Plum Creek Timber Company and Georgia Pacific Corporation announced in mid-June that they have amended their merger agreement and are proceeding with the previously announced merger of Plum Creek and The Timber Company, Inc.

When completed, the transaction will make Plum Creek the second-largest timber land owning company in the United States, with 7.8 million acres, behind only International Paper Co. Plum Creek currently manages 530,000 acres in Louisiana and southern Arkansas, from its Southern Division headquarters in West Monroe. It maintains contracts with approximately 50 logging contractors to furnish timber to mills it formerly owned and sold to West Fraser South, at Joyce, Louisiana, and Huttig, Arkansas.

The Timber Company, Inc., is currently a subsidiary of Georgia Pacific, formed to own timber lands of the parent corporation.

According to a statement from the two companies from their headquarters at Seattle and Atlanta, the decision to move forward with the merger was made by directors of the two companies following confirmation that they will receive opinions from tax counsel that the spin-off of The Timber Company from Georgia Pacific and the subsequent merger with Plum Creek will be tax free to both companies and their shareholders.

Outside legal opinions from independent tax counsel to each company would replace a private letter ruling previously requested from the Internal Revenue Service.

Plum Creek and The Timber Company plan to hold shareholder meetings on August 12, 2001, to approve the transaction. Closing is expected by the end of September.

The IRS notified the companies that it decided not to issue the private latter because its standard for proving the business purpose of the transaction had not been met.

"Plum Creek and Georgia Pacific have taken action enabling us to move into the final phase of completing this important strategic transaction," said Plum Creek president and CEO Rick Holley. "We are highly confident of our position, based on our discussions with the IRS and on the opinions we will receive from our tax counsel, that the transaction will be free to all parties."

Following the merger, Plum Creek will be the second largest private timber land owner in the U.S., with more than 7.8 million acres in 19 states.

A.D. (Pete) Corell, chairman and CEO of Georgia Pacific, said, "This transaction creates significant value for both companies and their shareholders. The opinions of tax counsel are clear and unambiguous."

Financial terms of the agreement indicate The Timber Company shareholders will receive 1.37 shares of Plum Creek stock for each share of The Timber Company. Based on Plum Creek's closing share price of $28.11 on June 11, the overall transaction is valued at approximately $3.1 billion, including an estimated $730 million of The Timber Company debt that Plum Creek will re-finance at closing.

The Timber Company currently manages 4.7 million acres of timber land in the U.S., and sells timber and wood fiber to industrial wood users.