives of Munger Tolles and Davis Wright, at times with participation by representatives of Winston Strawn and Orrick, engaged in numerous calls with Party A’s legal advisor regarding structuring and other legal matters with respect to the proposed transaction and rollover.

At a meeting of the Pope special committee on October 15, 2019, the financial advisor to the GP shareholders presented to the Pope special committee and its advisors its views regarding the value of the stock of the Pope general partners. The financial advisor to the GP shareholders suggested a range of values of the Pope general partners. The Pope special committee, with input from Centerview, considered the GP shareholders’ financial advisor’s presentation and determined that they were not in agreement with the advisor’s views and the bases therefor with respect to the value of the stock of the Pope general partners. The Pope special committee instructed Centerview to communicate the Pope special committee’s differing views to the GP shareholders’ financial advisor and the GP shareholders. On several occasions following the October 15, 2019

 

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meeting, Centerview and the GP shareholders’ financial advisor discussed their differing views on the value of the stock of the Pope general partners, without reaching a joint view.

On October 17, 2019, a representative of Party E’s financial advisor reached out to Centerview to convey Party E’s interest in an all equity transaction on the terms previously outlined by them to Centerview and that, in Party E’s view, such transaction valued Pope at $105 to $110 per unit. The representative also mentioned that Party E was prepared to discuss Pope having the right to select a majority of the members of the board of the combined company. Centerview reported this conversation to the Pope special committee.

On October 18, 2019, the Rayonier board of directors held a meeting at which they discussed a potential business combination with Pope and received an update from Rayonier management as to due diligence on Pope performed as of such time. At the meeting, the Rayonier board authorized Rayonier management to submit a non-binding indication of interest to acquire Pope for between $115.00 and $125.00 per Pope unit in the form of Rayonier common stock or Opco units, as well as potentially cash (with flexibility as to the mix of consideration between equity and cash), and $3 million in the form of Rayonier common stock to acquire the Pope general partners (excluding the Pope units held by those entities).

On October 18, 2019, Rayonier submitted to Centerview a non-binding indication of interest in which it stated that it was prepared to offer between $115.00 and $125.00 per unit in the form of Rayonier common stock or Opco units, as well as potentially cash (with flexibility as to the mix of consideration between equity and cash), and $3 million for the GP consideration (excluding the Pope units held by those entities). The indication of interest provided that the equity portion of the consideration would be determined pursuant to a fixed exchange ratio set closer to a signing. The indication of interest also contemplated that the Opco units would be available to all Pope unitholders, not only Pope unitholders who were accredited investors. Representatives of Centerview and Credit Suisse thereafter had a call to discuss the proposal outlined by Rayonier as compared to Rayonier’s prior proposals.

The Pope special committee discussed Rayonier’s indication of interest at its next regularly scheduled meeting on October 20, 2019. Representatives of Centerview and Munger Tolles noted the improvements made in Rayonier’s proposal from the perspective of Pope unitholders compared to Rayonier’s prior proposals, including the opportunity for tax deferral to the unaffiliated Pope unitholders electing Opco units who were not accredited investors. After discussion with its advisors, the Pope special committee agreed that it would be in the best interests of the unaffiliated Pope unitholders to move forward with discussions with Rayonier. Centerview and Munger Tolles discussed these matters along with other process updates at a meeting of the Pope board held the next day, which was also attended by representatives of Davis Wright and Orrick.

On October 21, 2019, Rayonier was granted access to the virtual data room. From October 30, 2019 to October 31, 2019, Rayonier had due diligence calls with Pope management and with Centerview regarding timber, real estate and environmental matters. Also around this time, Rayonier provided Centerview with its due diligence request list and engaged in due diligence and site visits through the first week of November. Rayonier indicated to Centerview that it expected to provide a refined view of value and a draft merger agreement by November 8, 2019. Representatives of Centerview and Credit Suisse thereafter continued to speak from time to time to discuss transaction matters.

On October 24, 2019, a representative of Party A contacted a representative of Centerview to notify Centerview that Party A did not see a basis for moving forward with the transaction. Party A cited several reasons for this decision, including the loss of a key co-investor and Party A’s decision that it would not acquire Pope’s non-timber real estate assets. Party A also noted that if it were to continue in the transaction process, it would be reducing its proposed offer price as a result of changes to its valuation analysis based on its due diligence. Centerview responded with suggestions for Party A to consider to address their structural and financing concerns and asked that Party A provide Centerview with an update on its consideration of such matters within the next 48 hours. That afternoon, the Pope special committee convened a meeting to discuss the

 

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developments with Party A. At that meeting, the Pope special committee determined that, regardless of the outcome of negotiations with Party A, transaction discussions with Rayonier should continue.

Later that same day, Munger Tolles and Party A’s legal advisor had a call to discuss Party A’s structural and other legal concerns. Party A’s legal advisor raised with Munger Tolles the concept of revising the transaction structure to contemplate an asset purchase (rather than a merger) whereby Party A would acquire Pope’s assets other than its non-timber real estate assets. Environmental liabilities, general corporate liabilities and other liabilities not specifically associated with any of the acquired assets would be excluded from the transaction. Munger Tolles discussed this request with the Pope special committee at a meeting of that committee the following day, October 25, 2019. The Pope special committee discussed the complexities associated with the transaction structure outlined by Party A and determined to assess the feasibility of such a structure, including with respect to satisfying Pope’s ongoing environmental remediation obligations and estimating the costs and addressing other considerations associated with running Pope as a real estate holding company that would wind down over time. The Pope special committee instructed its advisors to engage with Pope management and Davis Wright on the feasibility assessment. Munger Tolles and Party A’s legal advisor spoke again that day to discuss these matters.

Several days later, on October 29, 2019, the Pope special committee met to receive preliminary feedback from Pope management on the feasibility of pursuing the alternative transaction structure proposed by Party A. Members of Pope management presented their cost estimates for amounts needed to run the real estate business on a stand-alone basis post-closing as well as their views on potential obstacles to selling the real estate before Pope had fully satisfied its ongoing environmental remediation obligations, and the implications for the prices at which such real estate could be sold if a third party buyer were to agree to assume those remediation obligations. The Pope special committee again discussed the challenges and uncertainties associated with this alternative transaction structure and the resulting impact on value for the unaffiliated Pope unitholders. In light of these challenges and uncertainties, and the likelihood Party A would discontinue discussions with respect to a potential transaction if its proposed alternative transaction structure was rejected by the Pope special committee, the Pope special committee discussed with its advisors the merits of engaging in discussions with Party E to explore its proposed transaction. After discussion, the Pope special committee authorized Centerview to contact Party E’s financial advisor with an invitation to sign a confidentiality agreement.

On November 3, 2019, Pope entered into a confidentiality agreement with Party E, which included a standstill obligation with the fall-away provision. On November 4, 2019, Party E was granted access to the virtual data room.

On November 5, 2019, with the approval of the Pope special committee, Pope issued a press release announcing that it was engaged in discussions with parties regarding a potential transaction, including a merger or an acquisition of Pope. The press release also stated that no definitive agreement had been reached and there could be no assurance that any transaction would result from these discussions.

Over the three days following issuance of the press release, representatives of two new potential acquirers, referred to as Party F and Party G, separately contacted representatives of Pope and Centerview expressing interest in pursuing a transaction with Pope. Pope entered into a confidentiality agreement with Party G on November 7, 2019 and with Party F on November 12, 2019, both of which included a standstill obligation with a fall-away Provision. Party G and Party F received access to the virtual data room shortly after signing their respective confidentiality agreements.

On November 8, 2019, Rayonier delivered a revised non-binding offer letter for Pope to Centerview, referred to as the Rayonier November 2019 proposal, which provided that Rayonier would be prepared to offer $119.00 for each Pope unit not already owned by Rayonier and $3 million in the form of Rayonier common stock to acquire the Pope general partners (excluding the Pope units held by the Pope general partners). The Rayonier November 2019 proposal provided that the consideration for the Pope units would consist of an aggregate of 75%

 

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of Rayonier common stock or Opco units (pursuant to a to-be-determined fixed exchange ratio) and 25% cash, with the form of consideration to be elected by Pope unitholders (subject to proration and a mechanism to equalize the value of the two elections prior to consummation of the proposed transaction). The proposal contemplated that the Opco units would be registered under the Securities Act of 1933 so that they would be available to all Pope unitholders rather than only to accredited investors as proposed in Rayonier’s prior offers (and therefore would not be subject to the one year lock-up period that would be imposed under securities laws for restricted securities). The Rayonier November 2019 proposal was accompanied by a draft merger agreement prepared by Wachtell, Lipton, Rosen & Katz, legal advisor to Rayonier, referred to as Wachtell Lipton, which provided, among other things, that in the event of a change in recommendation by the Pope board due to a superior proposal or an intervening event, Pope would be required to hold the partnership meeting, unless Rayonier exercised its right to terminate the merger agreement and collect a termination fee of a to-be-determined amount. The draft also (i) provided for the merger of the Pope general partners with subsidiaries of Rayonier substantially concurrent with the acquisition by merger of Pope, (ii) required Ms. Pope and Mr. Andrews and certain of their related parties, on behalf of themselves and the GP shareholders, to sign voting and support agreements in favor of the proposed transaction, referred to as the support agreements, and deliver written consents approving the acquisition of the Pope general partners within twenty-four hours of execution of the merger agreement and (iii) required that the GP shareholders indemnify Rayonier for any liabilities of the Pope general partners (other than liabilities arising from their status as the general partners of Pope) that remained unsatisfied at closing, referred to as the GP shareholder post-closing indemnity.

On November 8, 2019, Ms. Pope met with the chief executive officer of Party A, with whom she had a pre-existing business relationship, a meeting which had been previously proposed to, and not objected to by, the Pope special committee. Prior to that time, Centerview had communicated to Party A the Pope special committee’s views with respect to the difficulties presented with Party A’s alternative transaction structure. Ms. Pope reported to Centerview regarding her discussions with Party A about this structure.

On November 9, 2019, Party A sent Centerview a revised non-binding written proposal along the lines of the alternative transaction proposal initially presented by Party A’s legal advisor. The proposal contemplated a purchase of Pope’s timber and fund assets for $636 million in cash, subject to adjustments for various items, including working capital and land sales. The proposal excluded Pope’s non-timber real estate assets (and their related liabilities) and all liabilities of Pope not specifically associated with an acquired asset. Among other transaction terms, the proposal contemplated a reverse termination fee as Pope’s sole monetary remedy in the event of a financing failure or Party’s A failure to otherwise close, as previously proposed by Party A in their markup of the merger agreement. The proposal was accompanied by an exclusivity letter contemplating that Pope would agree to exclusivity with Party A until the earlier of December 11, 2019 or the termination by Party A of discussions with Pope.

The Pope special committee considered the Rayonier November 2019 proposal and Party A’s latest proposal at its meeting on November 10, 2019. The Pope special committee also received a status update from Centerview on Party E, Party F and Party G. Centerview provided an analysis of the financial aspects of Party A’s proposal, and Munger Tolles addressed legal considerations in connection with pursuing the proposed alternative transaction structure. With input from its advisors, the Pope special committee determined that due to, among other reasons, ongoing discussions with several potential acquirers, it was not in the best interests of the unaffiliated Pope unitholders to agree to exclusivity with Party A. The Pope special committee also discussed at length their concerns that the proposed acquisition by Party A of only Pope timber and fund assets would not produce the highest value to unitholders relative to a sale of the entire company. The Pope special committee instructed Centerview to reject Party A’s exclusivity request and to inform Party A that it would need to address the significant weaknesses in its proposal, including structure and conditionality, to be compelling in comparison to proposals from other prospective acquirers. Also at this meeting, the Pope special committee expressed the view that it would be in the best interest of the unaffiliated Pope unitholders to engage in further discussions with Rayonier with respect to the Rayonier November 2019 proposal, but that due to, among other reasons, ongoing discussions with several potential acquirers, Rayonier’s proposed offer price was insufficiently compelling to

 

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Pope unitholders. The Pope special committee instructed Centerview to advise Rayonier of other compelling proposals that Pope had received and to recommend that Rayonier increase its offered price or make other improvements in value to remain competitive.

A representative of Centerview later spoke with a representative of Credit Suisse regarding these matters, and Centerview raised the prospect of Rayonier agreeing to a fixed value structure, whereby the exchange ratio would change based on changes in the Rayonier common stock price. The representative of Credit Suisse responded that while Rayonier would be open to a discussion on the overall mix of equity and cash, Rayonier was only willing to consider a fixed exchange ratio transaction and not a transaction where such ratio could potentially change based on changes in the Rayonier stock price.

On November 13, 2019, representatives of Munger Tolles and Wachtell Lipton participated in a call to discuss the principal issues of the draft merger agreement prepared by Wachtell Lipton.

Also on November 13, 2019, at the direction of the Pope special committee, Centerview delivered process letters to representatives of Party F and Party G requesting submission of their proposals by 5:00 p.m. Eastern time on December 4, 2019. The process letters set forth certain guidelines for items to be addressed by the proposals, which included, among other things, a description of the transaction structure and consideration mechanics, the consideration to be paid by the acquirer for Pope and the Pope general partners, any provision for continued investment by the GP shareholders or their affiliates in Pope’s assets, and either a markup of the merger agreement to be provided by Munger Tolles or a detailed summary of any material changes to the merger agreement that the party expected to request.

On November 15, 2019, Party E submitted a non-binding term sheet describing terms of a potential business combination of Party E and Pope. The term sheet contemplated that Pope unitholders would own approximately 40 to 45% of the combined company. The proposed combination would be subject to approval by both the stockholders of Party E and the Pope unitholders.

On November 18, 2019, the Pope board held an update call, with representatives of Centerview, Davis Wright, Munger Tolles and Orrick present, to discuss the sale process and the status of communications with the potential counterparties. Centerview presented its assessment to the Pope board of the proposals received from Rayonier, Party A and Party E.

At a meeting of the Pope special committee on November 19, 2019, the Pope special committee discussed the proposal submitted by Party E and the weaknesses of that proposal relative to a potential business combination transaction with Rayonier, in particular with respect to valuation and the conditionality arising from the need for a vote by Party E’s stockholders. The Pope special committee also again considered the weaknesses of the asset purchase proposal presented by Party A. After discussion with its advisors, the Pope special committee determined to terminate data room access for Party A and Party E and to focus its efforts on pursuing further discussions with Rayonier, Party F and Party G. Representatives of Centerview communicated this decision to representatives of Party A and Party E and described to them the Pope special committee’s concerns with respect to their respective proposals.

On November 20, 2019, in light of the equity component of Rayonier’s proposed consideration, representatives of Centerview, Rayonier and Pope participated in a reverse due diligence call, where Centerview, Pope’s management and Pope directors discussed Rayonier’s operational, legal and financial risks and asked due diligence questions relating to Rayonier’s timber, real estate and trading segments, financial performance, capital allocation and management. Representatives of Centerview, Rayonier and Credit Suisse participated in a subsequent reverse due diligence call on November 26, 2019 to ask due diligence questions relating to financial information made available by Rayonier.

Also on November 20, 2019, at the direction of the Pope special committee, Centerview delivered a draft merger agreement prepared by Munger Tolles and Davis Wright to Party F and Party G. In addition, at the

 

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direction of the Pope special committee, Centerview delivered to Party F and Party G a proposal prepared by Winston Strawn, on behalf of Ms. Pope in her capacity as the Pope general partner shareholder, relating to a potential rollover of Pope family units to be included as part of the overall transaction with Party F and Party G. The proposal requested, among other things, certain minority protections and other minority rights with respect to Ms. Pope and certain of her affiliates continued investment in the surviving company. Thereafter, over the course of several days, representatives of Winston Strawn, Munger Tolles, and Centerview participated in conference calls with each of Party F and Party G and their respective advisors to discuss rollover structure and terms. At the instruction of the Pope special committee, the parties did not address the consideration payable for the Pope general partners on such calls.

In November 2019, Rayonier, Party F and Party G engaged in due diligence, with Pope’s management team participating in a number of calls with representatives of these potential acquirers addressing various due diligence requests and arranging for visits to certain of Pope’s timber sites by their respective management teams.

On two separate occasions in late November 2019 and early December 2019, Party A reached out to Centerview to reaffirm their interest in pursuing a transaction consistent with the alternative transaction structure that Party A had previously proposed. Centerview communicated Party A’s re-affirmation of interest to the Pope special committee.

On December 4, 2019, Munger Tolles delivered a revised draft of the merger agreement to Wachtell Lipton. The revised draft included, among other things, a requirement that a majority of the Pope units held by the unaffiliated Pope unitholders approve the proposed transaction and contemplated that Pope had the right to terminate the merger agreement in response to a superior proposal or intervening event. The revised draft rejected Rayonier’s proposal that the GP shareholders provide post-closing indemnification to Rayonier for any liabilities of the Pope general partner entities unrelated to their status as the general partners of Pope.

Also on December 4, 2019, Party F and Party G delivered their initial non-binding proposals and mark-ups of the draft merger agreement:

 

   

Subject to the assumptions set forth therein, Party F proposed $111.28 in cash per Pope unit and assumed $25 million in cash or equity of the newly formed parent company for the collective stock of the Pope general partners, excluding the value of the Pope units held by the Pope general partners. Party F proposed that the GP shareholders and their affiliates could elect to receive the merger consideration for their Pope units in cash or retain those Pope units as interests in the surviving company following the closing. Party F’s proposal stated that, among other conditions, it was subject to receipt of internal approvals and final approval from its co-investors. Party F’s proposal also set forth its remaining due diligence work plan and indicated that it anticipated completion of its due diligence by February 3, 2020.

 

   

Subject to the assumptions set forth therein, Party G proposed $112.00 in cash per Pope unit and $4 million for the collective stock of the Pope general partners, excluding the value of the Pope units held by the Pope general partners. Party G proposed that the GP shareholders and their affiliates could elect to receive the merger consideration for their Pope units in cash or for an interest in a designated portfolio of Pope’s timberlands. Party G’s proposal stated that it was subject to, among other conditions, receipt of internal approvals and approvals from Party G’s co-investor and its co-investor’s investors.

At a meeting of the Pope special committee on December 5, 2019, Centerview presented its assessment of the proposals received from Party F and Party G, including in terms of value, structure, conditionality and timing, and compared them to the Rayonier November 2019 proposal. Munger Tolles also summarized for the Pope special committee the proposed changes that Party F and Party G made to the draft merger agreement. The Pope special committee discussed these matters as well as each of the party’s rollover proposals and proposals on

 

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consideration payable for the Pope general partners. In that regard, the Pope special committee determined that Party F’s proposal of $25 million was too high and would not be supported by the Pope special committee, based on the committee members’ view that such amount was not supported by the information provided by the GP shareholders and their advisors. Munger Tolles discussed the Pope special committee’s role with respect to maximizing per unit value while recognizing that the support of the GP shareholders would likely be required by potential acquirers in order to execute definitive agreements with respect to a transaction. After a lengthy discussion with its advisors on negotiation strategies that would ultimately produce the highest value for the unaffiliated Pope unitholders, the Pope special committee determined that it should wait to address allocation of value to the GP shareholders in respect of their separate interests until later in negotiations and in the meantime seek to improve total value in the proposals submitted by each of Rayonier, Party F and Party G. The Pope special committee instructed Centerview to communicate to Rayonier, Party F and Party G that it should focus on increasing maximum total value and that the Pope special committee would address any value allocated to the GP shareholders in respect of their separate interests at a later time.

