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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from__________ to__________
Commission file number 0-24976
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CROWN PACIFIC PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 93-1161833
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
121 SW Morrison Street, Suite 1500, Portland, Oregon 97204
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 503-274-2300
----------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
Common Units 27,314,277
(Class) (Outstanding at May 5, 1998)
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<PAGE>
CROWN PACIFIC PARTNERS, L.P.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Income - Quarters Ended
March 31, 1998 and 1997 2
Consolidated Balance Sheet - March 31, 1998 and
December 31, 1997 3
Consolidated Statement of Cash Flows - Quarters
Ended March 31, 1998 and 1997 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Item 3. Quantitative and Qualitative Disclosures About Market Risk 10
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 11
Signature 12
</TABLE>
1
<PAGE>
PART I - FINANCIAL INFORMATION
CROWN PACIFIC PARTNERS, L.P.
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT UNIT AND PER UNIT DATA)
(UNAUDITED)
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
MARCH 31,
1998 1997
----------- -----------
<S> <C> <C>
Revenues .................................................. $ 153,930 $ 117,391
Operating costs:
Cost of products sold ................................... 127,194 94,171
Selling, general and administrative expenses ............ 7,096 6,720
----------- -----------
Operating income .......................................... 19,640 16,500
Interest expense .......................................... 12,995 9,479
Amortization of debt issuance costs ....................... 216 182
Other (income) expense, net ............................... (462) 142
----------- -----------
Net income ................................................ $ 6,891 $ 6,697
----------- -----------
----------- -----------
Net income per unit ....................................... $ 0.25 $ 0.24
----------- -----------
----------- -----------
Weighted average units outstanding ........................ 27,314,277 27,104,277
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of this financial statement.
2
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CROWN PACIFIC PARTNERS, L.P.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT UNIT DATA)
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
(UNAUDITED)
----------- ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents ................................... $ 17,534 $ 22,384
Accounts receivable ......................................... 74,967 50,523
Notes receivable ............................................ 4,768 4,063
Inventories ................................................. 41,543 44,914
Deposits on timber cutting contracts ........................ 5,671 6,656
Prepaid and other current assets ............................ 3,435 2,421
-------- --------
Total current assets ...................................... 147,918 130,961
Property, plant and equipment, net of accumulated
depreciation of $25,568 and $22,916 ........................ 48,444 47,325
Timber, timberlands and roads, net ............................ 637,871 645,641
Intangible assets, net of accumulated amortization
of $170 and $61 ............................................. 17,683 1,778
Other assets .................................................. 12,274 13,439
-------- --------
Total assets .............................................. $864,190 $839,144
-------- --------
-------- --------
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Notes payable ............................................... $ 9,000 $ 9,000
Accounts payable ............................................ 23,484 14,626
Accrued expenses ............................................ 20,522 25,007
Accrued interest ............................................ 12,494 6,144
Current portion of long-term debt ........................... 77 1,000
-------- --------
Total current liabilities ................................. 65,577 55,777
Long-term debt ................................................ 593,040 574,500
Other non-current liabilities ................................. 625 628
-------- --------
659,242 630,905
-------- --------
Commitments and contingent liabilities
Partners' capital:
General partners ............................................ 2,064 2,093
Limited partners (27,314,277 and 27,104,277 units
outstanding at March 31, 1998 and December 31, 1997,
respectively) ............................................. 202,884 206,146
-------- --------
Total partners' capital ................................... 204,948 208,239
-------- --------
Total liabilities and partners' capital ................... $864,190 $839,144
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of this financial statement.
3
<PAGE>
CROWN PACIFIC PARTNERS, L.P.
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
MARCH 31,
1998 1997
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................. $ 6,891 $ 6,697
Adjustments to reconcile net income to
net cash provided by operating activities:
Depletion, depreciation and amortization ........... 14,414 9,347
(gain) loss on sale of property .................... (3,597) 44
Other .............................................. -- (232)
Net change in current assets and current
liabilities, net of effects of business combination:
Accounts and notes receivable ...................... (16,413) (6,498)
Inventories ........................................ 7,997 3,904
Deposits on timber cutting contracts ............... 985 354
Prepaid and other current assets ................... (1,014) (442)
Accounts payable and accrued expenses .............. 10,151 2,357
--------- --------
Net cash provided by operating activities ................ 19,414 15,531
--------- --------
Cash flows from investing activities:
Additions to timberlands ............................... (2,700) (1,577)
Additions to timber cutting rights ..................... (2,551) (1,275)
Additions to equipment ................................. (1,309) (2,277)
Proceeds from sales of property ........................ 5,260 1,097
Principal payments received on notes ................... 38 3,070
Purchase of business ................................... (15,413) --
Other investing activities ............................. (11) 14
--------- --------
Net cash used by investing activities .................... (16,686) (948)
--------- --------
Cash flows from financing activities:
Proceeds from issuance of long-term debt ............... 148,250 --
Repayments of long-term debt ........................... (140,257) (1,000)
Contributions of capital ............................... 50 --
Distributions to partners .............................. (14,997) (14,492)
Debt and equity issuance costs ......................... (548) --
Other financing activities ............................. (76) (102)
--------- --------
Net cash used by financing activities .................... (7,578) (15,594)
--------- --------
Net decrease in cash and cash equivalents ................ (4,850) (1,011)
Cash and cash equivalents at beginning of period ......... 22,384 16,818
--------- --------
Cash and cash equivalents at end of period ............... $ 17,534 $ 15,807
--------- --------
--------- --------
</TABLE>
The accompanying notes are an integral part of this financial statement.
4
<PAGE>
CROWN PACIFIC PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS OR AS OTHERWISE INDICATED)
(UNAUDITED)
1: ORGANIZATION AND BASIS OF PRESENTATION
Crown Pacific Partners, L.P. (the "Partnership"), a Delaware limited
partnership, through its 99% owned subsidiary, Crown Pacific Limited
Partnership, was formed in 1994 to acquire, own and operate timberlands and
wood product manufacturing assets. The Partnership's business consists
primarily of growing and harvesting timber for sale as logs in domestic and
export markets and the manufacture and sale of lumber and other wood products.
The financial statements included in this Form 10-Q are unaudited and reflect
the consolidated financial position, results of operations and cash flows of
the Partnership. These financial statements include all the accounts of the
Partnership but do not contain all of the information required by generally
accepted accounting principles to be included in a full set of financial
statements. The financial statements in the Partnership's 1997 annual report
on Form 10-K, which includes a summary of significant accounting policies of
the Partnership, should be read in conjunction with this Form 10-Q. In the
opinion of management, all material adjustments necessary to present fairly
the results of operations for the three month periods ended March 31, 1998
and 1997 have been included. All such adjustments are of a normal and
recurring nature and all significant intercompany transactions have been
eliminated. The results of operations for any interim period are not
necessarily indicative of the results of operations for the entire year.