The next day, on December 6, 2019, the Pope board held a meeting in which Centerview reported to the members of the Pope board not on the Pope special committee and Mr. Andrews, in his capacity as a Pope board observer, on the proposals submitted by Party F and Party G as compared to the Rayonier November 2019 proposal and the status of due diligence with respect to such potential acquirers. Representatives from Munger Tolles, Davis Wright and Orrick also participated in the meeting.

Over the next several days, Centerview had discussions with Credit Suisse and the financial advisors of Party F and Party G to deliver the messages instructed by the Pope special committee and to discuss other aspects of their respective proposals. In Centerview’s discussion with Credit Suisse, Credit Suisse indicated, at the direction of Rayonier, that Rayonier would be open to increasing the value to Pope unitholders of its proposal in exchange for Pope granting exclusivity to finalize definitive documentation. Centerview also received a call from Party A, which indicated that it would be submitting a revised proposal for the Pope special committee’s consideration.

On December 8, 2019, Wachtell Lipton delivered a revised draft of the merger agreement to Munger Tolles. The revised draft, among other things, (i) deleted the condition that the proposed transaction would be subject to the affirmative vote of a majority of the Pope units held by unaffiliated Pope unitholders, (ii) rejected Pope’s ability to terminate the merger agreement in response to a superior proposal or intervening event and contemplated that Pope, absent earlier termination of the merger agreement in accordance with its terms, would be required to submit the transaction to a vote of the Pope unitholders and (iii) proposed a termination fee equal to 4% of Pope’s implied equity value. The revised draft also contemplated that the GP shareholders would indemnify Rayonier for any liabilities unrelated to the Pope general partners’ status as the general partners of Pope.

On December 10, 2019, representatives of Munger Tolles and Wachtell Lipton participated in a conference call to discuss issues presented by Wachtell Lipton’s markup of the merger agreement. Later, on the same day, representatives of Munger Tolles and Wachtell Lipton participated in a conference call to discuss tax considerations regarding Rayonier’s proposal.

Also on December 10, 2019, the Pope special committee met to discuss the status of discussions with the various parties. The Pope special committee continued to instruct Centerview to request that the potential acquirers make further improvements in the aggregate value of their proposals, which instructions Centerview followed.

In advance of a December 12, 2019 Pope board update call, on December 11, 2019, Party A and Party F each submitted revised non-binding proposals to Centerview:

 

   

Subject to the assumptions therein, Party A’s revised proposal continued to contemplate an asset purchase transaction along the lines of the term sheet it previously submitted (which excluded Pope’s

 

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non-timber real estate assets and liabilities not specifically associated with the purchased assets), but provided for an increase in its proposed base purchase price from $636 million to $647.5 million (on a cash-free, debt-free basis). The revised proposal still contemplated that the sole monetary remedy against Party A for a breach by Party A resulting in a failure to close would be the payment by Party A of a reverse termination fee. Party A indicated that its proposal would expire on December 13, 2019 and that it would need one month to confirm financing.

 

   

Subject to the assumptions therein, Party F’s revised proposal increased its purchase price from $111.28 to $115.28 per unit in cash, and continued to assume payment of $25 million in cash or equity to acquire the Pope general partners, excluding the Pope units held by the Pope general partners. Party F indicated it would accelerate its due diligence work with an estimated completion date of January 17, 2020, but that it still required final internal approvals as well as approvals from its co-investors. Other terms of Party F’s proposal remained unchanged, including with respect to the ability of the GP shareholders or their affiliates to roll their Pope units into the private company post-closing.

That day, Centerview and Credit Suisse participated on a call where Credit Suisse re-iterated, as directed by Rayonier, that Rayonier may be willing to increase its proposed offer price in exchange for exclusivity. As on prior calls, Centerview raised again with Credit Suisse the prospect of a fixed value deal given that Rayonier was competing against potential acquirers proposing all cash consideration. Credit Suisse reiterated, as directed by Rayonier, that under no circumstance would Rayonier agree to a fixed value deal.

Also on that day, Party G’s financial advisor communicated to Centerview that Party G would not be moving forward with the process given that it would need to lower its value based on its due diligence work. Party G’s president also contacted each of Mr. Thomas Ringo, president and chief executive officer of Pope, and Ms. Pope (with whom Party G’s president had a pre-existing business relationship) to convey Party G’s decision.

On December 12, 2019, the Pope board held an update call, with representatives from Centerview, Munger Tolles, Davis Wright and Orrick participating, to discuss the latest proposals from Rayonier, Party A and Party F. Centerview compared the price and other material terms of each of the proposals, including as to structure and expected timing. Centerview estimated that Party A’s December 11 proposal represented a per unit value of approximately $116.00, which was derived after adjusting the proposed purchase price for net debt, transaction expenses and environmental and other liabilities. Centerview noted that such estimate did not account for amounts that would need to be retained by Pope in order to capitalize and operate the surviving company through such time as the remaining company could sell all real estate assets and satisfy all remaining liabilities, including environmental liabilities. Centerview also noted that such estimate did not include any value attributable to the retained real estate assets, and that it was highly uncertain what value, if any, could be obtained for those assets in light of the environmental remediation obligations relating to such assets.

In addition, Centerview noted that Party A’s proposed structure presented various significant complexities, did not provide tax deferral for non-rollover unitholders and presented a delayed timeline on account of Party A’s financing approval process. With respect to Party F, Centerview noted that it had substantial due diligence pending and required co-investor approvals, both of which delayed the time to signing, and also did not present any tax deferral for non-rollover unitholders. With respect to Rayonier, Centerview noted that, based on Rayonier’s then current stock price and assuming a consideration mix of 75% equity and 25% cash, the per unit value of their offer was $119.00, but that the Rayonier offer lacked price certainty given the significant equity component of the consideration and Rayonier’s rejection of a fixed value approach in respect of the equity consideration.

With input from Centerview, Munger Tolles and Davis Wright, members of the Pope board discussed the relative strengths and weaknesses of the competing proposals, and the members of the Pope special committee conveyed their view that the Rayonier November 2019 proposal provided the most value in the aggregate to the Pope unitholders, but that it wanted Centerview to explore the possibility of further improvements to the

 

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aggregate value offered by Rayonier and Party F prior to indicating to either party receptiveness to moving forward with a transaction and agreeing to definitive documentation. The members of the Pope special committee also conveyed their view that the transaction proposed by Party A presented significant complexities and weaknesses and was not compelling relative to the proposals from Rayonier and Party F and that, accordingly, it was not advisable to continue discussions with Party A.

In connection with the discussion of the various proposals, Ms. Pope and Mr. Andrews asked the members of the Pope special committee about the process with respect to coming to agreement on the amount to be paid to acquire the Pope general partners, which would be critical to their support of any transaction. Members of the Pope special committee indicated that they were focused on maximizing total value to be paid by each of the potential acquirers and were not yet prepared to approve an amount payable to acquire the Pope general partners.

Also on December 12, 2019, the Rayonier board held a meeting to discuss the potential business combination transaction with Pope. The Rayonier board along with management and its advisors, Credit Suisse and Wachtell Lipton, engaged in a discussion regarding feedback received from Centerview with respect to the Rayonier November 2019 proposal. The Rayonier board and management also discussed various findings in the diligence to date and the analysis underlying any valuation for Pope, including the appropriate assumptions for comparative net asset values between Pope and Rayonier. Following these discussions, the Rayonier board authorized a proposed offer of $125.00 per Pope unit, consisting of a mix of 75% Rayonier common shares or Opco units and 25% cash, and $3 million to acquire the Pope general partners (excluding the Pope units held by those entities). The proposed offer per Pope unit represented a 65% premium to the $75.70 closing price of Pope units on November 4, 2019, the day prior to Pope’s announcement of discussions regarding a potential transaction. The equity portion of the consideration per the Rayonier November 2019 proposal would be translated into a fixed number of Rayonier common shares or Opco units based on the closing price of Rayonier common shares on December 11, 2019. Accordingly, the proposal would be 2.965 Rayonier common shares or Opco units and $31.25 in cash for each Pope unit (or 3.953 Rayonier common shares or Opco for those who elect to convert their Pope units into 100% equity). The Rayonier board also authorized that Rayonier management communicate willingness to allocate the aggregate fixed pool of consideration to acquire Pope and its two general partners in some other manner if the Pope special committee approved. Rayonier management was also instructed to request that Pope work exclusively with Rayonier as a condition to proceeding to work to finalize definitive documentation. At the meeting, it was also noted that Mr. Nunes had agreed in writing to accept all equity consideration for his Pope units, subject to any adjustments required per the merger agreement’s proration procedures. Mr. Nunes beneficially owned approximately 101,000 Pope units at the time of the entry into the merger agreement.

Later that same day, Rayonier submitted a revised non-binding written proposal consistent with the proposal authorized by the Rayonier board of directors described above, referred to as the Rayonier December 12, 2019 proposal, and submitted a request for exclusivity that contemplated Pope, MGP and EGP would exclusively negotiate with Rayonier until the earlier of January 2, 2020 or the date of execution of a definitive agreement between the parties, and the letter outlining the Rayonier December 12, 2019 proposal provided that if the exclusivity agreement were not signed by 5:00 p.m. New York time on December 13, 2019, the Rayonier December 12, 2019 proposal would expire.

On December 13, 2019, the Pope special committee met to discuss the Rayonier December 12, 2019 proposal and to receive an update from Centerview on its discussions with the potential acquirers and their respective financial advisors subsequent to the December 12, 2019 Pope board meeting. Centerview reported that it communicated to Party A that Party A’s proposal was not compelling relative to the proposals of other potential acquirers, and Party A responded that it would not be submitting any more proposals but would remain interested in pursuing a transaction on the terms it outlined in the event that discussions were terminated with other potential acquirers. Centerview reported that Party F indicated it would seek to try to find more value in connection with its ongoing due diligence but indicated that it could not move more quickly on its due diligence or investor approval timeline. Finally, Centerview reported on discussions with Credit Suisse about the terms of

 

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the Rayonier December 12, 2019 proposal, Rayonier’s request for exclusivity and possible adjustments to the mix of cash and equity contemplated by such proposal.

The Pope special committee discussed potential responses to the Rayonier December 12, 2019 proposal on value and mix of consideration. After weighing various factors, including Rayonier’s repeated rejections of a fixed value approach to the equity portion of its proposed consideration, the Pope special committee determined that it would prefer to increase the aggregate cash portion of the consideration (of $125.00 per Pope unit) from 25% to 30% to provide an additional measure of price protection in the event of a decrease in the value of Rayonier common stock after execution of a definitive merger agreement with Rayonier. The Pope special committee also determined to request an increase in the exchange ratio from 3.953 shares of Rayonier common stock or Opco units per Pope unit to 4.0 shares of Rayonier common stock or Opco units per unit along with a traditional fixed exchange ratio rather than the value equalization mechanism previously proposed by Rayonier.

In connection with this discussion, the Pope special committee decided to reject Rayonier’s request for exclusivity given, among other things, the lack of agreement with Rayonier on price and mix of consideration, and the continued participation by Party F and the prospect that Party F would increase its proposed purchase price if it were to remain in the process. However, the Pope special committee determined that it would be in the best interests of the unaffiliated Pope unitholders to focus on negotiating with Rayonier and coming to final terms and documents as promptly as practicable, given the advantages of value, tax deferral, execution certainty and timing presented by Rayonier’s offer relative to Party F’s.

In addition, the Pope special committee discussed a request that had been made by Ms. Pope on prior occasions as to whether Rayonier would consider allowing her to retain a direct interest in Pope legacy timberlands in exchange for Pope units owned by her and certain of her affiliates, consistent with her objective to remain a long-term investor in Pope’s assets. The Pope special committee determined that it did not have an objection to raising Ms. Pope’s request with Rayonier but discussed that any such exchange, if acceptable to Rayonier, would require Pope special committee oversight and approval.

After the Pope special committee meeting concluded, Centerview, Mr. McDade, Mr. Nunes, Mr. Mark McHugh, the chief financial officer of Rayonier, and Credit Suisse participated in various calls to discuss value and the mix of consideration. Centerview and Mr. McDade communicated the Pope special committee’s positions on these topics. Centerview and Mr. McDade also reported to Mr. Nunes and Mr. McHugh that the Pope special committee was not prepared to enter into exclusivity with Rayonier, but that the Pope special committee would be focusing on negotiating with Rayonier in order to resolve terms and finalize documents with them as promptly as practicable. Finally, Centerview and Mr. McDade raised Ms. Pope’s request that Rayonier consider allowing her to retain a direct interest in certain Pope legacy timberlands, and Mr. Nunes and Mr. McHugh stated that Rayonier could not agree to such a transaction structure.

Later on December 13, 2019, Wachtell Lipton delivered an initial draft of the limited partnership agreement of Opco, referred to as the Opco LPA, to be attached as an exhibit to the merger agreement and entered into at the closing of the proposed transaction. Wachtell Lipton, Munger Tolles and Davis Wright thereafter exchanged various drafts of the Opco LPA prior to its finalization on January 14, 2019.

On December 14, 2019, the Rayonier board and its advisors, Credit Suisse and Wachtell Lipton, met to discuss the Pope special committee’s response to the Rayonier December 12, 2019 proposal. Rayonier management explained that Centerview had informed them that the Pope special committee was interested in exploring a potential business combination transaction with Rayonier, subject to certain revisions to Rayonier’s December 12, 2019 proposal, in particular, that Rayonier revise its mix of consideration to 70% Rayonier common shares or Opco units and 30% cash (the equity portion of which would continue to be translated into a fixed number of Rayonier common shares or Opco units based on the closing price of Rayonier common shares on December 11, 2019) and that Rayonier increase its proposed exchange offer from 3.953 shares of Rayonier common stock or Opco units per Pope unit to 4.0 shares of Rayonier common stock or Opco units per unit. The

 

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Rayonier board had a lengthy discussion about the Pope special committee’s proposed revisions, and determined that it would accept the Pope special committee’s proposed revisions with the understanding that Rayonier’s proposal, as so revised, would represent its best and final proposed offer for a business combination transaction with Pope. The Rayonier board also instructed Rayonier management to continue to offer to acquire the Pope general partners for $3 million, and to continue to indicate willingness to re-allocate the aggregate fixed pool of consideration to acquire Pope and the Pope general partners in some other manner if the Pope special committee approved.

On December 14, 2019, following a conversation between Mr. Nunes and a representative of Centerview, Rayonier submitted an updated non-binding written proposal, referred to as the Rayonier December 14, 2019 proposal. The Rayonier December 14, 2019 proposal provided that Pope unitholders electing Opco units as consideration would receive 4.0 Opco units and those who did not elect to receive the Opco units would receive $125.00 in cash, subject to proration to ensure that the overall consideration did not exceed 70% Rayonier equity and 30% cash. The proposal contemplated a fixed exchange ratio. Based on Rayonier’s closing stock price of $31.79 as of December 13, 2019, and assuming a 1-to-1 equivalency between an Opco unit and a share of Rayonier common stock, the per Pope unit value represented by the Rayonier December 14, 2019 proposal was $126.51. Rayonier proposed to acquire the Pope general partners for $3 million (excluding the Pope units held by the Pope general partners), but continued to indicate flexibility as to the allocation of the aggregate consideration paid to acquire Pope and the Pope general partners. In subsequent discussions, Credit Suisse, as directed by Rayonier, indicated to Centerview that the Rayonier December 14, 2019 proposal was Rayonier’s best and final offer in terms of overall value to acquire Pope and the Pope general partners.

On December 15, 2019, in order to finalize transaction terms with Rayonier and determine whether they had the support of the GP shareholders for a transaction with Rayonier, the Pope special committee determined that it would be appropriate to address the amount the Pope special committee would be prepared to approve for the equity interests of the Pope general partners. The Pope special committee discussed the amount of such consideration at length with its advisors at a meeting on December 15, 2019, and representatives of Munger Tolles reviewed with the Pope special committee applicable legal considerations. At this meeting, the Pope special committee instructed Munger Tolles to send Winston Strawn and Orrick a letter from the Pope special committee to Ms. Pope and Mr. Andrews. The letter stated the Pope special committee’s position, with input from Centerview, that the work performed by the financial advisor to the GP shareholders did not support the range of values for the equity interests of the Pope general partners presented by such financial advisor at the meeting of the Pope special committee on October 15, 2019. The letter provided that the Pope special committee was prepared to approve an appropriate amount to be received by the GP shareholders for their ownership of the Pope general partners taking into account Pope’s unique governance structure and information provided by the GP shareholders and their financial advisor that the Pope special committee considered relevant, among other factors. The Pope special committee discussed at length, with input from Centerview, what an appropriate amount would be for the consideration to acquire the Pope general partners and determined, in light of the likely need for support by the GP shareholders of a potential transaction, that it would be prepared to approve a total of $7.35 million for such consideration, regardless of whether the prevailing potential acquirer was Rayonier or Party F. Munger Tolles delivered a letter to this effect to Winston Strawn and Orrick shortly after the Pope special committee meeting concluded, and Centerview subsequently contacted the financial advisor to the GP shareholders, the GP shareholders and their counsel on separate calls to communicate that the Pope special committee would be prepared to approve $7.35 million for the consideration payable to acquire the Pope general partners.

On December 16, 2019, Wachtell Lipton proposed revisions to the merger agreement to reflect the Rayonier December 14, 2019 proposal. Also on December 16, 2019, Wachtell Lipton delivered a draft form of support agreement to be signed by Ms. Pope, Mr. Andrews and certain of their related parties. Wachtell Lipton, Orrick and Winston Strawn thereafter exchanged various drafts of the form of support agreement prior to its finalization on January 14, 2019.

 

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On December 17, 2019, the financial advisor to the GP shareholders discussed with representatives of Centerview the consideration payable to acquire the Pope general partners. The financial advisor to the GP shareholders asked Centerview to express to Rayonier the GP shareholders’ view that Rayonier should fund the entirety of the consideration payable to acquire the Pope general partners without any decrease in the per unit value offered by Rayonier in the Rayonier December 14, 2019 proposal. Ms. Pope also reported by telephone to Centerview that the chief executive officer of Party F, with whom Ms. Pope had a pre-existing business relationship, had indicated to Ms. Pope that Party F was still interested in pursuing a transaction with Pope and would need ten more days to confirm value. Centerview reported the contents of this conversation to the Pope special committee at its meeting later that morning. The Pope special committee considered the GP shareholders’ request in light of Rayonier’s message that their offer on total value was best and final and expressed their concerns that making this request would risk the proposed exchange ratio of 4.0 Opco units per Pope unit the Pope special committee had bargained for. The Pope special committee determined no response was needed to the GP shareholders or to Rayonier at that time.

On December 18, 2019, at the direction of the Pope special committee, Munger Tolles delivered a revised draft of the merger agreement. The revised draft, among other things, (i) re-proposed that the proposed transaction would be subject to the affirmative vote of a majority of the Pope units held by unaffiliated Pope unitholders, (ii) accepted Rayonier’s proposal that Pope would not have a right to terminate the agreement in order to accept a superior proposal and therefore, absent earlier termination of the merger agreement in accordance with its terms, Pope would be required to submit the transaction to a vote of the Pope unitholders and (iii) rejected Rayonier’s proposed termination fee of 4% of Pope’s implied equity value but did not offer a specific counter-proposal. Prior to submitting the revised draft, the Pope special committee discussed with its advisors various considerations related to potentially accepting Rayonier’s proposal that its proposed transaction be submitted to a vote of Pope unitholders even in the event the Pope board changed its recommendation in support of a superior proposal. The Pope special committee concluded that it was running a sufficiently thorough market check, which was publicly known and reasonably likely to have elicited interest from all interested potential acquirers, such that the Pope special committee was prepared to accept Rayonier’s position to achieve other transaction terms acceptable to the Pope special committee. At the request of the GP shareholders’ legal advisors, the revised draft also indicated that the GP shareholders would not agree to indemnify Rayonier for any liabilities relating to the Pope general partners (other than those liabilities arising from their status as such).

On December 18, 2019, Orrick, on behalf of the Andrews general partner shareholder, delivered a revised draft of the form of support agreement to Munger Tolles for distribution to Wachtell Lipton.

On December 20, 2019, at a meeting of the Pope special committee, Centerview reported that, in its discussions with the GP shareholders and their financial advisor, Centerview (i) expected that the GP shareholders would likely request $14 million for the GP consideration and (ii) conveyed the GP shareholders’ view that Rayonier should pay this amount without decreasing Rayonier’s proposed consideration to acquire the Pope units as reflected in the Rayonier December 14, 2019 proposal. Centerview also reported that representatives of Rayonier had reiterated to Centerview that the Rayonier December 14, 2019 proposal was its best and final in terms of overall consideration to acquire Pope and the Pope general partners, and any amount payable to acquire the Pope general partners above the $3 million offered by Rayonier would result in a corresponding reduction in the amount payable to acquire Pope reflected in the Rayonier December 13, 2019 proposal. Finally, Centerview reported that Party F’s financial advisor told Centerview that it would be delivering an updated proposal before the upcoming Pope board update call on December 22, 2019. The Pope special committee discussed these issues and the negotiating positions it could take relative to Rayonier, Party F and the GP shareholders depending on, among other things, Party F’s proposed purchase price and terms.

On December 20, 2019, representatives of Munger Tolles and Wachtell Lipton participated in a conference call to discuss issues presented by the revised draft of the merger agreement. Wachtell Lipton expressed Rayonier’s objection to conditioning the transaction on the approval of a majority of the Pope units held by unaffiliated Pope unitholders, in light of the fact that, among other things, all Pope units would have the right to

 

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convert into the same consideration or mix of consideration under Rayonier’s proposal. Wachtell Lipton also reiterated Rayonier’s position that the GP shareholders provide an indemnity to Rayonier for any liabilities of the Pope general partners unrelated to their status as such. Munger Tolles and Wachtell Lipton also discussed other issues relating to, and the status of, other definitive documentation.

On December 21, 2019, Party F delivered to Centerview a revised non-binding written proposal to acquire Pope for $116.48 per Pope unit in cash, assuming payment of $25 million in the form of cash or equity to acquire the Pope general partners, excluding the Pope units held by these entities. The revised proposal stated that Party F expected to complete its due diligence work by January 17, 2020 but that it would need until February 4, 2020 to obtain the approval of its co-investors. Other terms of Party F’s proposal remained unchanged, including with respect to the ability of the GP shareholders or their affiliates to roll their Pope units into the private company post-closing.

On December 22, 2019, the Pope special committee met to discuss and compare the terms of the proposals from Rayonier and Party F. Centerview noted that Rayonier’s proposal represented a value of $129.11 per Pope partnership unit (up from $126.51 as of December 14, 2019 due to the increase in Rayonier’s stock price). Centerview reported that Credit Suisse had reiterated to Centerview that the Rayonier December 14, 2019 proposal was Rayonier’s best and final in terms of overall consideration to acquire Pope and the Pope general partners, and any amount payable to acquire the Pope general partners above the $3 million offered by Rayonier would result in a corresponding reduction in the amount payable to acquire the Pope units. The Pope special committee considered various factors with respect to the competing proposals, including value, price risk, tax treatment, timing, financing risk and execution risk. As part of that discussion, Centerview noted that Party F’s financial advisor had confirmed that Party F would not be able to secure financing before early February 2020. In addition to price, the Pope special committee considered Party F’s additional due diligence requirements and lack of committed financing as material weaknesses of its proposal relative to Rayonier’s proposal, as there could be no certainty that Party F would be able to secure co-investor approval or that it would not attempt to reduce its price as it continued its due diligence. The Pope special committee also considered the risk that Rayonier would reduce its proposed offer price or terminate discussions if the Pope special committee were to ask Rayonier to maintain its current proposal until at least February 2020 so that another potential acquirer could complete its work. In light of these and other factors, the Pope special committee determined that the Rayonier December 14, 2019 proposal continued to present the best reasonably available opportunity to maximize unitholder value and resolved to work expeditiously to finalize definitive agreements with Rayonier. The Pope special committee recognized when making this determination, as it had at other times during the transaction process, that it remained uncertain whether there would be unanimous GP shareholder support for a Rayonier transaction on terms supported by the Pope special committee, including with respect to the amount of consideration payable to acquire the Pope general partners and the terms of the Rayonier transaction applicable to the GP shareholders, and had considered the prospect that one or both GP shareholders would prefer a transaction proposed by a different counterparty or no transaction at all. The Pope special committee and its advisors accordingly discussed on various occasions the possibility of alternative transaction structures that would deliver control of Pope without acquiring the Pope general partners, or acquiring the Pope general partners without the unanimous support of the GP shareholders, and their attendant legal risks.

On December 22, 2019, following the meeting of the Pope special committee described in the preceding paragraph, the Pope board conducted a conference call, with representatives of Centerview, Munger Tolles, Davis Wright, Orrick and Winston Strawn participating, to receive an update from Centerview on the December 14, 2019 Rayonier proposal and the revised proposal from Party F. The Pope board discussed the factors the Pope special committee considered in assessing the two proposals, and the members of the Pope special committee reported on their resolution to move forward expeditiously with Rayonier. At this meeting, Ms. Pope and Mr. Andrews inquired about the status of discussions with Rayonier on the amount of the consideration payable to acquire the Pope general partners and its effect, if any, on the price to be paid to acquire Pope. Centerview conveyed Rayonier’s position, as communicated through Credit Suisse, that it would be open to approving a reasonable increase in the GP consideration in order to secure the approval of the GP shareholders

 

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for the transactions, but that the Rayonier December 14, 2019 proposal was its best and final in terms of overall consideration to acquire Pope and the Pope general partners, and any amount payable to acquire the Pope general partners above the $3 million offered by Rayonier would result in a corresponding reduction in the amount payable to acquire the Pope units. Ms. Pope also reported that she had a brief conversation with the chief executive officer of Party F when they encountered one another by happenstance, and that she had suggested that Party F call Centerview to discuss whether there were areas where Party F had undervalued Pope’s assets and businesses.

Over the next several days, Centerview spoke with representatives of the financial advisor to Party F regarding potential areas where Party F could improve the value of its proposal. With approval from the Pope special committee, Centerview also reached out to Party G’s financial advisor to suggest that Party G reach out to Party A to explore the possibility that Party G and Party A work together to submit a joint bid for an entire company transaction in light of Party G’s interest in acquiring Pope’s non-timber real estate assets, which Party A had previously stated it would not acquire. Party G’s financial advisor indicated it would reach out to Party A to discuss this possibility. Additionally, Centerview informed Credit Suisse that the Pope special committee was agreeable to a transaction where the amount payable to acquire the Pope general partners would be $7.35 million, but that the GP shareholders had not yet formally responded to the position of the Pope special committee.

On December 23, 2019, Wachtell Lipton delivered a revised draft of the merger agreement to Munger Tolles and Davis Wright. The revised draft, among other things, (i) continued to propose that the transaction would be subject to the approval of a majority of the outstanding Pope units, but not a separate requirement that it would also be subject to an affirmative vote of a majority of the Pope units held by unaffiliated Pope unitholders and (ii) continued to propose a termination fee equal to 4% of Pope’s implied equity value. The revised draft also contemplated that the GP shareholders would indemnify Rayonier for any liabilities unrelated to the Pope general partners’ status as the general partners of Pope.

On December 24, 2019, Party F delivered a revised non-binding written proposal with a per Pope unit offer price of $119.28 in cash, assuming $25 million to be paid in the form of cash or equity to acquire the Pope general partners. Party F’s revised proposal did not otherwise change the terms of its prior proposal, including with respect to its anticipated due diligence schedule or ability to secure committed financing, or the ability of the GP shareholders or their affiliates to roll their Pope units into the private company post-closing.

Over the next several days, Munger Tolles and Wachtell Lipton participated in conference calls to discuss issues presented by the draft merger agreement. Wachtell Lipton reiterated that Rayonier would not accept a separate requirement that the transaction would be subject to approval of a majority of the Pope units held by unaffiliated Pope unitholders, in light of the fact that, among other things, all Pope units would have the right to convert into the same consideration or mix of consideration under Rayonier’s proposal.

Also on December 27, 2019, Centerview presented the terms of Party F’s revised proposal at a meeting of the Pope special committee. For the reasons previously considered by the Pope special committee, the Pope special committee instructed Centerview to report to Party F that its proposal was not competitive compared to other potential acquirers with respect to value and too uncertain from a timing and financing perspective, which instructions Centerview later followed. Also at the meeting, Munger Tolles summarized the terms of the latest draft of the merger agreement with Rayonier and noted that Rayonier would not accept a separate requirement that the transaction would be subject to approval of a majority of the Pope units held by unaffiliated Pope unitholders, in light of the fact that, among other things, all Pope units would have the right to convert into the same consideration or mix of consideration under Rayonier’s proposal. In its discussions, the Pope special committee acknowledged that the condition was established in the context of considering a transaction on terms along the lines of Party A’s initial proposal, where the GP shareholders and their affiliates could elect to retain an equity interest after closing. The Pope special committee determined that it would continue to seek to include such a provision, but, subject to prior approval by the Pope board, may ultimately support an attractive transaction with Rayonier without such a provision.

 

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On December 30, 2019, representatives of Rayonier, Wachtell Lipton, Credit Suisse, Centerview and Munger Tolles participated in a call to discuss key open items in the merger agreement, including the size of the termination fee and condition that the merger be approved by a majority of the Pope units held by unaffiliated Pope unitholders. Munger Tolles proposed on behalf of the Pope special committee a termination fee of 2.5% of Pope’s implied equity value. Rayonier rejected this proposal and countered with a proposed termination fee of 3.5% of Pope’s implied equity value. Rayonier also repeated its position that it would not accept a condition that the merger be approved by a majority of the Pope units held by unaffiliated Pope unitholders, in light of the fact that, among other things, all Pope units would have the right to convert into the same consideration or mix of consideration under Rayonier’s proposal. Munger Tolles reported to Rayonier and Wachtell Lipton that the Pope special committee was not prepared at that time to accept removal of the condition and that any such removal would require prior approval from the Pope board. The parties also discussed the GP shareholders’ rejection of the GP shareholder post-closing indemnity and potential solutions to satisfy the GP shareholders’ preference for no post-closing recourse while alleviating Rayonier’s concerns with respect to acquiring the Pope general partners with potential liabilities unrelated to the Pope general partners’ status as such.

The parties also discussed the consideration elections in the merger agreement. Rayonier had proposed that Pope unitholders could elect to receive either 4.0 Opco units or $125.000 in cash for each Pope unit (each subject to proration). Centerview raised a request from the Pope special committee that unitholders have the option to elect to receive (a) 4.0 shares of Rayonier common stock, (b) 4.0 Opco units or (c) $125.00 in cash, for each Pope unit (each subject to proration). Rayonier’s representative indicated that this would likely be acceptable to Rayonier. The parties also discussed Rayonier’s request that it have the option to issue more shares of Rayonier common stock or Opco units to the extent the equity elections were oversubscribed, and Centerview and Munger Tolles indicated that this would likely be acceptable to the Pope special committee. Both of these changes were reflected in subsequent drafts of the merger agreement.

Also on December 30, 2019, Mr. Nunes and Mr. Ringo met for lunch to discuss certain topics related to the potential business combination transaction, including the views of Pope senior management about the transaction, open items on employee compensation matters, and transition planning.

On December 31, 2019, Munger Tolles delivered a revised draft of the merger agreement to Wachtell Lipton. The revised draft, among other things, re-proposed that the merger would be subject to the affirmative vote of a majority of the Pope units held by unaffiliated Pope unitholders and proposed a termination fee equal to 3.25% of Pope’s implied equity value based on the Rayonier December 14, 2019 proposal. The revised draft also indicated that Rayonier’s proposal for a post-closing indemnity to be provided by the GP shareholders in respect of liabilities of the Pope general partners’ remained subject to resolution with the GP shareholders.

On January 2, 2020, Party G’s financial advisor orally communicated to Centerview that Party G and Party A would be prepared to make a non-binding joint proposal to acquire all of the Pope units in a transaction valued at $123.00 to $125.00 per Pope unit, which amount would be reduced by any consideration to acquire the Pope general partners. On the same day, Party F delivered to Centerview a non-binding addendum to its latest proposal proposing a total cash offer price of $127.29 per Pope unit, which amount would similarly be reduced by any consideration to acquire the Pope general partners. Party F’s proposal stated that they had previously assumed $25 million as consideration to acquire the Pope general partners (excluding the Pope units owned by them) but would be open to adjusting that amount if Pope would like to do so. In subsequent conversations between representatives of Party F’s financial advisor and Centerview, Party F’s financial advisor confirmed that there was no change to the timing or financing requirements of Party F set forth in their previous proposal, and that the earliest Party F could secure financing commitments was early February 2020.

On January 3, 2020, with Pope special committee authorization, Centerview arranged a call between Ms. Pope and Mr. McHugh, with counsel for Ms. Pope and Wachtell Lipton also participating. Ms. Pope and Mr. McHugh discussed, among other things, whether Rayonier would be open to a transaction in which she could exchange her Pope units for interests in timberlands of Pope, consistent with her desire to be a long-term holder

 

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of timber assets previously held by her family and proposals offered by other bidders. Mr. McHugh indicated that Rayonier would not be willing to agree to any transaction in which certain Pope unitholders would receive a different form or amount of consideration than other Pope unitholders as part of the acquisition of Pope. Mr. McHugh indicated that Rayonier was always interested in considering transactions that would maximize the value of its portfolio and that it would be willing to consider any offers for such timber assets after the closing of the transaction. Rayonier emphasized, however, that no assurance could be given as to whether Rayonier would sell such timber assets or upon what terms (including price). In this conversation, they also discussed the inclusion of a mutual non-disparagement provision in her support agreement.

On January 4, 2020, Wachtell Lipton delivered a revised draft of the merger agreement to Munger Tolles and Davis Wright. The revised draft, among other things, (i) continued to propose that the transaction would be subject to the approval of a majority of the outstanding Pope units, but not a separate requirement that it would also be subject to an affirmative vote of a majority of the Pope units held by unaffiliated Pope unitholders and (ii) proposed a termination fee equal to 3.75% of Pope’s implied equity value based on the Rayonier December 14, 2019 proposal. The revised draft also contemplated that the GP shareholders indemnify Rayonier for any liabilities of the Pope general partners unrelated to their status as such.

Over the course of January 4, 2020 and January 5, 2020, Centerview had separate discussions with the financial advisor to Party F and the financial advisor to Parties G and A regarding their proposals. Party F’s financial advisor indicated that Party F would not be submitting any further written proposals, but, if selected by the Pope special committee as the preferred potential acquirer, Party F could potentially offer up to approximately $128.00 per Pope unit (an increase of approximately $1.00 from its prior proposal, but which proposal contemplated that the per unit consideration would be reduced by any consideration paid to acquire the Pope general partners). The financial advisor to Parties G and A indicated that they were working to determine if they could increase their proposed offer price. The financial advisor also stated that in order for Parties G and A to spend more resources to explore a potential transaction, they would require either a commitment that Pope would exclusively negotiate with them for some period of time and/or reimbursement of their expenses. Centerview updated the Pope special committee on these conversations.

On January 5, 2020, representatives of Winston Strawn and Orrick, on behalf of the GP shareholders, notified representatives of Munger Tolles that, in connection with the Pope special committee’s consideration of the potential acquirer’s proposals, the GP shareholders were willing to accept $10 million in cash for the consideration for the Pope general partners, plus the reimbursement by Pope of all attorneys’ fees (including all attorneys’ fees in excess of the $400,000 aggregate cap previously approved by the Pope special committee) and financial advisor fees incurred by each of the GP shareholders in connection with the evaluation of the various proposals and other related matters. The communication stated that the GP shareholders’ willingness to sell their respective interests in the Pope general partners on such proposed terms would remain in effect so long as definitive documents acceptable to the GP shareholders with respect to any proposed transaction were executed on or prior to February 29, 2020 and provided any such proposed transaction was recommended by the Pope special committee. The Pope special committee met and discussed this proposal from the GP shareholders, but did not provide a response in light of the ongoing negotiations with Rayonier over open items relating to the GP shareholders. Centerview, at the instruction of the Pope special committee, informed Credit Suisse of the terms of the GP shareholders’ communication.