Net income per unit was calculated using the weighted average number of
Common and Subordinated units outstanding divided into net income, after
adjusting for the General Partner interest. The General Partner income
allocation was $69 and $67 for the three months ended March 31, 1998 and
1997, respectively. Adoption of Statement of Financial Accounting Standards
No. 128, EARNINGS PER SHARE (SFAS 128), in 1997 had an immaterial effect on
the Partnership. There is no significant difference between basic and diluted
earnings per unit as net income is allocated proportionately to both
Subordinated and Common units.
NOTE 2: INVENTORIES
Inventories, consisting of lumber and logs, are stated at the lower of LIFO
cost or market. Supplies and inventories maintained at non-manufacturing
locations are valued at the lower of average cost or market. Inventories
consisted of the following:
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
-------------- -----------------
<S> <C> <C>
Finished goods $19,618 $13,054
Logs 19,334 29,720
Supplies 1,575 1,224
LIFO adjustment 1,016 916
------- -------
Total $41,543 $44,914
------- -------
------- -------
</TABLE>
5
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NOTE 3: TIMBER, TIMBERLANDS AND ROADS
In the first quarter of 1998, the Partnership performed its annual update of
its timber inventory system, resulting in an increase to depletion costs for
the first quarter of 1998 of approximately $2.0 million, or $0.07 per unit,
with no impact on cash flow.
NOTE 4: SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental disclosure of cash flow information is as follows:
<TABLE>
<CAPTION>
Three months ended March 31,
1998 1997
------ ------
<S> <C> <C>
Cash paid during the period for interest $6,669 $3,818
</TABLE>
NOTE 5: ACQUISITION OF ALLIANCE WHOLESALE LUMBER, INC.
In January 1998, the Partnership completed its acquisition of Alliance
Wholesale Lumber, Inc. ("Alliance Lumber") of Phoenix, Arizona. Alliance
Lumber operates three contractor service yards, which provide a variety of
wood products to residential and commercial contractors. Consideration given
by the Partnership totaled $29.5 million, consisting of $15.0 million in
cash, $5.0 million in the Partnership's Common Units and the assumption of
$9.5 million of existing debt. The acquisition was accounted for as a
purchase and the results of Alliance Lumber operations have been included
with those of the Partnership since the acquisition date. Goodwill related to
this acquisition was $15.9 million, which is being amortized over 40 years.
NOTE 6: SUBSEQUENT EVENTS
On April 21, 1998, the Board of Control authorized the Partnership to make a
distribution of $0.551 per unit. The total distribution will be $15.4 million
(including $0.3 million to the General Partners) and will be paid on May 15,
1998 to unitholders of record on May 4, 1998.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Crown Pacific's principal operations consist of the growing and harvesting of
timber, the sale of logs and the processing and sale of lumber and other wood
products. The Partnership's ability to implement its business strategy over
the long term and its results of operations depend upon a number of factors,
many of which are beyond its control. These factors include general industry
conditions, domestic and international prices and supply and demand for logs,
lumber and other wood products, seasonality and competition from other
supplying regions and substitute products.
FORWARD-LOOKING STATEMENTS
Information contained in Item 2 and other sections of this report includes
forward-looking statements including statements regarding the Partnership's
expectations, hopes, beliefs, intentions or strategies regarding the future
that are not purely historical, but are based on assumptions that in the
future may prove not to be accurate. The Partnership's business and prospects
are subject to a number of risks, including the volatility of global timber
and lumber prices and supplies, factors limiting harvesting of timber
including contractual obligations, governmental restrictions, weather and
access limitations - as well as the substantial capital expenditures required
to supply its operations.
Additional factors that could affect future performance include environmental
risks, operating risks normally associated with the timber industry,
competition, government regulation and economic
6
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changes in the regions where the Partnership's products are sold, including
Southeast Asia and Japan. Other risk factors include the value of the U.S.
dollar against foreign currencies and the ability of the Partnership to
implement its business strategy. These and other risks are described in the
Partnership's registration statements and reports filed from time to time on
forms 10-K, 8-K and 10-Q and reports to unitholders, which are available from
the Company or the United States Securities and Exchange Commission.
FINANCIAL CONDITION
The Partnership's primary sources of liquidity have been cash provided by
operating activities as well as debt and equity financings. Cash provided by
operating activities was $19.4 million and $15.5 million for the three-month
periods ended March 31, 1998 and 1997, respectively. Working capital
increased to $82.3 million at March 31, 1998 compared to $75.2 million at
December 31, 1997.
Net cash used in investing activities of $16.7 million resulted from the
acquisition of Alliance Lumber and additions to timberlands, equipment and
timber cutting rights, which was partially offset by proceeds from sales of
properties.
Net cash used by financing activities of $7.6 million resulted primarily from
distributions to partners of $15.0 million, offset by $8.0 million of net
proceeds from long-term debt.
On January 27, 1998, the Board of Control authorized the Partnership to make
a distribution of $0.538 per unit, the Second Target Distribution as defined
by the Partnership Agreement. The total distribution was $15.0 million
(including $0.3 million to the General Partners) and was paid on February 13,
1998 to Unitholders of record on February 6, 1998.
Cash required to meet the Partnership's quarterly cash distributions (as
required by the Partnership Agreement), to pay for capital expenditures and
to satisfy interest and principal payments on indebtedness, will be
significant. Capital expenditures, excluding purchases of timber and
timberlands, acquisitions of businesses and any costs incurred in connection
with new mills, are expected to be approximately $16.0 million in 1998, $2.9
million of which has already been incurred. The Managing General Partner
expects that capital expenditures will be funded by property sales, cash
generated from operations, current funds and/or bank borrowings. The
Partnership is currently constructing a new sawmill in Port Angeles,
Washington and one in Bonners Ferry, Idaho. The new mills will be financed
using operating leases. Debt service is expected to be funded from current
operations. The Partnership expects to make cash distributions from its
current funds and cash generated from operations.
The Partnership has a $40 million revolving credit facility with a group of
banks for working capital purposes and stand-by letters of credit that expire
on September 30, 2000. The credit facility bears a floating rate of interest,
7.90% at March 31, 1998, and among other provisions, requires the Partnership
to repay all outstanding indebtedness under the facility for at least 30
consecutive days during any twelve-month period. The line of credit is
secured by the Partnership's inventories and receivables. At March 31, 1998,
the Partnership had $9.0 million outstanding under this facility.