On January 6, 2020, the Pope board held an update call, with representatives of Centerview, Davis Wright, Munger Tolles and Orrick participating, to discuss the Rayonier December 14, 2019 proposal and the most recent proposals from Party F and Parties G and A. Centerview presented the total equity value per unit of each proposal on a gross basis, before any allocation of value for the consideration to acquire the Pope general partners. On that basis, the total equity value per Pope unit represented by the Rayonier December 13, 2019 proposal was $129.30, the Party F proposal was $127.29, and the joint proposal submitted on January 2, 2020 by Party G and A was between $123.00 and $125.00. The Pope board considered the comparative value of the Rayonier December 13, 2019 proposal and Party F’s proposal and discussed at length the advantages and

 

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disadvantages of Rayonier’s mixed equity and cash deal in terms of tax treatment (with tax deferral available to all unitholders with respect to the Opco portion of the consideration) and price certainty (with value fluctuating based on Rayonier’s stock price). In that regard, the Pope board noted the increase in Rayonier’s stock price over the latter half of 2019 and acknowledged the risk of a decline in Rayonier’s stock price after execution of a definitive agreement with Rayonier due to market reaction to the transaction, business performance, general market conditions or other factors. At the request of the Pope board, Centerview reviewed the reverse due diligence work performed on Rayonier and agreed to schedule a separate discussion with the Pope board and Pope management for Centerview and Pope management to discuss the nature and scope of the reverse due diligence in greater detail. The Pope board also discussed at length their concerns over Party F’s timing to complete due diligence and ascertain whether it had committed financing for the transaction at the offer price (or at all), as compared to the Rayonier transaction which could be finalized and executed promptly upon resolution of several open issues, many of which related to the GP shareholders. Certain members of the Pope board also discussed the disadvantages of delaying entering into a definitive agreement with Rayonier to provide Party F additional time to evaluate a potential transaction. One of the disadvantages considered was the risk that if the Pope special committee requested that Rayonier maintain its current proposal until at least February 2020, Rayonier may terminate discussions or reduce the value of its proposal, with no assurance that Party F would be able to secure financing or that it would not reduce its proposed purchase price or otherwise adjust the terms and conditions of its own proposal in a manner adverse to Pope.

Based on the Pope special committee’s continued uncertainty as to whether the GP shareholders would unanimously support a transaction with Rayonier recommended by the Pope special committee, on various occasions in late 2019 and early January 2020, representatives of the Pope special committee’s advisors and Rayonier and its advisors participated in a number of discussions considering alternative transaction structures that would deliver control of Pope without acquiring the Pope general partners or acquiring the Pope general partners without the unanimous support of the GP shareholders. One transaction structure discussed by representatives of Munger Tolles and Wachtell Lipton involved removal of the Pope general partners pursuant to the terms of the Pope limited partnership agreement. Members of Pope management and representatives of Munger Tolles, Davis Wright and Wachtell Lipton participated on a call regarding the procedures for removing the Pope general partners under the Pope limited partnership agreement in late December 2019.

On January 7, 2020, Wachtell Lipton delivered to Munger Tolles a proposal outlining the terms on which Rayonier would be willing to engage in a business combination transaction with Pope without the unanimous support of the GP shareholders. The proposal contemplated, among other things, that if unanimous GP shareholder consent was not received within fourteen days of the execution of the merger agreement, then Rayonier would have the option, at any time prior to five business days prior to the partnership meeting, to either (1) terminate the merger agreement and collect a termination fee equal to 3.75% of Pope’s implied equity value or (2) pursue a removal of MGP and EGP as general partners of Pope, in which case, if the removal vote failed, Rayonier would receive a termination fee equal to 1% of Pope’s implied equity value. The day prior, representatives of Rayonier and its advisors previewed the terms of this proposal on a call with representatives of the Pope special committee’s advisors.

At meetings of the Pope special committee on January 6, 2020 and January 7, 2020, Munger Tolles described the terms and implications of Rayonier’s proposal to the Pope special committee. The Pope special committee considered how the proposal would (i) obligate Pope to pay a termination fee based entirely on decisions by the GP shareholders and Rayonier, each of which was outside of the Pope special committee’s control, (ii) provide Rayonier an option to terminate the transaction during the period that proxy materials to approve the transaction may have been circulated to Pope unitholders and only several days in advance of the partnership meeting, (iii) prevent Pope from pursuing other transactions through such time, and (iv) affect the value that another potential acquirer would be willing to propose to offer for Pope should Pope have to pay the termination fee to Rayonier. For these and other reasons, the Pope special committee determined that Rayonier’s alternative proposal was not in the best interests of the unaffiliated unitholders, and that the Pope special committee would not pursue these discussions further with Rayonier. The Pope special committee instead

 

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determined to focus on resolving open issues with the GP shareholders in a manner that would be acceptable to the Pope special committee and Rayonier, and result in a transaction that provided the unaffiliated unitholders the maximum value reasonably available for their Pope units.

At the January 7, 2020 meeting of the Pope special committee, in anticipation of the call to provide members of the Pope board with an overview of the reverse due diligence performed on Rayonier, Mr. Ringo joined the Pope special committee meeting to answer questions relating to his views and the views of Pope’s management regarding Rayonier’s assets and business, based on industry knowledge and reports and the responses from Rayonier management on the reverse due diligence call in which Mr. Ringo participated.

Also on January 7, 2020, Party F’s financial advisor contacted Centerview and asked that a call be arranged between the chief executive officer of Party F and Mr. McDade, so that the chief executive officer could seek to enhance the confidence of the Pope special committee in Party F’s proposal. Party F’s financial advisor also indicated that although Party F would not be able to seek financing approval before early February 2020, it would be able to accelerate due diligence on certain items if Pope were willing to reimburse Party F’s expenses in the event it did not enter into definitive agreement with Pope with respect to a transaction. Mr. McDade accepted the invitation for a call, but the chief executive officer of Party F did not propose any changes to the terms of the proposal Party F previously submitted or offer solutions to the weaknesses in that proposal identified by the Pope special committee.

On January 9, 2020, the members of the Pope board participated in a call with representatives of Centerview and Munger Tolles and members of Pope management to review the reverse due diligence work completed by Centerview and Pope management and to give members of the Pope board the opportunity to ask follow-up questions of Centerview and Pope management.

At its meeting on January 10, 2020, the Pope special committee deliberated on the value of the GP consideration and determined that it would be prepared to agree to the $10 million amount (which excluded the Pope units held by those entities) proposed by the GP shareholders as consideration to purchase the Pope general partners. Fundamental to this decision were (i) the Pope special committee’s view that a potential business combination with Rayonier on the basis of its most recent proposal presented the best reasonably available opportunity to maximize value for the unaffiliated Pope unitholders, (ii) a business combination transaction with Rayonier could only proceed if it had the unanimous support of the GP shareholders, in light of the Pope special committee concerns around alternative transaction structures that did not contemplate an acquisition of the Pope general partners and (iii) the GP shareholders’ unanimous commitment to support a transaction with Rayonier if they received consideration for the Pope general partners of $10 million (excluding the Pope units held by those entities). The Pope special committee also considered the fact that the GP shareholders’ proposal was within the range of consideration for the Pope general partners implied by the precedent transactions selected by the financial advisor to the Pope general partners that the Pope special committee considered relevant. However, members of the Pope special committee expressed concern with the request from the GP shareholders to lift the $400,000 aggregate cap on reimbursement of their legal expenses per the GP shareholders’ January 5th proposal and decided to leave this point open pending further discussion with the GP shareholders and Rayonier.

The Pope special committee next discussed how the increase in the consideration payable to acquire the Pope general partners to $10 million would affect the per Pope unit consideration payable in a business combination transaction with Rayonier. Centerview estimated that the incremental $7 million of GP consideration above the $3 million proposed by Rayonier amounted to less than $2.00 per Pope unit (and, above the $7.35 million previously approved by the Pope special committee, approximately $1.00 per Pope unit). After discussion, the Pope special committee determined that, even after adjusting the per Pope unit consideration to accommodate the $10 million in cash payable to acquire the Pope general partners, the Rayonier proposal represented the best value reasonably available for the unaffiliated Pope unitholders. The Pope special committee determined that it would request of Rayonier that the additional value for the GP consideration would reduce only the equity portion of the consideration offered to acquire Pope and not the cash portion, in order to preserve

 

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the fixed price component of the transaction consideration. The Pope special committee instructed Centerview to negotiate with Rayonier and its financial advisor with respect to appropriate adjustments to Rayonier’s proposed exchange ratio to reflect the increase in GP consideration. Centerview notified Credit Suisse of the Pope special committee’s decision, and representatives of the two financial advisors engaged in a number of discussions over calculating the appropriate adjustment to the exchange ratio, the resolution of which ultimately provided for a ratio of 3.929 shares of Rayonier common stock or Opco units for each Pope unit (or, on a fully prorated basis, 2.751 shares of Rayonier common stock or Opco units and $37.50 in cash for each unit). At Rayonier’s closing stock price on January 10, 2020, this implied a value of $126.42 per Pope unit.

On January 10, 2020, Munger Tolles delivered a revised draft of the merger agreement to Wachtell Lipton. The draft did not contain a condition that the transaction would be subject to an affirmative vote of a majority of the Pope units held by unaffiliated Pope unitholders, but noted that the removal of this condition was subject to approval of the Pope board. The draft also included a termination fee equal to $19.5 million. At the request of the GP shareholders’ legal counsel, the revised draft did not contemplate that the GP shareholders would indemnify Rayonier for any liabilities of the Pope general partners.

Also on January 11, 2020, Orrick and Winston Strawn delivered a revised draft of the form of support agreement to Munger Tolles for distribution to Wachtell Lipton.

On January 12, 2020, Centerview reviewed their financial analysis with the Pope special committee so that the members of the Pope special committee would have the opportunity to ask questions before convening with other members of the Pope board. Based on previous discussions with the Pope special committee and Munger Tolles, it was determined that the Pope board would meet in person on January 13, 2020 to consider the merger agreement with Rayonier, and that Centerview would present its fairness opinion and accompanying analysis at that time at a joint session of the Pope special committee, the Pope board and the EGP board (which consisted of Mr. Ringo, Ms. Pope and Mr. Andrews), so that the other members of the Pope board would be able to hear Centerview’s presentation and participate in the discussion. At the end of Centerview’s presentation to the Pope special committee, the members of the Pope special committee confirmed that they believed that approving a business combination transaction with Rayonier on the presented terms (including with respect to the absence of an additional requirement that a majority of the Pope units held by unaffiliated Pope unitholders approve the merger) was in the best interests of the unaffiliated unitholders. There were no changes in Centerview’s analysis between the initial meeting with the Pope special committee on January 12, 2020 and the meeting with the Pope special committee, the Pope board and the EGP board on January 13, 2020.

Later that day, representatives of Wachtell Lipton, Winston Strawn, Orrick, Munger Tolles and Davis Wright participated in a conference call to discuss the open issues in the draft definitive documentation with respect to the GP shareholders.

Also on that day, Davis Wright, Munger Tolles and Wachtell Lipton, on behalf of their respective clients, agreed on the treatment of employee compensation matters, which is described in greater detail under the heading “—Interests of Pope’s Directors and Executive Officers in the Merger” beginning on page 128 of this proxy statement/prospectus.

On January 13, 2020, the Pope board met in person to consider the Rayonier merger agreement at a combined meeting of the Pope board, the Pope special committee and the board of directors of EGP, referred to as the EGP board. Representatives of Centerview, Munger Tolles, Davis Wright, Orrick and Winston Strawn participated. Munger Tolles reported to the Pope board and the GP shareholders that it had received a term sheet from Wachtell Lipton that day proposing a global resolution of open issues in the transaction documents, including those relating to the GP shareholders. In that term sheet, Rayonier proposed, among other things, (i) a termination fee of $20 million, (ii) no indemnification by the GP shareholders for any liabilities related to the Pope general partners but, in lieu thereof, a reduction in aggregate consideration payable to the Pope general partners on a dollar-for-dollar basis for unsatisfied liabilities of the Pope general partners (other than those liabilities arising from their status as general partners) in excess of $250,000 and a right of Rayonier not to close

 

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in the event such unsatisfied liabilities exceeded $10 million in the aggregate and (iii) an aggregate expense reimbursement limit of $500,000 for the legal expenses of the GP shareholders. Munger Tolles also reported that Wachtell Lipton had delivered a revised merger agreement and form of support agreement reflecting these proposals.

The members of the Pope board and Ms. Pope and Mr. Andrews, on behalf of the GP shareholders, discussed, separately and together, the proposed resolution proposed by Rayonier. Members of the Pope board (including the Pope special committee) determined that the proposed termination fee of $20 million was acceptable in light of the robust transaction process run by the Pope special committee (which fee represented approximately 3.5% of Pope’s implied equity value based on Rayonier’s closing stock price of $32.33 on January 10, 2020, inclusive of the consideration to acquire the Pope general partners). With respect to Rayonier’s proposed compromise in lieu of indemnification by the GP shareholders, members of the Pope board (including the Pope special committee) discussed how the Pope general partners throughout their history had not engaged in any business activity, other than serving as general partners of Pope and performing obligations incidental thereto, and that the prospect that the Pope general partners had liabilities unrelated to their role as general partners of more than a de minimis amount was very remote. On that basis, and in light of the interim operating covenants under the merger agreement requiring the Pope general partners to operate in the ordinary course after the execution of the merger agreement and prior to the consummation of the merger, the members of the Pope board (including the Pope special committee) determined to accept the termination right in favor of Rayonier in the event that any such liabilities of the Pope general partners were above $250,000 and exceeded the $10 million payable to acquire the Pope general partners. The GP shareholders also agreed with the revised expense reimbursement cap contemplated by the term sheet delivered by Wachtell Lipton on behalf of Rayonier and the other proposals reflected therein.

At the meeting, Centerview gave its presentation on the financial aspects of the Rayonier transaction to the Pope special committee, with the other members of the Pope board and EGP board listening and participating in the discussion. Centerview reviewed the transaction process and the proposals received from the various bidders since the commencement of the transaction process and the negotiating history with each such bidder. Centerview noted that it had contacted Party F’s financial advisor once more that day to press for any final increase in value by Party F, and Party F’s financial advisor responded that Party F had no further proposals to submit. Centerview noted that, based on Rayonier’s most recent closing stock price, the Rayonier offer price represented a fully prorated value of $126.44 per Pope unit (or $128.74 total equity value per Pope unit (fully prorated and before allocating any value for acquiring the Pope general partners)). Centerview proceeded to review with the Pope special committee its financial analysis of the merger consideration to be paid to the unaffiliated Pope unitholders, and rendered to the Pope special committee an oral opinion, which was subsequently confirmed by delivery of a written opinion dated January 14, 2020, to the Pope special committee, that, as of such date and based upon and subject to various assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken in preparing its opinion, the merger consideration to be paid to the unaffiliated Pope unitholders was fair, from a financial point of view, to such holders. For a detailed discussion of Centerview’s opinion, please see below under the heading “Opinion of Centerview Partners LLC” beginning on page 97 of this proxy statement/prospectus. Munger Tolles then reviewed the terms of the Rayonier merger agreement, including the fact that the merger agreement did not contemplate that the approval of the merger would be conditioned upon an affirmative vote of a majority of the Pope units held by the unaffiliated Pope unitholders and the reasons the Pope special committee supported accepting the absence of such provision, including that all Pope units would have the right to receive the same consideration or mix of consideration in the transaction, and responded to questions from members of the Pope board regarding these matters. The Pope board (including the members of the Pope special committee) discussed the Rayonier proposal at length, including as to value, risk of price fluctuation, the opportunity for tax deferral to all unitholders to the extent that they receive Opco units and closing certainty. Because the transaction documents were not yet completed, the members of the Pope board, Pope special committee and EGP board agreed to reconvene the following day to review and consider approving the final transaction documents with Rayonier.

 

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Also on January 13, 2020, in connection with the meeting of the Pope board to discuss the Rayonier transaction, the Human Resources Committee of the Pope board discussed and approved certain compensation and benefits-related matters, which are described in greater detail under the heading “—Interests of Pope’s Directors and Executive Officers in the Merger” beginning on page 128 of this proxy statement/prospectus. At the meeting the committee adopted resolutions to establish target payouts for 2020 and approve payments for 2019 performance.

Over the course of January 13, 2020 and January 14, 2020, Wachtell Lipton, Munger Tolles and Davis Wright proceeded to finalize the forms of the transaction documents.

On January 14, 2020, the Rayonier board convened a meeting, which was attended by representatives of Credit Suisse and Wachtell Lipton, to consider approving the entry into definitive transaction documents with Pope. A summary of the definitive documentation and draft resolutions for the Rayonier board’s consideration for the purposes of approving such agreements were provided to the Rayonier board in advance of the meeting. Representatives of Wachtell Lipton led a discussion of the material terms of the transaction documents and explained that the merger agreement contemplated the same aggregate consideration, and consideration mix payable to Pope unitholders as discussed in prior discussions with the Rayonier board, but that $10 million of such consideration (not the previously contemplated $3 million) was allocated as cash consideration paid to acquire the Pope general partners. Representatives of Credit Suisse then presented its financial analysis of the consideration to be provided by Rayonier in the transaction. After discussion, the Rayonier board of directors approved the merger agreement and determined the merger agreement and the transactions contemplated thereby to be advisable and in the best interests of Rayonier and its stockholders.

Later in the evening on January 14, 2020, the Pope special committee, the Pope board and the EGP board convened a joint telephonic meeting, which was attended by representatives of Centerview, Munger Tolles, Davis Wright, Orrick and Winston Strawn, to consider approving the Rayonier merger agreement and related items, taking into consideration the matters discussed during the prior meetings of the Pope special committee and the Pope board. At that meeting, Centerview informed members of the Pope special committee, the Pope board and the EGP board that there were no material changes between January 13 and 14, 2020 in its analysis or view that the transaction and the merger consideration to be paid to the unaffiliated Pope unitholders in respect of their Pope units was fair to such unitholders. At that meeting, the Pope board, based on the recommendation of the Pope special committee, unanimously approved the removal of the requirement that a majority of the Pope units held by the Pope unaffiliated unitholders approve the merger, which condition was previously established in the Pope board’s July 2019 resolutions, based on the fact that Rayonier was not willing to enter into a merger agreement with such a condition and that all Pope unitholders had the right to receive the same consideration or mix of consideration in the transaction in respect of their Pope units. The Pope board further unanimously reaffirmed the Pope special committee’s authority to recommend and approve a transaction with Rayonier without such a condition. The Pope special committee subsequently unanimously (w) determined that the merger agreement and the transactions contemplated thereby were advisable to and in the best interests of Pope and the unaffiliated unitholders, (x) approved Pope’s consummation of the transactions contemplated by the merger agreement, (y) recommended that the Pope board approve the merger agreement and the consummation by Pope of the transactions contemplated thereby, and (z) determined that MGP (or a designee) serve as the limited partner of record for all Pope units held by assignees. Thereafter, the Pope board (including a majority of the members who were not interested in the transaction as contemplated by the Pope limited partnership agreement), acting on the recommendation of the Pope special committee, unanimously (1) determined that the merger agreement and the transactions contemplated thereby were advisable to and in the best interests of Pope, (2) authorized and approved the merger agreement and the consummation by Pope of the transactions contemplated thereby, (3) elected to have MGP (or a designee) serve as the limited partner of record for all Pope units held by assignees, (4) recommended that Pope’s unitholders approve the merger agreement and the transactions contemplated thereby and (5) resolved to submit the merger agreement to a vote at a partnership meeting and recommend approval of the merger agreement and the transactions contemplated thereby by the unitholders. The Pope board and the EGP board thereafter also unanimously determined that the mergers of the Pope general partners were advisable to and in the best interests of the Pope

 

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general partners and the GP shareholders and approved the merger agreement and the consummation of the transactions contemplated thereby, including the mergers of the Pope general partners.

Later that night, the parties prepared execution versions of the merger agreement and all transaction documents and exchanged signature pages. The GP shareholders, upon receiving the signed merger agreement, delivered their written consents to the MGP merger and EGP merger as contemplated by the merger agreement. Pope and Rayonier announced the transaction before the market opened on January 15, 2020.

On April 1, 2020, the parties to the merger agreement amended the merger agreement to: (i) permit Pope unitholders who elect the cash consideration to designate whether they would receive Rayonier shares or Opco units in the event that the cash election was oversubscribed, and (ii) to reflect that Opco would be Rayonier’s operating company after the merger and successor-in-interest to Rayonier Operating Company LLC.

Recommendation of the Pope Board of Directors; Pope’s Reasons for the Merger

THE POPE BOARD UNANIMOUSLY RECOMMENDS THAT POPE UNITHOLDERS VOTE “FOR” APPROVAL OF THE MERGER AGREEMENT, THE MERGER AND THE RELATED TRANSACTIONS, “FOR” THE APPROVAL, BY ADVISORY (NON-BINDING) VOTE, OF THE MERGER-RELATED EXECUTIVE COMPENSATION AND “FOR” ADJOURNMENT OF POPE MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE INSUFFICIENT VOTES AT THE TIME OF POPE MEETING TO APPROVE THE MERGER AGREEMENT.

The Pope special committee believes, based on its consideration of the factors described below, that the merger agreement, the merger and the related transactions are advisable and in the best interests of Pope and the unaffiliated Pope unitholders, and that it is advisable and in the best interests of Pope and the unaffiliated Pope unitholders that the merger and the related transactions be consummated. The Pope board believes, based on its consideration of the factors described below, that the merger agreement, the merger and the related transactions are advisable and in the best interests of Pope, and that it is advisable and in the best interests of Pope that the merger and the related transactions be consummated.

Recommendation of the Pope Special Committee

On January 14, 2020, the Pope special committee, after receiving advice from Pope’s management and the Pope special committee’s outside financial and legal advisors, and after due and careful consideration, including of the terms and conditions of the merger agreement, the mergers and the related transactions, has unanimously (i) determined that the merger agreement, the merger and the related transactions are advisable and in the best interests of Pope and the unaffiliated Pope unitholders, (ii) approved the merger agreement and the consummation by Pope of the merger and the related transactions and (iii) recommended that the Pope board (A) approve the merger agreement and the consummation by Pope of the merger and the related transactions, (B) submit the merger agreement to the Pope unitholders for approval and (C) recommend that the Pope unitholders approve the merger agreement, the merger and the related transactions.

In evaluating the merger agreement, the merger and the related transactions, the Pope special committee consulted with its own financial and legal advisors, consulted with Pope’s management and considered a number of factors that it believed supported its decision to recommend to the Pope board that Pope enter into the merger agreement, including, but not limited to, the following factors (which are not intended to be exhaustive and are not listed in any relative order of importance):

 

   

the consideration to be paid for each Pope unit, which was valued at $127.51 per Pope unit as of the date of the Pope special committee’s approval (based on the closing price of Rayonier shares on January 14, 2020), representing a premium of approximately 36.45% over the closing price of the Pope

 

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units of $93.45 on January 14, 2020 (the last trading day before announcement of the merger) and a premium of approximately 83.57% to Pope’s closing price on March 4, 2019 (the last trading day before Pope’s announcement of the conclusion of its prior comprehensive review of strategic options);

 

   

the fact that tax deferral is generally expected to be available to all Pope unitholders with respect to the Opco unit portion of the merger consideration (including, at the election of the holder and in the event the cash election is oversubscribed, for any Pope units with respect to which a cash election was made that are subject to proration), and more generally the fact that all Pope unitholders are eligible to make the same merger consideration elections;

 

   

the Pope special committee’s understanding of Pope’s business, operations, financial condition, earnings, prospects, competitive position and the nature of the industry in which Pope and its subsidiaries compete, as well as Pope’s historical and projected financial performance;

 

   

the Pope special committee’s understanding of the risks, uncertainties and challenges faced by Pope and the industry in which Pope competes, including the potential downside that Pope would face if it continued to operate on a standalone basis and the challenges of continuing to operate as a master limited partnership, or “MLP” (which risks, uncertainties and challenges include the cautionary discussion of risks and uncertainties detailed in “Risk Factors” and Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of Pope’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (as filed with the SEC on February 28, 2020));

 

   

the Pope special committee’s belief, informed by the Pope board’s publicly announced comprehensive review of strategic options launched in August 2018, including the Pope board’s assessment of a potential conversion of Pope to a C-corporation, that Pope’s stand-alone strategic plan involved significant risks in light of the industry and competitive pressures facing Pope and MLPs generally, and the Pope special committee’s concerns with respect to the risks relating to Pope’s ability to execute on its strategic plan including the possibility that the strategic plan may not produce the intended results on the targeted timing or at all;

 

   

the financial analyses reviewed and discussed with the Pope special committee and the Pope special committee by representatives of Centerview, as well as the oral presentation of Centerview rendered to the Pope special committee and the Pope special committee on January 13, 2020, which was subsequently confirmed in writing by delivery of Centerview’s written opinion dated January 14, 2020, that as of January 13, 2020 and based upon and subject to the assumptions made, procedures followed, matters considered and limitations and qualifications on the review undertaken by Centerview in preparing its opinion, the merger consideration to be paid to the unaffiliated Pope unitholders in the merger pursuant to the merger agreement in respect of their Pope units is fair, from a financial point of view, to such holders, as more fully described in the section entitled “—Opinion of the Pope Special Committee’s Financial Advisor” beginning on page 97 of this proxy statement/prospectus;

 

   

the Pope special committee’s assessment of Pope’s market value on a standalone basis and its longstanding acknowledgement of the illiquidity of Pope’s units and the discount between the estimated net value of Pope’s assets on a per-unit basis and the historical trading prices of the Pope units in the market;

 

   

the possibility that it could take a considerable period of time, if ever, before the trading price of the Pope units would reach and sustain at least the merger consideration proposed by Rayonier;

 

   

the fact that the Pope special committee, with the assistance of its outside financial and legal advisors, engaged in, or attempted to initiate, discussions regarding a potential sale transaction with numerous strategic and financial parties, including giving such parties the opportunity to conduct due diligence and join with other parties in order to facilitate increases in any offers made, and that, as of the date of the Pope special committee’s approval, none of those parties had proposed a transaction that the Pope special committee believed was more attractive than the Rayonier proposal to the unaffiliated Pope

 

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unitholders after considering, among other factors, the relevant timing risk, consummation risk and potential for delay and additional uncertainty (as described under the section entitled “—Background of the Merger”);

 

   

the fact that the Pope special committee, with the assistance of its outside financial and legal advisors, conducted extensive negotiations with Rayonier with respect to the merger consideration and other terms and conditions of the merger agreement, including with respect to the mix of cash, Rayonier shares and Opco units comprising the merger consideration, which negotiation resulted in significant increases to the value of Rayonier’s proposal and ultimately a final revised proposal from Rayonier at a higher value than the proposals that Rayonier had previously put forward;

 

   

the Pope special committee’s belief that the price to be paid by Rayonier is the highest price per unit that Rayonier was willing to pay to the unaffiliated Pope unitholders, that the terms and conditions of the merger agreement were the most favorable to Pope and the unaffiliated Pope unitholders to which Rayonier was willing to agree, and that continued efforts to obtain a higher price from Rayonier, or soliciting additional interest from third parties, would be unlikely to lead to a higher price from Rayonier or a more favorable transaction with a third party, and could lead to the loss of Rayonier’s proposed transaction, in which event the unaffiliated Pope unitholders would lose the opportunity to accept the premium being offered;

 

   

the fact that the merger is not subject to approval by holders of Rayonier shares;

 

   

the Pope special committee’s belief that Rayonier has an experienced management team and board of directors;

 

   

Rayonier’s financial capability to pay the merger consideration and consummate the merger without the need for a contribution from third party equity sources;

 

   

the fact that unitholders will continue to be entitled to receive regular quarterly cash distributions declared by the Pope board that are paid on a date prior to the closing of the merger in respect of the Pope units in an amount up to $1.00 per unit;

 

   

the provisions of the merger agreement that permit Pope to explore an alternative proposal, including:

 

   

Pope’s ability to furnish information to and engage in negotiations with third parties that have made an alternative proposal that is a superior proposal or could reasonably be expected to result in a superior proposal, as more fully described in the section entitled “No Solicitation” beginning on page 118 of this proxy statement/prospectus;

 

   

the Pope board’s ability to consider, and under certain conditions, effect a change in recommendation with respect to, a superior proposal if failure to do so would be inconsistent with the Pope board’s duties under applicable Delaware law and the Pope limited partnership agreement; and

 

   

the $20,000,000 termination fee, which the Pope special committee believed, after consultation with its outside advisors, was reasonable and not likely to preclude a superior proposal for a business combination with Pope;

 

   

the belief that the terms of the merger agreement, taken as a whole, provide protection against the risk that the merger would be delayed or not consummated:

 

   

the covenants contained in the merger agreement obligating each of the parties to use reasonable best efforts to cause the merger to be consummated;

 

   

the covenant in the merger agreement pursuant to which Rayonier has agreed to use reasonable best efforts to promptly take all actions necessary to obtain antitrust approval of the merger, including (i) holding separate or divesting any property, asset or businesses; (ii) taking or committing to take any action that limits Rayonier’s freedom of action with respect to its ability to

 

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retain any property, assets or businesses, and (iii) initiating or defending against any lawsuit, action or proceeding, judicial or administrative, challenging the merger agreement or the related transactions, in each case subject to certain qualifications;

 

   

the provision of the merger agreement that allows the outside date for completing the merger to be extended to January 14, 2021, if the merger has not been consummated by the initial October 14, 2020 deadline because of the conditions relating to obtaining regulatory approvals not having been satisfied prior to such date;

 

   

the Pope special committee’s belief that the outside date for consummating the merger under the merger agreement on which either party, subject to certain exceptions, can terminate the merger agreement allows for sufficient time to consummate the merger and the transactions contemplated by the merger agreement;

 

   

the absence of a financing condition in the merger agreement;

 

   

the likelihood and anticipated timing of consummating the merger in light of the scope of the conditions to closing; and

 

   

the fact that Pope is entitled to enforce specifically the terms of the merger agreement and to pursue damages in the event of breaches of the merger agreement by Rayonier, subject to certain qualifications;

 

   

the GP shareholders’ willingness to deliver their written consent approving the acquisition of the Pope general partners within twenty-four hours of execution of the merger agreement as contemplated by the terms of the merger agreement;

 

   

the willingness of Ms. Pope and Mr. Andrews and certain of their related entities to enter into support agreements to vote in favor of the transaction with Rayonier, which provide for greater certainty that the merger agreement will be approved and the related transactions will be consummated;

 

   

the fact that the merger is not conditioned upon any member of Pope’s management or board entering into any employment, equity contribution or other agreement or arrangement with Pope or Rayonier, and that no such agreement or arrangement existed as of the date of the merger agreement;

 

   

the Pope board’s ability, under certain circumstances and upon the recommendation of the Pope special committee, to withhold or withdraw its recommendation to the Pope unitholders that they vote in favor of approval of the merger agreement, the merger and the related transactions, as more fully described in the section entitled “The Merger Agreement—No Change in Recommendation or Entry into Alternative Proposal Agreement” beginning on page 119;

 

   

the Pope board’s ability, under certain circumstances and upon the recommendation of the Pope special committee, to change its recommendation upon the occurrence of an intervening event, as more fully described in the section entitled “The Merger Agreement—No Change in Recommendation or Entry into Alternative Proposal Agreement” beginning on page 119;

 

   

the belief that the terms of the merger agreement, taken as a whole, including the parties’ representations, warranties and covenants, and the conditions to the parties’ respective obligations, are reasonable;

 

   

the risk that pursuing other potential alternatives, including continuing to operate on a standalone basis, could have resulted in the loss of an opportunity to consummate a transaction with Rayonier;

 

   

the fact that the Pope special committee had the authority to reject any proposals made by Rayonier and had no obligation to recommend any transaction to the Pope board; and

 

   

the fact that the Pope board would not approve any transaction without the prior affirmative recommendation of the Pope special committee.

 

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In the course of its deliberations, the Pope special committee also considered a variety of risks and other countervailing factors related to the merger agreement and the merger, including the following material factors:

 

   

the potential upside in Pope’s stand-alone strategic plan;

 

   

the fact that the merger consideration consisting of Rayonier stock and Opco units is based on a fixed ratio, and therefore the market value of the merger consideration to the Pope unitholders receiving Rayonier stock or Opco units would be adversely affected by a decrease in the trading price of Rayonier stock between the announcement of the merger agreement and the consummation of the merger;

 

   

the possibility that the merger might not be consummated in a timely manner or at all due to a failure of certain conditions, including with respect to the required approval of the transaction by regulatory authorities;

 

   

the risks and costs to Pope if the merger does not close in a timely manner or at all, including the potential negative impact on Pope’s ability to retain key employees, the diversion of management and employee attention, as well as the potential disruptive effect on Pope’s day-to-day operations and Pope’s relationships with customers, suppliers and other third parties;

 

   

the fact that the holders of Pope units who receive cash consideration will have no continuing equity interest in the combined company and will generally recognize taxable gain equal to the amount of cash received, reduced by the amount of their basis in the Pope units surrendered in the exchange; that those who receive Opco election consideration will have no immediate liquidity in the Opco units so acquired; and those who receive stock election consideration will incur the same recognition of taxable gain as those who receive cash consideration but will also have investment risk associated with changes in the market price of Rayonier shares (including without limitation by virtue of the matters discussed in “Risk Factors” beginning at page 39, above);

 

   

the restrictions on the conduct of Pope’s business prior to the merger effective time, which may delay or prevent Pope from undertaking business opportunities that may arise or any other action that it might otherwise take with respect to the operations and strategy;

 

   

the risk that Pope may be unable to obtain the requisite affirmative vote of the Pope unitholders to approve the merger agreement, the merger and the related transactions;

 

   

the provisions of the merger agreement that restrict Pope’s ability to solicit or participate in discussions or negotiations regarding superior proposals for alternative business combination transactions, subject to specified exceptions, and that require Pope to negotiate with Rayonier (if Rayonier desires to negotiate) prior to Pope being able to accept a superior proposal;

 

   

the possibility that Pope’s obligation to pay Rayonier a termination fee of $20,000,000 upon the termination of the merger agreement under certain circumstances could discourage other potential acquirers from making an alternative proposal to acquire Pope; and

 

   

the significant costs involved in connection with negotiating the merger agreement and consummating the merger, including in connection with any litigation that may result from the announcement or pendency of the merger, and the fact that if the merger is not consummated, Pope may be required to bear such costs.

In addition, the Pope special committee was aware of and considered the fact that the shareholders of the general partners and some of Pope’s directors and executive officers have interests in the merger that may be different from, or in addition to, the interests of Pope’s unitholders generally, including those interests that are a result of employment and compensation arrangements with the Partnership, as described more fully in the section entitled “—Interests of Pope’s Directors and Executive Officers in the Merger” beginning on page 128 of this proxy statement/prospectus.

 

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Recommendation of the Pope Board of Directors

On January 14, 2020, the Pope board, after receiving advice from Pope’s management and its outside legal advisors and acting upon the recommendation of the Pope special committee, and after due and careful consideration, including of the terms and conditions of the merger agreement, the mergers and the related transactions, unanimously (i) determined that the execution, delivery and performance of the merger agreement by Pope and the consummation by Pope of the related transactions are advisable to and in the best interests of Pope, (ii) authorized and approved the execution, delivery and performance by Pope of the merger agreement and the consummation by Pope of the related transactions (subject to receipt of the Pope unitholder approval), (iii) recommended that the Pope unitholders approve the merger agreement, the merger and the related transactions and (iv) resolved to submit the merger agreement to a vote at a meeting of the Pope unitholders and recommend approval of the merger agreement, the merger and the related transactions by the Pope unitholders. In addition, the Pope board, after receiving advice from the Human Resources Committee has unanimously recommended that the unitholders approve, by a non-binding, advisory vote at a special meeting of unitholders, the compensation that may be paid or become payable to Pope’s named executive officers in connection with, or following, the consummation of the merger. The Pope board therefore recommends a vote “FOR” the proposal to approve the merger agreement, the merger and the related transactions. The Pope Board also recommends a vote “FOR” the nonbinding compensation proposal and “FOR” the adjournment proposal.

The Human Resources Committee, after review and consideration of the compensation plans, arrangements and agreements between Pope and each of Pope’s named executive officers (within the meaning of Item 402(a)(3) of Regulation S-K under the Exchange Act) under which such named executive officers may receive compensation that may be paid or become payable in connection with, or following, the consummation of the merger, after receiving advice from Pope’s management and outside legal advisors with respect to such compensation plans, arrangements and agreements, and after due and careful discussion and consideration, has recommended to the Pope board that (i) the proxy statement include a submission to the Pope unitholders of a non-binding, advisory proposal to approve the compensation that may be paid or may become payable to Pope’s named executive officers in connection with, or following, the consummation of the merger and (ii) the Pope board recommend to the unitholders that the unitholders approve, by a non-binding, advisory vote at a special meeting of unitholders, the compensation that may be paid or become payable to Pope’s named executive officers in connection with, or following, the consummation of the merger.