The Partnership also has an Acquisition Facility with a group of banks to
provide for a $150 million revolving line of credit for the acquisition of
additional timber, timberlands and related assets. The Acquisition Facility
is unsecured, bears a floating rate of interest, 6.69% at March 31, 1998, and
7
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expires September 30, 2000. At the end of the revolving period, the
Partnership may elect to convert any outstanding borrowings under this
facility to a four-year term loan, requiring quarterly principal payments
equal to 6.25% of the outstanding principal balance on the conversion date.
Borrowings against this facility were $52.5 million at March 31, 1998.
On October 15, 1997, the Partnership used $107.5 million of seller provided
financing to fund the purchase of 65 thousand acres of timberland from
Trillium Corp. The notes to Trillium require monthly interest payments, at
variable rates, with principal payments of $55 million in January 1998 and
$52.5 million in 1999. The $55 million payment in January 1998 was paid with
the proceeds from a new senior note offering, which was issued in January
1998.
On December 30, 1997, the Partnership issued $15 million of new senior notes
and on January 13, 1998, the Partnership issued an additional $80 million of
new senior notes. The $95 million of combined notes have an average interest
rate of 7.80%, with principal payments of varying amounts due 2010 to 2018.
The proceeds of these notes were used to refinance indebtedness associated
with the Trillium acquisition and to finance a portion of the Alliance Lumber
acquisition.
The Partnership's 9.78%, 9.60% and 8.17% senior notes, issued in 1994, 1995
and 1996, respectively, are unsecured and require semi-annual interest
payments through 2013. The senior note agreements require the Partnership to
make an aggregate annual principal payment of $37.5 million on December 1,
2002, and principal payments in various amounts from December 1, 2003 through
2013.
All of the Partnership's senior note agreements and bank lines of credit
contain certain restrictive covenants, including limitations on harvest
levels, land sales, cash distributions and the amount of future indebtedness.
The Partnership was in compliance with such covenants at March 31, 1998.
RESULTS OF OPERATIONS (THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE
MONTHS ENDED MARCH 31, 1997)
Net revenues during the first quarter ended March 31, 1998 increased 31.1% to
$153.9 million, from $117.4 million in the same quarter in 1997. The $36.5
million increase was principally due to increased sales from the
Partnership's wholesale operations and increased log and stumpage sales. The
first quarter of 1998 was the first quarter which included the results of
operations for the recently acquired Alliance Lumber division.
Lumber sales, excluding sales of lumber by the wholesale operations,
represented 31.6% of sales in the first quarter of 1998, compared to 43.6% of
sales in the same quarter of 1997. Average external prices received for
lumber in the Oregon and Inland regions decreased 17.9% and 13.2%,
respectively, to $568 per thousand board feet (MBF) and $420/MBF,
respectively, for the first quarter of 1998 from prices received in the same
quarter of 1997. Lumber prices decreased in Oregon during the third and
fourth quarters of 1997 and began increasing slightly in the first quarter of
1998 as the U.S. millwork industry worked off existing inventory levels and
seasonal demand increased. Moderate price increases may also be seen in the
second quarter of 1998 as spring logging conditions begin to reduce readily
available supplies. Prices are expected to remain fairly flat for Inland
lumber throughout 1998. Prices for lumber products sold from the
Partnership's studmill in Marysville, Washington increased 6.4% to $332/MBF
in the first quarter of 1998 compared to $312/MBF in the comparable quarter
of 1997. Lumber prices from the Marysville, Washington location have also
increased from the later quarters of 1997, primarily as a result of increased
8
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production of higher priced Douglas Fir in the first quarter of 1998. Lumber
from this region is primarily studs and prices should be favorably impacted
by the change from exempt to non-exempt status for Canadian pre-drilled
studs, thereby potentially subjecting this Canadian product to tarrifs.
External lumber sales volumes, excluding sales from the wholesale operation,
increased 9.1% in the first quarter of 1998 to 100 million board feet (MMBF),
compared to 91.9 MMBF in the same period of 1997. Sales volumes of Oregon
lumber increased 34.3% to 45.4 MMBF in the 1998 quarter from 33.8 MMBF in the
1997 quarter due to increases in capacity at the Partnership's Gilchrist and
Prineville, Oregon facilities subsequent to capital improvements made in 1996
and 1997. External lumber sales volumes in the Inland region decreased by
8.2% to 46.5 MMBF in the first quarter of 1998 compared to 50.7 MMBF in the
first quarter of 1997. Modest volume increases are expected in the second
quarter of 1998 as dealers replenish depleted inventories in anticipation of
seasonal increases in construction. External lumber sales volume from the
Marysville studmill increased 12.7% to 8.4 MMBF during the first quarter of
1998 compared to 7.5 MMBF in the first quarter of 1997 as a result of capital
improvements made in 1997.
Total log sales represented approximately 26.4% of sales in the first quarter
of 1998, compared to 21.8% in the comparable quarter of 1997. Average
external domestic prices received for logs sold from the Olympic and Oregon
tree farms increased 1.6% and 1.4%, respectively, to $443/MBF and $432/MBF,
respectively, over prices experienced in the comparable quarter of 1997.
Average external prices received for logs sold from the Inland and Hamilton
tree farms decreased 37.8% and 23.6%, respectively, to $300/MBF and $385/MBF,
respectively, from prices experienced during the comparable quarter of 1997.
Overall decreases in domestic log prices are primarily a result of decreases
in the selling prices for lumber and a greater proportion of stumpage sales
in the mix in the first quarter of 1998 compared to the first quarter of
1997. The overall price decrease was partially offset by increased sales of
higher quality logs that previously had been sold for export. Domestic log
prices are expected to remain relatively flat throughout 1998.
Domestic log sales volumes increased 137.7% in the first quarter of 1998 to
92.2 MMBF, compared to 38.8 MMBF in the same quarter of 1997. The increases
at each of the Partnership's tree farms are primarily a result of continued
movement of lower grade export logs to the domestic market, the addition of
the Trillium timberlands and increased stumpage sales volumes compared to the
1997 quarter.
Sales of logs to customers involved in exporting activities (included in
total log sales above) were approximately $1.3 million, or 0.8% of sales in
the first quarter of 1998, compared to $5.7 million, or 4.9% of sales for the
same quarter in 1997. Prices received for export logs decreased 17.3% to
$566/MBF while sales volumes decreased 73.2% to 2.2 MMBF in the first quarter
of 1998 from levels experienced in the same quarter of 1997. Decreases in
sales volumes resulted from a shift toward selling logs in the domestic
market as a result of weak Asian demand for logs. The volume of log exports
is expected to remain relatively low as the Partnership gets higher value
selling similar quality logs to domestic mills in log form or on the stump.
Sales from the Partnership's wholesale operations consisted of lumber and
other wood products, most of which were not manufactured by the Partnership,
and represented 35% of sales in the first quarter of 1998 compared to 22% in
the first quarter of 1997. The first quarter of 1998 was the first quarter to
include the results of newly acquired Alliance Lumber.