Prior to and in reaching the foregoing determinations, the Pope board consulted with and received the advice of its advisors and outside legal counsel, Davis Wright Tremaine LLP, discussed certain issues with Pope’s management, and considered a variety of factors weighing positively in favor of the merger agreement, the merger and the related transactions, including the factors considered by the Pope special committee summarized above and including, but not limited to:

 

   

the Pope special committee’s analyses, conclusions and unanimous determination that the merger agreement, the merger and the related transactions, including the merger, are advisable and in the best interests of Pope and the unaffiliated Pope unitholders, and recommendation that the Pope board approve the merger agreement and the consummation by Pope of the related transactions, submit the merger agreement to the Pope unitholders for approval, and recommend that the Pope unitholders approve the merger agreement, the merger and the related transactions;

 

   

the fact that the Pope special committee was composed of directors who (i) were not directly or indirectly affiliated with the affiliated Pope unitholders (other than by virtue of their service on the Pope board), (ii) were not members of Pope’s management and (iii) otherwise did not have a material interest in the potential transaction (other than an interest by virtue of their ownership of Pope units);

 

   

the fact that the Pope special committee was active and engaged throughout the transaction process;

 

   

the fact that the Pope special committee was assisted and advised by its own outside financial and legal advisors in negotiating and evaluating the terms of the merger agreement;

 

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the opinion of Centerview, delivered orally to the Pope special committee on January 13, 2020 which was subsequently confirmed by delivery of a written opinion dated January 14, 2020, to the Pope special committee, that, as of such date and based upon and subject to various assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken in preparing its opinion, the merger consideration to be paid to the unaffiliated Pope unitholders in respect of their Pope units was fair, from a financial point of view, to such unitholders. The written opinion is described below in the section entitled “—Opinion of the Pope Special Committee’s Financial Advisor” beginning on page 97 of this proxy statement/prospectus;

 

   

the briefings and information provided to the various members of the Pope board throughout the transaction process; and

 

   

the Pope board’s belief, based on the Pope board’s knowledge of Pope’s long-term strategic goals and opportunities, industry trends, competitive environment and short- and long-term performance in light of Pope’s strategic plan and discussions with Pope’s senior management and Centerview, that the value offered to Pope’s unitholders upon consummation of the merger is more favorable to Pope’s unitholders than the potential value that might reasonably be expected to result from remaining an independent company.

The foregoing discussion of the factors considered by the Pope special committee and the Pope board is not intended to be exhaustive, but rather includes the material factors considered by the Pope special committee and the Pope board. In view of the wide variety of factors considered by the Pope special committee and the Pope board in connection with their evaluation of the merger and the complexity of these matters, the Pope special committee and the Pope board did not consider it practical, and did not attempt, to quantify, rank or otherwise assign relative weights to the specific factors they considered in reaching their respective decisions and did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to their respective ultimate determinations. Rather, the Pope special committee and the Pope board made their respective recommendations based on the totality of the information available to them, including discussions with, and questioning of, Pope’s management and their respective legal advisors and Centerview. In considering the factors discussed above, individual members of the Pope special committee and the Pope board may have given different weights to different factors.

This explanation of the Pope special committee’s and the Pope board’s reasons for recommending the approval of the merger agreement, the merger and the related transactions and other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors described in the section of this proxy statement entitled “Cautionary Note Regarding Forward-Looking Statements” beginning on page 37.

Opinion of the Pope Special Committee’s Financial Advisor

On January 13, 2020, Centerview rendered to the Pope special committee its oral opinion, subsequently confirmed in a written opinion dated January 14, 2020, that, as of such date and based upon and subject to various assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, the merger consideration to be paid to the Pope unitholders (other than affiliated Pope unitholders) pursuant to the merger agreement was fair, from a financial point of view, to such holders.

The full text of Centerview’s written opinion, dated January 14, 2020, which describes the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion, is attached as Annex E and is incorporated herein by reference. The summary of the written opinion of Centerview set forth below is qualified in its entirety to the full text of Centerview’s written opinion attached as Annex E. Centerview’s financial advisory services and opinion were provided for the information and assistance of the Pope special committee (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the transaction and Centerview’s

 

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opinion only addressed the fairness, from a financial point of view, as of the date thereof, to the Pope unitholders (other than affiliated Pope unitholders) of the merger consideration to be paid to such holders pursuant to the merger agreement. Centerview’s opinion did not address any other term or aspect of the merger agreement or the transaction and does not constitute a recommendation to any holder of Pope units or any other person as to how such holder or other person should vote with respect to the transaction or otherwise act with respect to the transaction or any other matter, including without limitation whether any such holder of Pope units should elect to receive the cash election consideration, stock election consideration or the Opco election consideration or make no election with respect to the merger.

The full text of Centerview’s written opinion should be read carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, and qualifications and limitations upon the review undertaken by Centerview in preparing its opinion.

In connection with rendering the opinion described above and performing its related financial analyses, Centerview reviewed, among other things:

 

   

the merger agreement dated January 14, 2020;

 

   

Pope’s Annual Reports on Form 10-K for the years ended December 31, 2018, December 31, 2017 and December 31, 2016, and Rayonier’s Annual Reports on Form 10-K for the years ended December 31, 2018, December 31, 2017 and December 31, 2016;

 

   

certain interim reports to equityholders and Quarterly Reports on Form 10-Q of Pope and Rayonier;

 

   

certain publicly available research analyst reports for Pope and Rayonier;

 

   

certain other communications from Pope and Rayonier to their respective equityholders;

 

   

certain internal information relating to the business, operations, earnings, cash flow, assets, liabilities and prospects of Pope, including certain financial forecasts, analyses and projections relating to Pope prepared by management of Pope and furnished to Centerview by Pope for purposes of Centerview’s analysis (collectively, the “Pope internal data”); and

 

   

certain publicly available financial forecasts, analyses and projections relating to Rayonier discussed with Rayonier and furnished to Centerview for purposes of Centerview’s analysis (the “Rayonier forecasts”).

Centerview also participated in discussions with members of the senior management and representatives of MGP and Rayonier regarding their assessment of Pope internal data (including, without limitation, the Pope forecasts which are described under “The Merger—Certain Unaudited Prospective Financial Information”), the Rayonier forecasts, as appropriate, and the strategic rationale for the transaction. In addition, Centerview reviewed publicly available financial and stock market data, including valuation multiples, for Pope and Rayonier and compared that data with similar data for certain other companies, the securities of which are publicly traded, in lines of business that Centerview deemed relevant. Centerview also compared certain of the proposed financial terms of the transaction with the financial terms, to the extent publicly available, of certain other transactions that Centerview deemed relevant, and conducted such other financial studies and analyses and took into account such other information as Centerview deemed appropriate.

Centerview assumed, without independent verification or any responsibility therefor, the accuracy and completeness of the financial, legal, regulatory, tax, accounting and other information supplied to, discussed with, or reviewed by Centerview for purposes of its opinion and, with the Pope special committee’s consent, Centerview relied upon such information as being complete and accurate. In that regard, Centerview assumed, at the Pope special committee’s direction, that Pope internal data (including, without limitation, the Pope forecasts which are described under “The Merger—Certain Unaudited Prospective Financial Information”) were reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of MGP as to the matters covered thereby and that the Rayonier forecasts have been reasonably prepared on

 

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bases reflecting the best currently available estimates and judgments of the management of Rayonier as to the matters covered thereby, and Centerview relied, at the Pope special committee’s direction, on Pope internal data (including, without limitation, the Pope forecasts which are described under “The Merger—Certain Unaudited Prospective Financial Information”) and the Rayonier forecasts for purposes of Centerview’s analysis and opinion. Centerview expressed no view or opinion as to Pope internal data (including, without limitation, the Pope forecasts which are described under “The Merger—Certain Unaudited Prospective Financial Information”), the Rayonier forecasts, or the assumptions on which it was based. In addition, at the Pope special committee’s direction, Centerview did not make any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet or otherwise) of Pope or Rayonier, nor was Centerview furnished with any such evaluation or appraisal, and was not asked to conduct, and did not conduct, a physical inspection of the properties or assets of Pope or Rayonier. Centerview also assumed, at the Pope special committee’s direction, that the transaction will be consummated on the terms set forth in the merger agreement and in accordance with all applicable laws and other relevant documents or requirements, without delay or the waiver, modification or amendment of any term, condition or agreement, the effect of which would be material to Centerview’s analysis or Centerview’s opinion and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the transaction, no delay, limitation, restriction, condition or other change, including any divestiture requirements or amendments or modifications, will be imposed, the effect of which would be material to Centerview’s analysis or Centerview’s opinion. Centerview did not evaluate and did not express any opinion as to the solvency or fair value of Pope or Rayonier, or the ability of Pope or Rayonier to pay its obligations when they come due, or as to the impact of the transaction on such matters, under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. Centerview is not a legal, regulatory, tax or accounting advisor, and Centerview expressed no opinion as to any legal, regulatory, tax or accounting matters.

Centerview’s opinion expressed no view as to, and did not address, Pope’s underlying business decision to proceed with or effect the transaction, or the relative merits of the transaction as compared to any alternative business strategies or transactions that might be available to Pope or in which Pope might engage. Centerview’s opinion was limited to and addressed only the fairness, from a financial point of view, as of the date of Centerview’s written opinion, to the holders of the Pope units (other than affiliated Pope unitholders) of the merger consideration to be paid to such holders pursuant to the merger agreement. For purposes of its opinion, Centerview was not asked to, and Centerview did not, express any view on, and its opinion did not address, any other term or aspect of the merger agreement or the transaction, including, without limitation, the structure or form of the transaction, the GP mergers, or any other agreements or arrangements contemplated by the merger agreement (including the support agreements) or entered into in connection with or otherwise contemplated by the merger agreement (including the support agreements) or entered into in connection with or otherwise contemplated by the transaction, including, without limitation, (i) the fairness of the transaction or any other term or aspect of the transaction to, or any consideration to be received in connection therewith by, or the impact of the transaction on, the holders of general partner interests in Popes, the stockholders of MGP or EGP, or the holders of any other class of securities, creditors or other constituencies of Pope, MGP, EGP or any other party, (ii) the allocation of the merger consideration as among Pope unitholders who receive the cash election consideration, stock election consideration, the Opco election consideration or any combination thereof, (iii) the relative fairness of the cash election consideration, stock election consideration or the Opco election consideration or (iv) the fairness of the amounts to be received by the stockholders of MGP or EGP in the GP mergers or otherwise in connection with the transaction, whether relative to the merger consideration to be paid to the Pope unitholders (other than affiliated Pope unitholders) pursuant to the merger agreement or otherwise. In addition, Centerview expressed no view or opinion as to the fairness (financial or otherwise) of the amount, nature or any other aspect of any compensation to be paid or payable to any of the officers, directors or employees of Pope or any party, or class of such persons in connection with the transaction, whether relative to the merger consideration to be paid to the Pope unitholders (other than affiliated Pope unitholders) pursuant to the merger agreement or otherwise. Centerview’s opinion was necessarily based on financial, economic, monetary, currency, market and other conditions and circumstances as in effect on, and the information made available to Centerview as of, the date of Centerview’s written opinion, and Centerview does not have any

 

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obligation or responsibility to update, revise or reaffirm its opinion based on circumstances, developments or events occurring after the date of Centerview’s written opinion. Centerview’s opinion does not constitute a recommendation to any holder of Pope units or any other person as to how such holder or person should vote with respect to the merger or otherwise act with respect to the transaction or any other matter, including without limitation whether any such holder of Pope units should elect to receive the cash election consideration, stock election consideration or the Opco election consideration or make no election with respect to the merger. Centerview’s financial advisory services and its written opinion were provided for the information and assistance of the Pope special committee (in their capacity as directors and not in any other capacity) in connection with and for purposes of its consideration of the transaction. The issuance of Centerview’s opinion was approved by the Centerview Partners LLC Fairness Opinion Committee.

Summary of Centerview Financial Analysis

The following is a summary of the material financial analyses prepared and reviewed with the Pope special committee in connection with Centerview’s opinion, dated January 14. 2020. The summary set forth below does not purport to be a complete description of the financial analyses performed or factors considered by, and underlying the opinion of, Centerview, nor does the order of the financial analyses described represent the relative importance or weight given to those financial analyses by Centerview. Centerview may have deemed various assumptions more or less probable than other assumptions, so the reference ranges resulting from any particular portion of the analyses summarized below should not be taken to be Centerview’s view of the actual value of Pope. Some of the summaries of the financial analyses set forth below include information presented in tabular format. In order to fully understand the financial analyses, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses performed by Centerview. Considering the data in the tables below without considering all financial analyses or factors or the full narrative description of such analyses or factors, including the methodologies and assumptions underlying such analyses or factors, could create a misleading or incomplete view of the processes underlying Centerview’s financial analyses and its opinion. In performing its analyses, Centerview made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Pope or any other parties to the transaction. None of Pope, the Pope general partners, Rayonier, Opco, Centerview or any other person assumes responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below. In addition, analyses relating to the value of Pope do not purport to be appraisals or reflect the prices at which Pope may actually be sold. Accordingly, the assumptions and estimates used in, and the results derived from, the financial analyses are inherently subject to substantial uncertainty. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before January 10, 2020 and is not necessarily indicative of current market conditions.

For purposes of the financial analyses described below, the implied value of the merger consideration of $126.44 per Pope unit (the “implied merger consideration”) was calculated based on the observed blended value of the right to receive, at the election of the holder, for each Pope unit (i) the cash election consideration ($125.00 in cash), (ii) the stock election consideration (3.929 newly issued Rayonier shares) or (iii) the Opco election consideration (3.929 newly issued Opco units), and assuming proration (70% equity and 30% cash) and a per share or unit value of any issued equity of $32.33, the closing price per share of Rayonier common stock as of January 10, 2020.

 

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Pope Financial Analyses

Public Company Analysis

Centerview reviewed certain financial information of Pope and compared it to certain financial and stock market information relating to the following two selected companies that Centerview in its professional judgment deemed generally relevant for comparative purposes as publicly traded pure-play timber companies:

 

   

Rayonier, Inc.

 

   

CatchMark Timber Trust, Inc.

However, because no company or business used in this analysis is identical to Pope and, accordingly, an evaluation of the results of this analysis is not entirely mathematical, Centerview believed it was inappropriate to, and therefore did not, rely solely on the quantitative results of the selected public company analysis.

Using publicly available information obtained from SEC filings and other data sources as of January 10, 2020, Centerview reviewed, among other things, the enterprise values, calculated as equity value plus net debt (debt less cash and equivalents) and plus non-controlling interest, as a multiple of estimated 2020 EBITDA for each of the companies. For Pope, Centerview calculated metrics on a partnership basis. Centerview observed that the multiples for the selected companies were 19.7 and 17.6, respectively, and that the multiple for Pope was 16.1x.

Centerview applied the EBITDA multiples to Pope’s 2020 estimated EBITDA as set forth in the Pope forecasts to derive a range of implied per unit equity values for the Pope units of $79.05 to $91.00 per Pope unit. Centerview compared this range to the $126.44 Implied merger Consideration.

Centerview also reviewed, among other things, the dividend yields based on the most recent quarterly dividends or distributions on an annualized basis, which is referred to as “LQA dividend yield,” for each of the companies. Centerview observed that LQA dividend yields for the selected companies were 3.3% and 5.1%, respectively, and that the LQA dividend yield for Pope was 5.7%.

Centerview applied the LQA dividend yields to Pope’s then most recent quarterly dividend on an annualized basis to derive a range of implied per unit equity values for the Pope units of $78.85 to $119.75 per Pope unit. Centerview compared this range to the $126.44 implied merger consideration.

Precedent Transaction Analysis

Centerview reviewed and compared certain information relating to the following 17 selected Pacific Northwest timber transactions of greater than 5,000 acres based on publically available information and information provided by Pope’s management that Centerview in its professional judgment deemed generally relevant for comparative purposes:

 

Year

  

Acquiror

  

Property

  

Seller

2019

   ORM Timber Fund IV    Beacon Rock    Weyerhaeuser

2018

   Weyerhaeuser    Trask    Hancock Timber Resource Group

2018

   Greenwood Resources    North Nestucca    Hancock Timber Resource Group

2018

   CatchMark    Bandon    Forest Investment Associates

2018

   ORM Timber Fund IV    Issaquah    Hancock Timber Resource Group

2018

   Hampton Affiliates    Pinchot South    Hancock Timber Resource Group

2018

   ORM Timber Fund IV    Pinchot North    Hancock Timber Resource Group

2017

   BTG    Tilton    Forest Investment Associates

 

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Year

  

Acquiror

  

Property

  

Seller

2017

   Hampton Affiliates    Tahoma    Hancock Timber Resource Group

2017

   Greenwood Resources    Elkhorn    Hancock Timber Resource Group

2017

   Greenwood Resources    Rockaway    ORM Timber Fund II

2016

   Campbell Global    Rosboro    Rosboro

2016

   Sierra Pacific Industries    Wallace Falls    Campbell Global

2016

   Greenwood Resources    Willapa    Hancock Timber Resource Group

2016

   Pope Resources    Carbon River    Hancock Timber Resource Group

2016

   Forest Investment Associates    Menasha    Campbell Global

2016

   Rayonier    Menasha    Campbell Global

In this analysis, Centerview reviewed transaction values as the ratio of the amount of consideration paid per acre of property sold. Centerview observed that the top quartile of the consideration paid per acre was $4,650, the median was $4,311, the mean was $4,146 and the bottom quartile of the consideration paid per acre was $3,656. Based upon its professional judgment, Centerview selected a reference range of consideration paid per acre of $3,700 to $4,700 and applied this reference range to Pope’s 124,978 wholly owned acres of timberland. Based on this analysis, Centerview derived an approximate implied per unit equity value reference range for the Pope units of $85.05 to $113.75 per Pope unit. Centerview compared this range to the $126.44 implied merger consideration.

Discounted Cash Flow Analysis

Centerview performed a discounted cash flow analysis of Pope based on the Pope forecasts and calculations of the unlevered cash flows derived from the Pope forecasts (which Pope forecasts are described under “The Merger—Certain Unaudited Prospective Financial Information”). A discounted cash flow analysis is a traditional valuation methodology used to derive a valuation of an asset by calculating the “present value” of estimated future cash flows of the asset. “Present value” refers to the current value of future cash flows and is obtained by discounting those future cash flows by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors.

In performing this analysis, Centerview calculated a range of illustrative equity values for the Company by (a) discounting to present value as of September 30, 2019 using discount rates ranging from 6.7% to 8.8% (reflecting Centerview’s analysis of the Company’s weighted average cost of capital) and the mid-year convention: (i) the forecasted after-tax unlevered free cash flows of Pope over the period beginning October 1, 2019 and ending on December 31, 2037, as set forth in the Pope forecasts and (ii) a range of illustrative terminal values of Pope, calculated by Centerview applying perpetuity growth rates ranging from 2.1% to 2.5% to Pope’s after-tax unlevered free cash flows for the terminal year (as set forth in the Pope forecasts) and (b) subtracting from the foregoing results Pope’s net debt as of September 30, 2019, as set forth in the Pope forecasts. Centerview divided the result of the foregoing calculations by the number of fully-diluted outstanding Pope units based on the most recently available information that is set forth in Pope Internal Data to derive a range of approximate implied values per Pope unit for the Pope units of $65.80 to $105.80 per Pope unit. Centerview compared this range to the $126.44 implied merger Consideration.

Other Factors

Centerview noted for the Pope special committee certain additional factors solely for informational purposes, including, among other things, the unaffected intraday trading range for the Pope units during the 12-month period ended October 15, 2019, which ranged from approximately $62.50 to $87.00.

 

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General

The preparation of a financial opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion is not readily susceptible to summary description. In arriving at its opinion, Centerview did not draw, in isolation, conclusions from or with regard to any factor or analysis that it considered. Rather, Centerview made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of the analyses.

Centerview’s financial analyses and opinion were only one of many factors taken into consideration by the Pope special committee in its evaluation of the transaction. Consequently, the analyses described above should not be viewed as determinative of the views of the Pope special committee, the Pope board or management of Pope with respect to the merger consideration or as to whether the Pope special committee would have been willing to determine that a different consideration was fair. The consideration for the transaction was determined through arm’s-length negotiations between Pope and Rayonier and was approved by the Pope special committee and the Pope board. Centerview provided advice to the Pope special committee during these negotiations. Centerview did not, however recommend any specific amount of consideration to the Pope special committee or the Pope board or that any specific amount of consideration constituted the only appropriate consideration for the transaction.

Centerview is a securities firm engaged directly and through affiliates and related persons in a number of investment banking, financial advisory and merchant banking activities. In the two years prior to the date of its written opinion, Centerview has been engaged to provide financial advisory services to the Pope board, including in connection with certain strategic matters, and has received compensation of $1,125,000 from Pope for such services. In the two years prior to the date of its written opinion, Centerview has not been engaged to provide financial advisory or other services to Rayonier and has not received any compensation from Rayonier during such period. Centerview may provide investment banking and other services to or with respect to Pope or Rayonier or their respective affiliates in the future, for which it may receive compensation. Certain (i) of Centerview’s and its affiliates’ directors, officers, members and employees, or family members of such persons, (ii) of Centerview’s affiliates or related investment funds and (iii) investment funds or other persons in which any of the foregoing may have financial interests or with which they may co-invest, may at any time acquire, hold, sell or trade, in debt, equity and other securities or financial instruments (including derivatives, bank loans or other obligations) of, or investments in, Pope, Rayonier, or any of their respective affiliates, or any other party that may be involved in the transaction.

The Pope special committee selected Centerview as its financial advisor in connection with the transaction based on Centerview’s qualifications, reputation and experience and Centerview’s prior knowledge of Pope’s business, structure and strategic objectives. Centerview is an internationally recognized investment banking firm that has substantial experience in transactions similar to the transaction.

In connection with Centerview’s services as the financial advisor to the Pope special committee, Pope has agreed to pay Centerview an aggregate fee of approximately $11.7 million (based upon the most recent closing price of Rayonier common stock before the announcement of the transaction), $2,525,000 of which has been paid and the remainder of which is payable contingent upon consummation of the transaction. In addition, Pope has agreed to reimburse certain of Centerview’s expenses arising, and to indemnify Centerview against certain liabilities that may arise, out of Centerview’s engagement.

Certain Unaudited Prospective Financial Information

Pope does not, as a matter of course, make public disclosure of budgets, forecasts or projections of its expected financial performance due to, among other things, the inherent difficulty of accurately predicting future periods and the likelihood that the underlying assumptions and estimates may prove incorrect. However, Pope is

 

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including a summary of certain previously nonpublic, unaudited prospective financial information for the fiscal year ending December 31, 2019 through the fiscal year ending December 31, 2025 (collectively, the “Pope forecasts”) that Pope management provided to the Pope special committee in connection with the Pope special committee’s evaluation of the merger. The Pope forecasts were prepared on a stand-alone basis and do not take into account any aspect of the merger, including any costs incurred in connection with mergers, or any changes to Pope’s operations or strategy that might be implemented after the completion of the mergers. As a result, actual results likely will differ, and may differ materially, from those contained in the Pope forecasts. You should note that Pope forecasts constitute forward-looking statements. See “Forward-Looking Statements.”

Pope management provided the Pope forecasts to the Pope special committee, and the Pope special committee directed Centerview to use the Pope forecasts in connection with performing its financial analyses in connection with its opinion, as described in more detail in the section of this proxy statement/prospectus titled “—Opinion of the Pope Special Committee’s Financial Advisor,” above.

The Pope forecasts were not prepared with a view toward public disclosure or toward complying with U.S. generally accepted accounting principles (“GAAP”), nor were they prepared with a view toward compliance with the published guidelines of the SEC, or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of projections of prospective financial information. Pope uses certain financial measures in the Pope forecasts that are not in accordance with GAAP as supplemental measures to evaluate operational performance. While Pope believes that non-GAAP financial measures provide useful supplemental information, there are limitations associated with the use of non-GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in accordance with GAAP. The non-GAAP financial measures used in the Pope forecasts were approved by the Pope special committee for Centerview’s use in connection with its opinion and were relied upon by the Pope special committee in connection with its consideration of the merger. The SEC rules, which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure, do not apply to non-GAAP financial measures provided to a board of directors or a financial advisor (like the Pope forecasts) in connection with a proposed transaction like the merger if the disclosure is included in a document like this proxy statement/prospectus. In addition, reconciliations of non-GAAP financial measures to a GAAP financial measure were not relied upon by Centerview for purposes of its opinion or by the Pope special committee in connection with its consideration of the merger. Accordingly, the Pope has not provided a reconciliation of the financial measures included in the Pope forecasts to the relevant GAAP financial measures. In addition, the Pope forecasts were not prepared with a view towards complying with GAAP, nor were they prepared with the assistance of or reviewed, compiled or examined by independent accountants. The Pope forecasts may differ from published analyst estimates and forecasts and do not take into account any events or circumstances after the date they were prepared, including the announcement of the entry into the merger agreement.

Neither Pope’s independent auditors nor any other independent accountants have compiled, reviewed, examined, or performed any procedures with respect to the prospective financial information contained herein, nor have they expressed any opinion or any other form of assurance on such information or its achievability and assume no responsibility for, and disclaim any association with, the prospective financial information. The reports of Pope’s independent auditor incorporated by reference in this proxy statement/prospectus relate to the historical financial information of Pope. Those reports do not extend to the Pope forecasts and should not be read to do so.

While the Pope forecasts were prepared in good faith, no assurance can be made regarding future events. The estimates and assumptions underlying these financial forecasts constitute forward-looking information and involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions that may not be realized and that are inherently subject to significant business, economic, competitive and regulatory uncertainties and contingencies, including, among other things, the inherent uncertainty of the business and economic conditions affecting the industries in which

 

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Pope operates, and the risks and uncertainties described under “Cautionary Note Regarding Forward-Looking Statements,” all of which are difficult to predict and many of which are outside the control of Pope and, upon merger effective time, will be beyond the control of Rayonier and the surviving entity. Pope’s unitholders are urged to review Pope’s SEC filings for a description of risk factors with respect to Pope’s business. There can be no assurance that the underlying assumptions will prove to be accurate or that the projected results will be realized and actual results likely will differ, and may differ materially, from those reflected in the Pope forecasts, whether or not the merger is consummated. The inclusion in this proxy statement of the Pope forecasts below should not be regarded as an indication that Pope, Rayonier, their respective boards of directors or management teams, as applicable, or their respective financial advisors considered, or now consider, such forecasts to be a reliable predictor of future results. The Pope forecasts assume that Pope would continue to operate as a standalone company and do not reflect any impact of the merger.

The Pope forecasts include certain non-GAAP financial measures, including Adjusted EBITDA and Unlevered Free Cash Flow (in each case, as defined below). Pope’s management included forecasts of Adjusted EBITDA and Unlevered Free Cash flow in the Pope forecasts because such non-GAAP financial measures are used by the Pope board and Pope’s management to assess the operating performance of Pope’s business and optimize resource allocation. The Pope board and Pope’s management use Adjusted EBITDA as a primary measure to: (i) evaluate Pope’s consolidated operating performance and the operating performance of Pope’s business segments; (ii) allocate resources and capital to business segments; (iii) evaluate the viability of proposed projects; and (iv) determine overall rates of return on alternative investment opportunities. The Pope board and Pope’s management used Unlevered Free cash Flow as a performance metric in connection with evaluating certain illustrative discounted Unlevered Free Cash Flow analyses of Pope relating to the proposed merger. Unlevered Free Cash Flow is a non-GAAP financial measure and should not be considered as an alternative to net income or operating income as a measure of operating performance or cash flows or as a measure of liquidity.

Pope is providing the non-GAAP financial measures to afford investors access to certain performance measures used by management. These measures may be useful to investors because they aid in comparing Pope’s operating performance with that of other companies with similar operations. The Adjusted EBITDA and Unlevered Free Cash flow data presented in this proxy statement/prospectus, however, may not be directly comparable to similarly titled measures prepared by other companies because such non-GAAP financial measures may be defined differently by other companies.

Investors should also note that the non-GAAP financial measures presented in this proxy statement are not prepared under any comprehensive set of accounting rules or principles and do not reflect all of the amounts associated with Pope’s results of operations as determined in accordance with GAAP. Investors should also note that the non-GAAP financial measures presented in this proxy statement have no standardized meaning prescribed by GAAP and, therefore, have limits in their usefulness to investors. Because of the non-standardized definitions, the non-GAAP financial measures as used by Pope in this proxy statement/prospectus may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by Pope’s competitors and other companies.

Due to the inherent limitations of non-GAAP financial measures, investors should consider non-GAAP measures only as a supplement to, not as a substitute for or as a superior measure to, measures of financial performance prepared in accordance with GAAP. The footnotes to the tables below provide certain supplemental information with respect to the calculation of these non-GAAP financial measures. All of the financial forecasts summarized in this section were prepared by Pope’s management.

By including the Pope forecasts in this proxy statement/prospectus, neither Pope nor Rayonier nor any of their respective representatives has made or makes any representation to any person regarding the ultimate performance of Pope compared to the information contained in the Pope forecasts. Accordingly, the Pope forecasts should not be construed or relied upon as financial guidance. Further, the inclusion of the Pope forecasts in this proxy statement/prospectus does not constitute an admission or representation by Pope that this

 

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information is material. The Pope forecasts summarized in this section reflected the estimates and judgments available to Pope’s management at the time they were prepared and have not been updated to reflect any changes since such financial forecasts were prepared. Neither Pope, Rayonier, Opco nor, after merger effective time, the surviving entity undertakes any obligation, except as required by law, to update or otherwise revise the Pope forecasts to reflect circumstances existing since their preparation or to reflect the occurrence of unanticipated events, even in the event that any or all of the underlying assumptions are shown to be in error, or to reflect changes in general economic or industry conditions.

The information set forth below is included solely to give unitholders access to relevant portions of the Pope forecasts and is not included in this proxy statement/prospectus to influence any unitholder’s decision to vote on the merger, to make a cash election, stock election, Opco election or no election, or for any other purpose.

The following table presents a summary of the material portions of the Pope forecasts:

 

     Fiscal Year ended December 31
(in millions, except per share amounts, and all
amounts in USD)
 
     2019E      2020E      2021E      2022E      2023E      2024E      2025E  

Adjusted EBITDA(1)

   $ 20.2      $ 28.5      $ 26.4      $ 23.3      $ 36.7      $ 32.0      $ 30.1  

Unlevered Free Cash Flow(2)

   $ 21.1      $ 20.9      $ 48.8      $ 16.4      $ 29.3      $ 23.6      $ 22.7  

 

(1)

Adjusted EBITDA means earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is a non-GAAP financial measure.

(2)

Unlevered Free Cash Flow means Adjusted EBITDA, less taxes, capex, real estate development capital and timberland acquisitions, plus non-cash cost of land sold and plus adjustments for the Pope Fund’s business or adjustments for changes in net working capital. Unlevered Free Cash Flow is a non-GAAP financial measure.

Certain Effects of the Merger

If the proposal to approve the merger agreement and the transactions contemplated thereby receives the requisite vote of the unitholders and the other conditions to the closing of the merger are either satisfied (or if permissible under applicable law, waived), Merger Sub 3 will be merged with and into Pope upon the terms set forth in the merger agreement. As the surviving entity in the merger, Pope will continue to exist following the merger as a subsidiary of Opco.

Following the merger effective time, Rayonier will hold all limited partner/equity interests in Opco other than the Opco units received by Pope unitholders who make the Opco consideration election, and, other than such electing Pope unitholders, none of the current unitholders will, by virtue of the merger, have any ownership interest in, or be a unitholder of, Pope or Opco. As a result, the current unitholders who do not make an Opco consideration election will no longer benefit from any increase in the value, nor will they bear the risk of any decrease in the value, of Pope units. Following the merger effective time, Opco and its unitholders will benefit from any increase in Pope’s value and also will bear the risk of any decrease in Pope’s value.

Upon the merger effective time, each Pope unit issued and outstanding immediately prior to the merger effective time (other than Pope units owned immediately prior to the merger effective time by Pope, Rayonier or any of its subsidiaries or affiliates), will be canceled and converted into the right to receive $125.00 in cash, 3.929 Rayonier shares or 3.929 Opco units, depending on the Pope unitholder’s election and subjection to proration, without interest and less any applicable withholding taxes.

Please see the sections entitled “The Merger Agreement—Consideration to be Received in the Merger,” “The Merger—Closing and Merger effective time of the Merger,” and “The Merger Agreement—Cancellation of Certain units,” beginning on pages 59, 107 and 112, respectively.

 

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For information regarding the effects of the merger on Pope’s outstanding equity awards, please see the section below entitled “—Interests of Pope’s Directors and Executive Officers in the Merger” beginning on page 128 and the section entitled “The Merger Agreement—Treatment of Equity and Equity-Based Awards” beginning on page 112.

The Pope units are currently registered under the Exchange Act and trade on the Nasdaq Capital Market under the symbol “POPE”. Following the merger effective time, the Pope units will no longer be traded on the Nasdaq Capital Market or any other public market. In addition, the registration of the Pope units under the Exchange Act will be terminated and Pope will no longer be required to file periodic and other reports with the SEC with respect to the Pope units. Termination of registration of the Pope units under the Exchange Act will reduce the information required to be furnished by Pope to its unitholders and the SEC.

Effects on Pope if the Merger Is Not Consummated

In the event that the proposal to approve the merger agreement and the transactions contemplated thereby is not approved by the affirmative vote of unitholders holding at least a majority of the outstanding units entitled to vote on the proposal at the special meeting, or if the merger is not consummated for any other reason, the holders of units will not receive any payment for their units in connection with the merger. Instead, Pope will remain an independent public company, the Pope units will continue to be listed and traded on the Nasdaq Stock Market, the Pope units will continue to be registered under the Exchange Act and Pope’s unitholders will continue to own their Pope units and will continue to be subject to the same general risks and opportunities as they currently are with respect to ownership of the Pope units.

If the merger is not consummated, there is no assurance as to the effect of these risks and opportunities on the future value of the Pope units, including the risk that the market price of the Pope units may decline to the extent that the current market price of the Pope units reflects a market assumption that the merger will be consummated. If the merger is not consummated, there is no assurance that any other transaction acceptable to Pope will be offered or that the business, operations, financial condition, earnings or prospects of Pope will not be adversely impacted. Pursuant to the merger agreement, under certain circumstances Pope is permitted to terminate the merger agreement in order to enter into an alternative transaction. Please see the section entitled “The Merger Agreement—Termination” beginning on page 126.

Under certain circumstances, if the merger is not consummated, Pope may be obligated to pay to Rayonier a termination fee. Please see the section entitled “The Merger Agreement—Termination Fee” beginning on page 126.

Closing and Effective Time

Unless the parties otherwise mutually agree, the closing of the merger will occur on the third business day after the day on which the last of the conditions to the closing of the mergers is satisfied or waived (to the extent permitted by applicable law) (other than those conditions that by their nature must be satisfied or waived at the closing of the mergers, but subject to the satisfaction or waiver of such conditions).

Subject to the satisfaction or waiver of the conditions to the closing of the merger described in the section entitled “The Merger Agreement—Conditions to Completion of the Merger” beginning on page 124 of this proxy statement/prospectus, including the approval of the merger agreement by Pope unitholders at the special meeting, it is anticipated that the merger is expected to close within several business days of the special meeting. It is possible that factors outside the control of both companies could result in the merger being completed at a different time, or not at all.

The merger shall become effective at the time the certificate of merger is duly filed with the Secretary of State of the State of Delaware or at such later time as Pope and Rayonier may mutually agree and specify in the certificate of merger. The GP mergers shall become effective substantially concurrently with the merger.

 

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NYSE Market Listing

The Rayonier shares to be issued in the merger will be listed for trading on the NYSE. The Opco units will not be listed on any securities exchange, and there will generally be no market for Opco units. See “Description of Rayonier, L.P. Limited Partner Units” beginning on page 281.

Regulatory Approvals

Under the HSR Act, certain transactions, including the merger, may not be completed unless statutory waiting periods have expired or been terminated. The HSR Act provides that each party must file a pre-merger notification with the Federal Trade Commission, referred to as the FTC, and the Antitrust Division of the Department of Justice, referred to as the DOJ. A transaction notifiable under the HSR Act may not be completed until the expiration of a 30-calendar-day waiting period following the parties’ filings of their respective HSR Act notification, unless that waiting period is terminated early. If the FTC or DOJ issues a Request for Additional Information and Documentary Material, referred to in this proxy statement/prospectus as a “second request”, prior to the expiration of the initial waiting period, the parties must observe a second 30-calendar-day waiting period, which would begin to run only after both parties have substantially complied with the second request, unless the waiting period is terminated earlier. Rayonier and Pope each filed their respective HSR Act notification forms on February 5, 2020 and received notice of early termination under the HSR Act on February 26, 2020.

Each of Rayonier and Pope has agreed to use their respective reasonable best efforts to promptly take, or cause to be taken (including by their respective subsidiaries) any actions necessary to avoid or eliminate each and every impediment under the HSR Act or any other antitrust law and obtain the expiration or termination of the applicable waiting periods under the HSR Act as soon as practicable (and in any event no later than the October 14, 2020, as such date may be extended in accordance with the merger agreement), including making agreements to (i) hold separate or divest any property, assets or businesses, (ii) take or commit to take any action that limits their respective freedom of action with respect to, or their ability to retain, any property, assets or businesses; and (iii) to initiate or defend against any lawsuit, action or proceeding challenging the merger agreement or the transactions contemplated thereby, except Rayonier is not required to take, and Pope without Rayonier’s written consent cannot take, the actions described in (i) and (ii) above if those actions would reasonably be expected to have a material adverse effect on either Pope and its subsidiaries taken as a whole or Rayonier and its subsidiaries taken as a whole.

Treatment of Pope Equity Compensation

Each restricted Pope unit granted under Pope’s equity plans that is outstanding immediately prior to the merger effective time will be converted into restricted Rayonier shares on substantially the same terms and conditions as were applicable to the restricted Pope units prior to the merger effective time, except that the numbers of Rayonier shares subject to each award shall be equal to the number of Pope units subject to the restricted Pope unit award outstanding immediately prior to the merger effective time multiplied by 3.929.