9
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The gain from property sales in the first quarter of 1998 was $3.4 million
and was immaterial in the first quarter of 1997. Several parcels were sold in
the first quarter of 1998, primarily from Oregon Eastside properties acquired
from Cavenham in 1996. The Partnership will continue to sell or trade
properties in both Oregon and northwest Washington as part of its strategy to
reinvest the value of non-strategic timberlands.
By-product and other revenues accounted for 4.2% of sales in the first
quarter of 1998, compared to 4.6% of sales in the same quarter of 1997.
Residual wood chip prices increased to $61 per bone dry unit ("BDU") in the
first quarter of 1998 compared to $44/BDU in the first quarter of 1997. Paper
mills are finding an adequate supply of wood chips as many paper mills have
taken down time to keep their finished inventory from building. As a result,
wood chip prices are expected to remain at current levels at least through
the third quarter of 1998.
Cost of sales as a percentage of sales increased to 82.6% in the first
quarter of 1998, compared to 80.2% in the same quarter of 1997. The increase
is primarily the result of a larger portion of the Partnership's revenue
being derived from its wholesale operations, which operate at a lower margin
and lower sales realizations for logs and lumber, which were partially offset
by property sale gains and operating efficiencies resulting from capital
improvements.
Selling, general and administrative expenses increased $0.4 million to $7.1
million in the first quarter of 1998, compared to $6.7 million in the first
quarter of 1997, reflecting the additional operations of Alliance Lumber.
Selling, general and administrative expenses represented 4.6% of sales in the
first quarter of 1998 and 5.7% of sales in the same quarter of 1997. The
Partnership has been able to achieve operating efficiencies within its
administrative functions as operations have increased.
Interest expense increased $3.5 million to $13.0 million in the first quarter
of 1998, from $9.5 million in the same quarter of 1997. The increase is
primarily a result of increased debt related to the Trillium and Alliance
Lumber acquisitions.
The Partnership pays no significant income taxes and does not include a
provision for income taxes in its financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None.
10
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibits filed as part of this report are listed below and this list
is intended to serve as the exhibit index:
<TABLE>
<CAPTION>
EXHIBIT NO. AND DESCRIPTION
---------------------------
<S> <C>
10.1 Amendment No. 2 to $25,000,000, 9.60% Senior Notes due
December 1, 2009, dated as of January 15, 1998.
10.2 Amendment No. 2 to $275,000,000, 9.78% Senior Notes due
December 1, 2009, dated as of January 15, 1998.
10.3 Amendment No. 1 to $91,000,000 Senior Notes, Series A, B, C and
D, due 2006-2013, dated as of January 15, 1998.
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the quarter ended
March 31, 1998.
11
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 8, 1998 CROWN PACIFIC PARTNERS, L.P.
By: Crown Pacific Management Limited
Partnership, as General Partner
By: /s/ Richard D. Snyder
---------------------------------
Richard D. Snyder
Vice President and Chief Financial
Officer (Duly Authorized Officer and
Principal Financial and Accounting
Officer)
12
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- --------------------------------------------------------------------------------
EXHIBIT 10.1
AMENDMENT NO. 2 TO NOTE PURCHASE AGREEMENT
Dated as of January 15, 1998
Among
CROWN PACIFIC LIMITED PARTNERSHIP
And
EACH OF THE NOTEHOLDERS
WHICH ARE SIGNATORIES HEREOF
----------------------------------------------
Re: $25,000,000 9.60% Senior Notes
Due December 1, 2009
- --------------------------------------------------------------------------------
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION HEADING Page
----
<S> <C>
Parties..................................................................... 1
Recitals.................................................................... 1
SECTION 1. AMENDMENTS TO ORIGINAL NOTE PURCHASE AGREEMENT ............. 1
Section 1.1. Amendments to Section 8.1 ............................... 1
Section 1.2. Addition to Section 8.1 ................................. 3
SECTION 2. MISCELLANEOUS .............................................. 3
Section 2.1. Effectiveness of Amendment .............................. 3
Section 2.2. Governing Law ........................................... 3
Section 2.3. Counterparts ............................................ 3
Section 2.4. Captions ................................................ 3
Section 2.5. References to Original Note Purchase Agreement .......... 3
Section 2.6. Expenses ................................................ 3
Section 2.7. Ratification ............................................ 4
Signature Page ............................................................. 5
</TABLE>
-i-
<PAGE>
AMENDMENT NO. 2 TO NOTE PURCHASE AGREEMENT
THIS AMENDMENT NO. 2 TO NOTE PURCHASE AGREEMENT, dated as of January 15,
1998 (this "AMENDMENT"), entered into among CROWN PACIFIC LIMITED
PARTNERSHIP, a Delaware limited partnership (the "COMPANY"), and EACH OF THE
NOTEHOLDERS WHICH ARE SIGNATORIES HEREOF (the "NOTEHOLDERS");
WITNESSETH:
WHEREAS, pursuant to the Note Purchase Agreement, dated as of March 15,
1995, (said Note Purchase Agreement as amended by Amendment No. 1 thereto
dated as of August 1, 1996, being herein called the "ORIGINAL NOTE PURCHASE
AGREEMENT"), between the Company and each of the Purchasers named therein,
the Company has heretofore issued $25,000,000 aggregate principal amount of
its 9.60% Senior Notes due December 1, 2009 (the "NOTES"); and
WHEREAS, terms not otherwise defined herein shall have the respective
meanings specified in the Original Note Purchase Agreement, as amended by
this Amendment; and
WHEREAS, the Company and the Noteholders desire to amend certain of the
provisions contained in the Original Note Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, the Company and the Noteholders hereby agree as
follows:
SECTION 1. AMENDMENTS TO ORIGINAL NOTE PURCHASE AGREEMENT.
The Original Note Purchase Agreement is hereby amended as follows:
SECTION 1.1. AMENDMENTS TO SECTION 8.1.
(a) Subclause (ii) of clause (b) of the definition of "AVAILABLE CASH"
contained in Section 8.1 of the Original Note Purchase Agreement is hereby
amended by (Y) deleting the phrase the "1994 NOTES AND THE 1996 NOTES" or the
phrase "1994 NOTES AND 1996 NOTES" wherever either such phrase occurs in such
clause (ii) and substituting in lieu thereof the phrase "1994 NOTES, THE 1996
NOTES AND THE 1997 NOTES" and (Z) deleting the phrase "1994 NOTES AND/OR THE
1996 NOTES" where such phrase occurs in such clause (ii) and substituting in
lieu thereof the phrase "1994 NOTES, THE 1996 NOTES AND/OR THE 1997 NOTES".