At the merger effective time, Rayonier will assume all of the obligations under Pope’s equity plans, and the number and kind of units available for issuance under Pope’s equity plans shall be adjusted to reflect Rayonier shares. As discussed in “Interests of Pope’s Directors and Executive Officers in the Merger—Treatment of Equity and Equity-Based Awards” beginning at page 128, Pope directors and some executive employees of Pope hold restricted Pope units that will experience accelerated vesting in connection with or following the merger.

Voting Agreements with Certain Pope Unitholders

Concurrently with the execution of the merger agreement, Rayonier entered into a voting and support agreement, a copy of which is attached to this proxy statement/prospectus as Annex B, with PT Pope Properties

 

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LLC, PMG Family Limited Partnership and Maria M. Pope, and a voting and support agreement, a copy of which is attached as Annex C, with the Emily T. Andrews 1987 Revocable Trust, Gordon Andrews and Gordon Pope Andrews Separate Property Revocable Trust U/T/D/ 5/9/2013. These agreements referred to collectively as the support agreements, provide that each of the named Pope unitholders has agreed, among other matters and upon the terms and subject to the conditions set forth in the relevant support agreement, to vote all of their Pope units in favor of the merger proposal and the other actions contemplated by the merger agreement and against any proposal that would reasonably be expected to (i) result in a breach of any covenant, representation or warranty or any other obligation of Pope contained in the merger agreement or (ii) prevent or impede, interfere with, delay, postpone or adversely affect the consummation of the transactions contemplated by the merger agreement, including the merger. As of January 14, 2020, the date of the execution of the merger agreement, as well as the date of this proxy statement/prospectus, the named Pope unitholders held 736,145 Pope units in the aggregate, or approximately 17% of the voting power of Pope as of the execution date and the date of this proxy statement/prospectus, in each case excluding Pope units held by the general partners.

Delisting and Deregistration of Pope units

If the merger is completed, Pope units will be delisted from the NASDAQ and deregistered under the Exchange Act as promptly as practicable after the merger effective time, and Pope will no longer be required to file periodic reports with the SEC with respect to the Pope units.

Expected Timing of the Merger

Although it is possible that factors outside the control of both Rayonier and Pope could result in the merger being completed at a different time, Rayonier and Pope currently expect the merger to close within several business days of the special meeting, if the Pope unitholders approve the merger at the special meeting and the other closing conditions in the merger agreement are satisfied.

Litigation Related to the Merger

On March 18, 2020, a purported Pope unitholder filed a putative stockholder class action against Pope and the members of the Pope board challenging the disclosures made in the registration statement of which this proxy statement/prospectus forms a part. The lawsuit is captioned Stein v. Pope Resources, et al., No. 1:20-CV-00387, and is pending in the United States District Court for the District of Delaware. On March 26, 2020, a purported Pope unitholder filed a putative stockholder class action against Pope, the members of the Pope board, Rayonier, ROC, Merger Sub 1, Merger Sub 2 , Merger Sub 3, MGP and EGP also challenging the disclosures made in the registration statement of which this proxy statement/prospectus forms a part. The lawsuit is captioned Thompson v. Pope Resources, et al., No. 1:20-CV-00432, and is also pending in the United States District Court for the District of Delaware.

The complaints generally allege that the registration statement filed in connection with the merger of which this proxy statement/prospectus forms a part fails to disclose certain allegedly material information in violation of Section 14(a) and 20(a) of the Exchange Act and Rule 14a-9 promulgated thereunder. The alleged omissions relate to (i) certain financial projections and GAAP reconciliations for Pope; and (ii) certain financial analyses performed by Pope’s financial advisor. Plaintiffs seek to enjoin Pope and Rayonier from proceeding with the merger and seek damages in the event the merger is consummated.

Pope and Rayonier believe that plaintiffs’ allegations are without merit and intend to defend against them vigorously. However, litigation is inherently uncertain and there can be no assurance regarding the likelihood that Pope’s or Rayonier’s defense of the actions will be successful. Additional lawsuits arising out of the merger may also be filed in the future.

 

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THE MERGER AGREEMENT

This section describes the material terms of the merger agreement. The description in this section and elsewhere in this proxy statement/prospectus is qualified in its entirety by reference to the complete text of the merger agreement, a copy of which is attached as Annex A, which is incorporated by reference into this proxy statement/prospectus. This summary does not purport to be complete and may not contain all of the information about the merger agreement that is important to you. You are encouraged to read the merger agreement carefully and in its entirety. This section is not intended to provide you with any factual information about Rayonier, Opco or Pope. Such information can be found elsewhere in this proxy statement/prospectus and in the public filings Rayonier and Pope make with the SEC, as described in the section entitled “Where You Can Find More Information” beginning on page 287 of this proxy statement/prospectus.

Explanatory Note Regarding the Merger Agreement

The merger agreement is included to provide you with information regarding its terms. Factual disclosures about Rayonier, Opco and Pope contained in this proxy statement/prospectus and/or in the public reports of Rayonier and Pope filed with the SEC may supplement, update or modify the factual disclosures about Rayonier, Opco and Pope contained in the merger agreement.

The merger agreement contains representations and warranties by Pope, MGP and EGP, on the one hand, and by Rayonier, ROC, Opco, Opco Holdings, Merger Sub 1, Merger Sub 2 and Merger Sub 3, on the other hand, made solely for the benefit of the other. The representations, warranties and covenants made in the merger agreement by the parties were qualified and subject to important limitations agreed to by the parties in connection with negotiating the terms of the merger agreement. In particular, in your review of the representations and warranties contained in the merger agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purpose of establishing circumstances in which a party to the merger agreement may have the right not to consummate the merger if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties to the merger agreement, rather than establishing matters as facts. The representations and warranties also may be subject to a contractual standard of materiality different from that generally applicable to security holders and reports and documents filed with the SEC and were qualified by the matters contained in the confidential disclosure schedules that Pope and Rayonier each delivered in connection with the merger agreement and certain documents filed with the SEC. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this proxy statement/prospectus, may have changed since the date of the merger agreement. Accordingly, the representations and warranties in the merger agreement should not be relied on by any persons as characterizations of the actual state of facts about the parties at the time they were made or otherwise.

Merger Effective Time, Effects of the Mergers; Organizational Documents of the Surviving Company; Directors and Officers

Merger Effective Time; Effects of the Mergers

The merger agreement provides for three mergers, referred to collectively as the mergers. After the merger, Pope will be the surviving company and indirect wholly owned subsidiary of Opco. Substantially concurrently with the merger, GP merger 1 provides for the merger of MGP with and into Merger Sub 1. After GP merger 1, Merger Sub 1 will be the surviving company and a wholly owned subsidiary of Rayonier. GP merger 2 provides for the merger of EGP with and into Merger Sub 2. After GP merger 2, Merger Sub 2 will be the surviving company and a wholly owned subsidiary of Rayonier.

On the closing date, the three mergers will be effected. Pope and Merger Sub 3 will effect the merger by filing a certificate of merger with the office of the Secretary of State of the State of Delaware, and the merger

 

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will become effective upon the filing of the certificate of merger or at a time agreed to by the parties and specified on the certificate of merger. At the merger effective time, all of the property, rights and privileges of Pope and Merger Sub 3 will vest in the surviving company, and all of the liabilities and obligations of Pope and Merger Sub 3 will become liabilities and obligations of the surviving company. Substantially concurrently with the merger (i) MGP and Merger Sub 1 will effect GP merger 1 by filing a certificate of merger with the office of the Secretary of State of the State of Delaware, and the merger will become effective upon the filing of the certificate of merger or at a time agreed to by the parties and specified on the certificate of merger, and, at the GP merger 1 effective time, all of the property, rights and privileges of MGP and Merger Sub 1 will vest in the surviving company, and all of the liabilities and obligations of MGP and Merger Sub 1 will become liabilities and obligations of the surviving company and (ii) EGP and Merger Sub 2 will effect GP merger 2 by filing a certificate of merger with the office of the Secretary of State of the State of Delaware, and the merger will become effective upon the filing of the certificate of merger or at a time agreed to by the parties and specified on the certificate of merger, and at the GP merger 2 effective time, all of the property, rights and privileges of EGP and Merger Sub 2 will vest in the surviving company, and all of the liabilities and obligations of EGP and Merger Sub 2 will become liabilities and obligations of the surviving company.

Organizational Documents of the Surviving Company; Directors and Officers

The Pope limited partnership agreement, as in effect immediately prior to the merger effective time, will be the limited partnership agreement of the surviving company, except that the limited partnership agreement will be amended to reflect that ROC will be the sole limited partner of Pope, and together with Opco immediately following the merger of Merger Sub 1 and Merger Sub 2 with and into Opco following the closing, will hold, directly or indirectly, all partnership interests in Pope.

Exchange and Payment Procedures

Prior to the merger effective time, Rayonier will enter into a customary exchange agreement with a nationally recognized financial institution, which is reasonably acceptable to Pope, to act as exchange agent for the payment of the merger consideration. Prior to the merger effective time, Rayonier and Opco will deposit (i) Rayonier shares representing the number of whole Rayonier shares sufficient to deliver the aggregate Rayonier shares portion of the merger consideration (and/or certificates representing these Rayonier shares), (ii) Opco units representing the number of whole Opco units sufficient to deliver the aggregate Opco unit portion of the merger consideration (and/or certificates representing these units), and (iii) cash sufficient to pay the aggregate cash portion of the merger consideration and payment for any fractional Rayonier shares or Opco units. Such cash, units, book-entry shares and certificates, along with any dividends or distributions that become due to the holders of converted Rayonier shares, are referred to as the exchange fund.

Promptly (but within three business days) after the merger effective time, Rayonier will instruct the exchange agent to mail each record holder of MGP common stock as of immediately prior to the GP Merger 1 effective time, EGP common stock as of immediately prior to the GP Merger 2 effective time and Pope units as of immediately prior to the merger effective time a letter of transmittal and instructions for use in effecting the surrender of the certificates or book-entry shares or units in exchange for the merger consideration payable to the stockholders or unitholders. The letter of transmittal must specify that that in respect of certificated Pope units, delivery will be effected, and risk of loss and title to the certificates will pass, only upon proper delivery of the certificates to the exchange agent, and which will be in customary form and agreed to by Rayonier and Pope prior to the merger effective time.

Promptly following the closing, upon surrender of certificates, if any, for cancellation to the exchange agent together with such letters of transmittal, properly completed and duly executed, and such other documents (including in respect of book-entry shares or units) as may be reasonably required by the exchange agent pursuant to such instructions, holders of MGP shares, EGP shares and Pope units will be entitled their respective merger consideration.

 

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Investment of the Exchange Fund

The exchange agent will invest the cash included in the exchange fund as directed by Rayonier, in Rayonier’s sole discretion. However, no investment loss will affect the amounts payable to the Pope unitholders, though any interest or other income from the investments will be paid promptly to Rayonier or Opco. If the cash in the exchange fund is insufficient to satisfy all of the cash payment obligations under the merger agreement for any reason (including losses), Rayonier will promptly deposit an amount of cash into the exchange fund equal to any deficiency.

Termination of the Exchange Fund

After one year following the closing date, any portion of the exchange fund that remains undistributed will be returned to Rayonier or Opco upon their demand. At that point, any holders of unexchanged shares of MGP or EGP or Pope units must look to Rayonier or Opco for the merger consideration. No interest accrues on any merger consideration.

Withholding Rights

Rayonier, Opco, ROC, Merger Sub 1, Merger Sub 2, Merger Sub 3, and the exchange agent will each be entitled to deduct and withhold from the consideration otherwise payable pursuant to the merger agreement any amount or securities required to deduct and withhold under the Code or any provision of state, local, or foreign tax law. To the extent that amounts or securities are so deducted and withheld such amounts will be treated for all purposes of the merger agreement as having been paid or issued to such person in respect of whom such deduction and withholding was made.

Treatment of Pope Equity Compensation

Each restricted Pope unit granted under Pope’s equity compensation plans that is outstanding immediately prior to the merger effective time will be converted into restricted Rayonier shares on substantially the same terms and conditions as were applicable to the restricted Pope units prior to the merger effective time, except that the number of restricted Rayonier shares subject to each award shall be equal to the number of Pope units subject to the restricted Pope unit award immediately prior to the merger effective time multiplied by 3.929.

At the merger effective time, Rayonier will assume all of the obligations under Pope’s equity plans, and unvested restricted Pope units then outstanding under Pope’s equity plans will be adjusted to reflect Rayonier shares. As discussed in “Interests of Pope’s Directors and Executive Officers in the Merger – Treatment of Equity and Equity-Based Awards” beginning at page 128, Pope directors and some executive employees of Pope hold restricted Pope units that will experience accelerated vesting in connection with or following the merger.

Representations and Warranties of Pope, MGP and EGP

The merger agreement contains customary representations and warranties made by Pope, MGP and EGP that are subject, in some cases, to specified exceptions and qualifications contained in the merger agreement, in the disclosure schedules or in certain reports filed by Pope with the SEC after January 1, 2018 and at or prior to the date of the merger agreement. In particular, certain of the representations and warranties in the merger agreement are subject to knowledge qualifications, which means that those representations and warranties would not be deemed untrue, inaccurate or incorrect as a result of matters of which certain officers of Pope did not have actual knowledge. The merger agreement includes representations and warranties by Pope, MGP and EGP relating to, among other things:

 

   

organization, general authority and standing;

 

   

capitalization of Pope, MGP and EGP;

 

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equity interests in other entities;

 

   

power, authority and approval relating to the transactions contemplated by the merger agreement;

 

   

no violations or defaults;

 

   

consents and approvals;

 

   

financial statements and SEC filings;

 

   

internal controls and procedures;

 

   

absence of any undisclosed liabilities;

 

   

absence of certain changes or events;

 

   

compliance with applicable law

 

   

permits;

 

   

material contracts;

 

   

environmental matters;

 

   

title to property;

 

   

litigation;

 

   

information supplied;

 

   

tax matters;

 

   

employee benefits;

 

   

intellectual property;

 

   

related party agreements;

 

   

insurance;

 

   

state takeover statutes;

 

   

partnership unitholder approval;

 

   

financial advisors; and

 

   

opinion of financial advisor.

Some of the representations and warranties contained in the merger agreement are qualified by a “materiality” standard or by a “material adverse effect” standard.

A material adverse effect with respect to Rayonier or Pope, as applicable, means, when used with respect to a person, any change, event, development, circumstance, condition, occurrence or effect that, individually or in the aggregate, (i) would have a material adverse effect on the business, condition (financial or otherwise), assets, liabilities or results of operations of such person and its subsidiaries, taken as a whole or (ii) would prevent or delay the consummation of the merger(s) beyond the outside date on the terms provided in the merger agreement, but none of the following changes, events, developments, circumstances, conditions, occurrences or effects (either alone or in combination) will be taken into account for purposes of determining whether or not a material adverse effect has occurred: (a) changes in the general economic, financial, credit, securities or commodities markets, including prevailing interest rates or currency rates, or regulatory or political conditions; (b) changes in general economic conditions in the any of the industries in which such person or its subsidiaries operates, including changes in timber prices or the prices of any other commodity; (c) the outbreak or escalation of hostilities, the declaration of a national emergency or war, or the occurrence of any other calamity or crisis,

 

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including acts of terrorism; (d) any hurricane, tornado, flood, earthquake or other natural disaster; (e) the execution, announcement or performance of the merger agreement or the consummation of the transactions contemplated thereby, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, distributors, investors, employees or regulators, or any litigation arising from the merger agreement or the mergers; (f) any change in the market price or trading volume of the common units representing limited partner interests or common shares of such person (it being understood and agreed that the exception in this clause (f) shall not preclude any party from asserting that the facts, circumstances, changes, events, developments, conditions, occurrences or effects giving rise to such change (if not otherwise excluded from the definition of a “material adverse effect”) should be deemed to constitute, or be taken into account in determining whether there has been, a material adverse effect); (g) any failure to meet any financial projections or estimates or forecasts of revenues, earnings or other financial metrics for any period (it being understood and agreed that the exception in this clause (g) shall not preclude any party from asserting that the facts, circumstances, changes, events, developments, conditions, occurrences or effects giving rise to such failure (if not otherwise excluded from the definition of a “material adverse effect”) should be deemed to constitute, or be taken into account in determining whether there has been, a material adverse effect); (h) changes after January 14, 2020 in any laws or regulations applicable to such person or applicable accounting regulations or the interpretations thereof, or enforcement of any of the foregoing; (i) the establishment or continuation of any permitted lien (as that term is defined in the merger agreement); (j) any action taken with the written consent of or at the written request of Pope or Rayonier, as the case may be; and (k) any change, in and of itself, in any credit rating that may be applied to the person (it being understood and agreed that this clause (k) shall not preclude any party from asserting that the facts, circumstances, changes, events, developments, conditions, occurrences or effects giving rise to such change (if not otherwise excluded from the definition of a “material adverse effect”) should be deemed to constitute, or be taken into account in determining whether there has been, a material adverse effect); provided, however, that any change, event, development, circumstance, condition, occurrence or effect referred to in clause (a), (b), (c) or (d) will be taken into account for purposes of determining whether or not a material adverse effect has occurred if and to the extent that such change, event, development, circumstance, condition, occurrence or effect disproportionately and adversely affects such person and its subsidiaries, taken as a whole, as compared to other persons operating in the industries in which such person operates (in which case only the incremental disproportionate impact may be taken into account in determining whether or not a material adverse effect has occurred).

Representations and Warranties of Rayonier, Opco Holdings Opco, ROC, Merger Sub 1, Merger Sub 2 and Merger Sub 3

The merger agreement contains customary representations and warranties made by Rayonier, Opco Holdings, Opco, ROC, Merger Sub 1, Merger Sub 2 and Merger Sub 3 that are subject, in some cases, to specified exceptions and qualifications contained in the merger agreement, in the disclosure schedules or in certain reports filed by Rayonier with the SEC after January 1, 2018 and at prior to the date of the merger agreement. In particular, certain of these representations and warranties are subject to materiality or material adverse effect qualifications. In addition, certain of the representations and warranties in the merger agreement are subject to knowledge qualifications, which means that those representations and warranties would not be deemed untrue, inaccurate or incorrect as a result of matters of which certain officers of Rayonier did not have actual knowledge. The merger agreement includes representations and warranties by Rayonier, Opco Holdings, Opco, ROC, Merger Sub 1, Merger Sub 2 and Merger Sub 3 relating to, among other things:

 

   

organization, general authority and standing;

 

   

capitalization;

 

   

power, authority and approval of the transactions;

 

   

equity interests in other entities;

 

   

tax matters;

 

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no violations or defaults;

 

   

consents and approvals;

 

   

financial reports and SEC documents;

 

   

internal controls and procedures;

 

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