<PAGE>
(b) The definition of "CONSOLIDATED CASH FLOW" contained in Section 8.1
of the Original Note Purchase Agreement is hereby amended by deleting the
number "15%" where it appears in said definition and substituting in lieu
thereof the number "8-1/3%".
(c) The definition of "PLANNED VOLUME" contained in Section 8.1 of the
Original Note Purchase Agreement is hereby deleted in its entirety and the
following is substituted therefor:
"PLANNED VOLUME" shall mean as of December 30, 1997 325,000,000
board feet per annum of timber, and shall be adjusted for any Annual
Timber Increase, as of the Effective Date for such Annual Timber
Increase, by increasing such per annum amount by an amount equal to
8-1/3% of such Annual Timber Increase. In addition, such per annum
amount shall, if there shall be an Annual Timber Decrease in any
Determination Period, be permanently (with respect to such Annual Timber
Decrease) adjusted, effective as of the Effective Date for such Annual
Timber Decrease, by decreasing such per annum amount in the same
proportion that the Predisposition Timber Amount in respect of such
Annual Timber Decrease is reduced by such Annual Timber Decrease;
PROVIDED that such adjustment shall not be made if the percentage
decrease represented by such adjustment would be less than 5% and if the
Asset Coverage Ratio as of the last day of such Determination Period is
at least 2:1. For purposes of the foregoing:
"ANNUAL TIMBER INCREASE" shall mean, for any Determination
Period, the amount, in board feet, by which the number of board
feet of timber acquired by the Company and its Restricted
Subsidiaries during such Determination Period shall exceed the
number of board feet of timber sold or otherwise disposed of by the
Company and its Restricted Subsidiaries during such Determination
Period; and "ANNUAL TIMBER DECREASE" shall mean, for any
Determination Period, the amount, in board feet, by which the
number of board feet of timber sold or otherwise disposed of by the
Company and its Restricted Subsidiaries during such Determination
Period shall exceed the number of board feet of timber acquired by
the Company and its Restricted Subsidiaries during such
Determination Period; PROVIDED that, neither such calculation shall
include timber acquired with the Net Proceeds of an Excess Harvest
pursuant to Section 4.12.
"ASSET COVERAGE RATIO" shall mean, as of the date of
determination, the ratio of (a) the fair market value (determined
in good faith by a Responsible Officer, but excluding any value
based on a higher and better use thereof) of the timberlands owned
by the Company and its Restricted Subsidiaries on such
determination date to (b) Funded Debt of the Company and its
Restricted Subsidiaries on a consolidated basis on such
determination date.
-4-
<PAGE>
"DETERMINATION PERIOD" shall mean the period from and
including December 30, 1997 to and including December 31, 1998 and
each calendar year thereafter.
"EFFECTIVE DATE" for any Annual Timber Increase or Annual
Timber Decrease shall be July 1 of the Determination Period for
which such Annual Timber Increase or Annual Timber Decrease, as the
case may be, occurs.
"PREDISPOSITION TIMBER AMOUNT" with respect to any Annual
Timber Decrease shall mean the amount of timber owned by the
Company and its Restricted Subsidiaries as of the first day of the
Determination Period for which such Annual Timber Decrease occurred.
SECTION 1.2. ADDITION TO SECTION 8.1.
The following definition of "1997 NOTES" is hereby added to Section 8.1
of the Original Note Purchase Agreement immediately following the definition
of "1996 NOTES":
"1997 NOTES" shall mean the $15,000,000 7.76% Senior Notes, Series
A, due February 1, 2012, the $55,000,000 7.76% Senior Notes, Series B,
due February 1, 2013, and the $25,000,000 7.93% Senior Notes, Series C,
due February 1, 2018 of the Company issued under and pursuant to the
Note Purchase Agreement dated as of December 15, 1997 among the Company
and the purchasers listed in Schedule I thereto.
SECTION 2. MISCELLANEOUS.
SECTION 2.1. EFFECTIVENESS OF AMENDMENT. This Amendment shall be effective
upon, and only upon, execution and delivery of counterparts hereof by the
Company and by the holders of at least 55% in aggregate principal amount of
the then outstanding Notes.
SECTION 2.2. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 2.3. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together only one Amendment.
SECTION 2.4. CAPTIONS. The descriptive headings of the various Sections or
parts of this Amendment are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
-5-
<PAGE>
SECTION 2.5. REFERENCES TO ORIGINAL NOTE PURCHASE AGREEMENT. Any and all
notices, requests, certificates and other instruments executed and delivered
concurrently with or after the effectiveness of this Amendment may refer to
the Original Note Purchase Agreement without making specific reference to
this Amendment but nevertheless all such references shall be deemed to
include this Amendment unless the context shall otherwise require.
SECTION 2.6. EXPENSES. Whether or not the transactions herein contemplated
shall be consummated, the Company agrees to pay all expenses relating to the
subject matter of this Amendment, including but not limited to the reasonable
out-of-pocket expenses of the Noteholders and the reasonable fees and
expenses of Chapman and Cutler, special counsel for the Noteholders.
SECTION 2.7. RATIFICATION. Except to the extent hereby modified or amended,
the Original Note Purchase Agreement is in all respects hereby ratified,
confirmed and approved by the parties hereto.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2
to Note Purchase Agreement to be executed and delivered, all as of the day
and year first above written.
CROWN PACIFIC LIMITED
PARTNERSHIP, a Delaware limited
partnership
By: CROWN PACIFIC MANAGEMENT
LIMITED PARTNERSHIP, a
Delaware
limited partnership
Its General Partner
By
-------------------------------
Its Authorized Officer
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By
Its
PROVIDENT LIFE AND ACCIDENT
INSURANCE COMPANY
By
Its
-7-
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBIT 10.2
AMENDMENT NO. 2 TO NOTE PURCHASE AGREEMENT
Dated as of January 15, 1998
Among
CROWN PACIFIC LIMITED PARTNERSHIP
And
EACH OF THE NOTEHOLDERS
WHICH ARE SIGNATORIES HEREOF
----------------------------------------------
Re: $275,000,000 9.78% Senior Notes
Due December 1, 2009
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION HEADING Page
----
<S> <C>
Parties .................................................................... 1
Recitals ................................................................... 1
SECTION 1. AMENDMENTS TO ORIGINAL NOTE PURCHASE AGREEMENT ............. 1
Section 1.1. Amendments to Section 8.1. .............................. 1
Section 1.2. Addition to Section 8.1. ................................ 3
SECTION 2. MISCELLANEOUS .............................................. 3
Section 2.1. Effectiveness of Amendment .............................. 3
Section 2.2. Governing Law ........................................... 3
Section 2.3. Counterparts ............................................ 3
Section 2.4. Captions ................................................ 3
Section 2.5. References to Original Note Purchase Agreement .......... 3
Section 2.6. Expenses ................................................ 3
Section 2.7. Ratification ............................................ 4
Signature Page ............................................................. 5
</TABLE>
-i-
<PAGE>
AMENDMENT NO. 2 TO NOTE PURCHASE AGREEMENT
THIS AMENDMENT NO. 2 TO NOTE PURCHASE AGREEMENT, dated as of January 15,
1998 (this "AMENDMENT"), entered into among CROWN PACIFIC LIMITED PARTNERSHIP
, a Delaware limited partnership (the "COMPANY"), and EACH OF THE NOTEHOLDERS
WHICH ARE SIGNATORIES HEREOF (the "NOTEHOLDERS");
WITNESSETH:
WHEREAS, pursuant to the Note Purchase Agreement, dated as of December
1, 1994, (said Note Purchase Agreement, as amended by Amendment No. 1 thereto
dated as of August 1, 1996, being herein called the "ORIGINAL NOTE PURCHASE
AGREEMENT"), between the Company and each of the Purchasers named therein,
the Company has heretofore issued $275,000,000 aggregate principal amount of
its 9.78% Senior Notes due December 1, 2009 (the "NOTES"); and
WHEREAS, terms not otherwise defined herein shall have the respective
meanings specified in the Original Note Purchase Agreement, as amended by
this Amendment; and
WHEREAS, the Company and the Noteholders desire to amend certain of the
provisions contained in the Original Note Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, the Company and the Noteholders hereby agree as
follows:
SECTION 1. AMENDMENTS TO ORIGINAL NOTE PURCHASE AGREEMENT.
The Original Note Purchase Agreement is hereby amended as follows:
SECTION 1.1. AMENDMENTS TO SECTION 8.1.
(a) Subclause (ii) of clause (b) of the definition of "AVAILABLE CASH"
contained in Section 8.1 of the Original Note Purchase Agreement is hereby
amended by (Y) deleting the phrase the "1995 NOTES AND THE 1996 NOTES" or the
phrase "1995 NOTES AND 1996 NOTES" wherever either such phrase occurs in such
clause (ii) and substituting in lieu thereof the phrase "1995 NOTES, THE 1996
NOTES AND THE 1997 NOTES" and (Z) deleting the phrase "1995 NOTES AND/OR THE
1996 NOTES" where such phrase occurs in such clause (ii) and substituting in
lieu thereof the phrase "1995 NOTES, THE 1996 NOTES AND/OR THE 1997 NOTES".
<PAGE>
(b) The definition of "CONSOLIDATED CASH FLOW" contained in Section 8.1
of the Original Note Purchase Agreement is hereby amended by deleting the
number "15%" where it appears in said definition and substituting in lieu
thereof the number "8-1/3%".
(c) The definition of "PLANNED VOLUME" contained in Section 8.1 of the
Original Note Purchase Agreement is hereby deleted in its entirety and the
following is substituted therefor:
"PLANNED VOLUME" shall mean as of December 30, 1997 325,000,000
board feet per annum of timber, and shall be adjusted for any Annual
Timber Increase, as of the Effective Date for such Annual Timber
Increase, by increasing such per annum amount by an amount equal to
8-1/3% of such Annual Timber Increase. In addition, such per annum
amount shall, if there shall be an Annual Timber Decrease in any
Determination Period, be permanently (with respect to such Annual Timber
Decrease) adjusted, effective as of the Effective Date for such Annual
Timber Decrease, by decreasing such per annum amount in the same
proportion that the Predisposition Timber Amount in respect of such
Annual Timber Decrease is reduced by such Annual Timber Decrease;
PROVIDED that such adjustment shall not be made if the percentage
decrease represented by such adjustment would be less than 5% and if the
Asset Coverage Ratio as of the last day of such Determination Period is
at least 2:1. For purposes of the foregoing:
"ANNUAL TIMBER INCREASE" shall mean, for any Determination
Period, the amount, in board feet, by which the number of board
feet of timber acquired by the Company and its Restricted
Subsidiaries during such Determination Period shall exceed the
number of board feet of timber sold or otherwise disposed of by the
Company and its Restricted Subsidiaries during such Determination
Period; and "ANNUAL TIMBER DECREASE" shall mean, for any
Determination Period, the amount, in board feet, by which the
number of board feet of timber sold or otherwise disposed of by the
Company and its Restricted Subsidiaries during such Determination
Period shall exceed the number of board feet of timber acquired by
the Company and its Restricted Subsidiaries during such
Determination Period; PROVIDED that, neither such calculation shall
include timber acquired with the Net Proceeds of an Excess Harvest
pursuant to Section 4.12.
"ASSET COVERAGE RATIO" shall mean, as of the date of
determination, the ratio of (a) the fair market value (determined
in good faith by a Responsible Officer, but excluding any value
based on a higher and better use thereof) of the timberlands owned
by the Company and its Restricted Subsidiaries on such
determination date to (b) Funded Debt of the Company and its
Restricted Subsidiaries on a consolidated basis on such
determination date.
-4-
<PAGE>
"DETERMINATION PERIOD" shall mean the period from and
including December 30, 1997 to and including December 31, 1998 and
each calendar year thereafter.
"EFFECTIVE DATE" for any Annual Timber Increase or Annual
Timber Decrease shall be July 1 of the Determination Period for
which such Annual Timber Increase or Annual Timber Decrease, as the
case may be, occurs.
"PREDISPOSITION TIMBER AMOUNT" with respect to any Annual
Timber Decrease shall mean the amount of timber owned by the
Company and its Restricted Subsidiaries as of the first day of the
Determination Period for which such Annual Timber Decrease occurred.
SECTION 1.2. ADDITION TO SECTION 8.1.
The following definition of "1997 NOTES" is hereby added to Section 8.1
of the Original Note Purchase Agreement immediately following the definition of
"1996 NOTES":
"1997 NOTES" shall mean the $15,000,000 7.76% Senior Notes, Series
A, due February 1, 2012, the $55,000,000 7.76% Senior Notes, Series B,
due February 1, 2013, and the $25,000,000 7.93% Senior Notes, Series C,
due February 1, 2018 of the Company issued under and pursuant to the
Note Purchase Agreement dated as of December 15, 1997 among the Company
and the purchasers listed in Schedule I thereto.
SECTION 2. MISCELLANEOUS.
SECTION 2.1. EFFECTIVENESS OF AMENDMENT. This Amendment shall be effective
upon, and only upon, execution and delivery of counterparts hereof by the
Company and by the holders of at least 55% in aggregate principal amount of
the then outstanding Notes.
SECTION 2.2. GOVERNING LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 2.3. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together only one Amendment.
SECTION 2.4. CAPTIONS. The descriptive headings of the various Sections or
parts of this Amendment are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
-5-
<PAGE>
SECTION 2.5. REFERENCES TO ORIGINAL NOTE PURCHASE AGREEMENT. Any and all
notices, requests, certificates and other instruments executed and delivered
concurrently with or after the effectiveness of this Amendment may refer to
the Original Note Purchase Agreement without making specific reference to
this Amendment but nevertheless all such references shall be deemed to
include this Amendment unless the context shall otherwise require.
SECTION 2.6. EXPENSES. Whether or not the transactions herein contemplated
shall be consummated, the Company agrees to pay all expenses relating to the
subject matter of this Amendment, including but not limited to the reasonable
out-of-pocket expenses of the Noteholders and the reasonable fees and
expenses of Chapman and Cutler, special counsel for the Noteholders.
SECTION 2.7. RATIFICATION. Except to the extent hereby modified or amended,
the Original Note Purchase Agreement is in all respects hereby ratified,
confirmed and approved by the parties hereto.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2
to Note Purchase Agreement to be executed and delivered, all as of the day
and year first above written.
CROWN PACIFIC LIMITED
PARTNERSHIP, a Delaware limited
partnership
By: CROWN PACIFIC MANAGEMENT
LIMITED PARTNERSHIP, a
Delaware
limited partnership
Its General Partner
By
--------------------------------
Its Authorized Officer
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By
Its
MELLON BANK, N.A., as trustee for
AT&T Master Pension Trust
as directed by John Hancock Mutual Life
Insurance Company
By
Its
-7-
<PAGE>
MELLON BANK, N.A., as trustee for
NYNEX Master Pension Trust
as directed by John Hancock Mutual Life
Insurance Company
By
Its
WESTERN NATIONAL LIFE INSURANCE
COMPANY
By Conseco Capital Management, Inc.,
acting as Investment Advisor
By
-------------------------------------
Its
BANKERS UNITED LIFE ASSURANCE
COMPANY
By
Its
PFL LIFE INSURANCE COMPANY
By
Its
-8-
<PAGE>
AUSA LIFE INSURANCE COMPANY, INC.
(as successor to International Life
Investors Insurance Company)
By
Its
LIFE INVESTORS INSURANCE COMPANY OF
AMERICA
By
Its
AUSA LIFE INSURANCE COMPANY, INC.
By
Its
MONUMENTAL LIFE INSURANCE
COMPANY
By
Its
GREAT NORTHERN INSURED ANNUITY
CORPORATION
By
Its
-9-
<PAGE>
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By
Its
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By
Its
EQUITABLE LIFE ASSURANCE SOCIETY OF
THE UNITED STATES
By
Its
ALLSTATE LIFE INSURANCE COMPANY
By
By
Authorized Signatories
THE OHIO NATIONAL LIFE INSURANCE
COMPANY
By
Its
-10-
<PAGE>
PROVIDENT LIFE AND ACCIDENT
INSURANCE COMPANY
By
Its
THE UNION CENTRAL LIFE INSURANCE
COMPANY
By
Its
THE MANHATTAN LIFE INSURANCE
COMPANY
By
Its
GENERAL AMERICAN LIFE INSURANCE
COMPANY
By
Its
WASHINGTON NATIONAL INSURANCE
COMPANY
By Conseco Capital Management, Inc.,
its investment advisors
By
-------------------------------------
Its
-11-
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBIT 10.3
AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT
Dated as of January 15, 1998
Among
CROWN PACIFIC LIMITED PARTNERSHIP
And
EACH OF THE NOTEHOLDERS
WHICH ARE SIGNATORIES HEREOF
----------------------------------------------
Re: $91,000,000 Senior Notes, Series A, B,C and D
Due 2006-2013
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION HEADING Page
----
<S> <C>
Parties .................................................................... 1
Recitals ................................................................... 1
SECTION 1. AMENDMENTS TO ORIGINAL NOTE PURCHASE
AGREEMENT .................................................. 1
Section 1.1. Amendments to Section 8.1 ............................... 1
Section 1.2. Addition to Section 8.1 ................................. 3
SECTION 2. MISCELLANEOUS .............................................. 3
Section 2.1. Effectiveness of Amendment .............................. 3
Section 2.2. Governing Law ........................................... 3
Section 2.3. Counterparts ............................................ 3
Section 2.4. Captions ................................................ 3
Section 2.5. References to Original Note Purchase Agreement .......... 3
Section 2.6. Expenses ................................................ 4
Section 2.7. Ratification ............................................ 4
Signature Page ............................................................. 5
</TABLE>
-i-
<PAGE>
AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 TO NOTE PURCHASE AGREEMENT, dated as of January 15,
1998 (this "AMENDMENT"), entered into among CROWN PACIFIC LIMITED PARTNERSHIP
, a Delaware limited partnership (the "COMPANY"), and EACH OF THE NOTEHOLDERS
WHICH ARE SIGNATORIES HEREOF (the "NOTEHOLDERS");
WITNESSETH:
WHEREAS, pursuant to the Note Purchase Agreement, dated as of August 1,
1996, (the "ORIGINAL NOTE PURCHASE AGREEMENT"), between the Company and each
of the Purchasers named therein, the Company has heretofore issued
$91,000,000 aggregate principal amount of its Senior Notes, Series A, B, C
and D due 2006-2013(the "NOTES"); and
WHEREAS, terms not otherwise defined herein shall have the respective
meanings specified in the Original Note Purchase Agreement, as amended by
this Amendment; and
WHEREAS, the Company and the Noteholders desire to amend certain of the
provisions contained in the Original Note Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, the Company and the Noteholders hereby agree as
follows:
SECTION 1. AMENDMENTS TO ORIGINAL NOTE PURCHASE AGREEMENT.
The Original Note Purchase Agreement is hereby amended as follows:
SECTION 1.1. AMENDMENTS TO SECTION 8.1.
(a) Subclause (ii) of clause (b) of the definition of "AVAILABLE CASH"
contained in Section 8.1 of the Original Note Purchase Agreement is hereby
amended by (Y) deleting the phrase the "1994 NOTES AND THE 1995 NOTES" or the
phrase "1994 NOTES AND 1995 NOTES" wherever either such phrase occurs in such
clause (ii) and substituting in lieu thereof the phrase "1994 NOTES, THE 1995
NOTES AND THE 1997 NOTES" and (Z)
<PAGE>
deleting the phrase "1994 NOTES AND/OR THE 1995 NOTES" where such phrase
occurs in such clause (ii) and substituting in lieu thereof the phrase "1994
NOTES, THE 1995 NOTES AND/OR THE 1997 NOTES".
(b) The definition of "CONSOLIDATED CASH FLOW" contained in Section 8.1
of the Original Note Purchase Agreement is hereby amended by deleting the
number "15%" where it appears in said definition and substituting in lieu
thereof the number "8-1/3%".
(c) The definition of "PLANNED VOLUME" contained in Section 8.1 of the
Original Note Purchase Agreement is hereby deleted in its entirety and the
following is substituted therefor:
"PLANNED VOLUME" shall mean as of December 30, 1997 325,000,000
board feet per annum of timber, and shall be adjusted for any Annual
Timber Increase, as of the Effective Date for such Annual Timber
Increase, by increasing such per annum amount by an amount equal to
8-1/3% of such Annual Timber Increase. In addition, such per annum
amount shall, if there shall be an Annual Timber Decrease in any
Determination Period, be permanently (with respect to such Annual Timber
Decrease) adjusted, effective as of the Effective Date for such Annual
Timber Decrease, by decreasing such per annum amount in the same
proportion that the Predisposition Timber Amount in respect of such
Annual Timber Decrease is reduced by such Annual Timber Decrease;
PROVIDED that such adjustment shall not be made if the percentage
decrease represented by such adjustment would be less than 5% and if the
Asset Coverage Ratio as of the last day of such Determination Period is
at least 2:1. For purposes of the foregoing:
"ANNUAL TIMBER INCREASE" shall mean, for any Determination
Period, the amount, in board feet, by which the number of board
feet of timber acquired by the Company and its Restricted
Subsidiaries during such Determination Period shall exceed the
number of board feet of timber sold or otherwise disposed of by the
Company and its Restricted Subsidiaries during such Determination
Period; and "ANNUAL TIMBER DECREASE" shall mean, for any
Determination Period, the amount, in board feet, by which the
number of board feet of timber sold or otherwise disposed of by the
Company and its Restricted Subsidiaries during such Determination
Period shall exceed the number of board feet of timber acquired by
the Company and its Restricted Subsidiaries during such
Determination Period; PROVIDED that, neither such calculation shall
include
-4-
<PAGE>
timber acquired with the Net Proceeds of an Excess Harvest pursuant to
(0)4.12.
"ASSET COVERAGE RATIO" shall mean, as of the date of
determination, the ratio of (a) the fair market value (determined
in good faith by a Responsible Officer, but excluding any value
based on a higher and better use thereof) of the timberlands owned
by the Company and its Restricted Subsidiaries on such
determination date to (b) Funded Debt of the Company and its
Restricted Subsidiaries on a consolidated basis on such
determination date.
"DETERMINATION PERIOD" shall mean the period from and
including December 30, 1997 to and including December 31, 1998 and
each calendar year thereafter.
"EFFECTIVE DATE" for any Annual Timber Increase or Annual
Timber Decrease shall be July 1 of the Determination Period for
which such Annual Timber Increase or Annual Timber Decrease, as the
case may be, occurs.
"PREDISPOSITION TIMBER AMOUNT" with respect to any Annual
Timber Decrease shall mean the amount of timber owned by the
Company and its Restricted Subsidiaries as of the first day of the
Determination Period for which such Annual Timber Decrease occurred.
(d) The definition of "PRO FORMA MAXIMUM DEBT SERVICE" contained in
Section 8.1 of the Original Note Purchase Agreement is hereby amended by
deleting the date "DECEMBER 31, 2011" where it appears in said definition and
substituting in lieu thereof the date "SEPTEMBER 30, 2013".
SECTION 1.2. ADDITION TO SECTION 8.1.
The following definition of "1997 NOTES" is hereby added to Section 8.1
of the Original Note Purchase Agreement immediately following the definition
of "1995 NOTES":
"1997 NOTES" shall mean the $15,000,000 7.76% Senior Notes, Series
A, due February 1, 2012, the $55,000,000 7.76% Senior Notes, Series B,
due
-5-
<PAGE>
February 1, 2013, and the $25,000,000 7.93% Senior Notes, Series C, due
February 1, 2018 of the Company issued under and pursuant to the Note
Purchase Agreement dated as of December 15, 1997 among the Company and
the purchasers listed in Schedule I thereto.
SECTION 2. MISCELLANEOUS.
SECTION 2.1. EFFECTIVENESS OF AMENDMENT. This Amendment shall be effective
upon, and only upon, execution and delivery of counterparts hereof by the
Company and by the holders of at least 55% in aggregate principal amount of
the then outstanding Notes.
SECTION 2.2. GOVERNING LAW. This Amendment shall be governed by and construed
in accordance with the laws of the State of New York.
SECTION 2.3. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together only one Amendment.
SECTION 2.4. CAPTIONS. The descriptive headings of the various Sections or
parts of this Amendment are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
SECTION 2.5. REFERENCES TO ORIGINAL NOTE PURCHASE AGREEMENT. Any and all
notices, requests, certificates and other instruments executed and delivered
concurrently with or after the effectiveness of this Amendment may refer to
the Original Note Purchase Agreement without making specific reference to
this Amendment but nevertheless all such references shall be deemed to
include this Amendment unless the context shall otherwise require.
SECTION 2.6. EXPENSES. Whether or not the transactions herein contemplated
shall be consummated, the Company agrees to pay all expenses relating to the
subject matter of this Amendment, including but not limited to the reasonable
out-of-pocket expenses of the Noteholders and the reasonable fees and
expenses of Chapman and Cutler, special counsel for the Noteholders.
SECTION 2.7. RATIFICATION. Except to the extent hereby modified or amended,
the Original Note Purchase Agreement is in all respects hereby ratified,
confirmed and approved by the parties hereto.
-6-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 1
to Note Purchase Agreement to be executed and delivered, all as of the day
and year first above written.
CROWN PACIFIC LIMITED
PARTNERSHIP, a Delaware
limited partnership
By: CROWN PACIFIC
MANAGEMENT
LIMITED PARTNERSHIP, a
Delaware
limited partnership
Its General Partner
By
Its Authorized Officer
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By
Its
COMMONWEALTH OF
PENNSYLVANIA
STATE EMPLOYEES RETIREMENT
SYSTEM
By John Hancock Mutual Life
Insurance
Company, as Investment
Adviser
By
-----------------------------------
[authorized John Hancock
Officer]
-7-
<PAGE>
TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF
AMERICA
By
Its
ALLSTATE LIFE INSURANCE
COMPANY
By
Name:
By
Name:
Authorized
Signatories
EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED
STATES
By
Name:
ALLSTATE INSURANCE
COMPANY OF NEW YORK
By
Name:
By
Name:
Authorized
Signatories
-8-
<PAGE>
PROVIDENT LIFE AND ACCIDENT
INSURANCE COMPANY
By
Its
-9-
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