Saturday, February 21, 2015

Massive timberland sale raises questions for Deschutes and Klamath projects



            The mammoth sale of nearly 200,000 acres of Timberland in Deschutes and Klamath counties has created concern over  conservation-oriented initiatives by the Klamath Tribes and the Deschutes Basin Land Trust.
            In a Feb. 18 statement, Cascade Timberlands, a subsidiary of Fidelity National Financial Ventures, announced the sale for $63 million to Whitefish  Cascade Forest Resources LLC. The buyer is registered in Oregon but with a Singapore address as its principal place of business.
            The mailing address is the Seattle law firm of Wilson Sonsini Goodrich & Rosati, attention Peter Mostow.
            The acreage includes the 90,000 acre Mazama Tree Farm along highway 97 between Chiloquin and Chemult  that  the Klamath Tribes had foreseen acquiring for reservation land.
            Also involved is approximately 33,000 acres south of Highway 20 between Bend and Sisters that the Deschutes Basin Land Trust has for nearly a decade hoped would become part of a purchase to protect the important view corridor to the Cascades and be managed for sustainable forest harvest.
            Cascade Timberlands acquired the property from previous investors who had assumed control of the former Crown Pacific timber company which had entered bankruptcy.
            Initially Cascade Timberlands announced it would seek to develop large estate size lots on the property between Sisters and Bend. State law restricts the size of partitions within forest zoned land.
            The company then went to the Oregon legislature in an attempt to reserve a portion for residential development while also discussing the possibility of selling most of the tract  to the Land Trust, which the organization has called Skyline Forest. The land was previously known as the Bull Springs Tree Farm.
            The conservation group has consistently promoted the possible purchase from Cascade Timberlands in its newsletters to supporters, and has encouraged bike riding and hiking in the area. 
 Tax records show Deschutes land valued at approximately $330 per acre
            Deschutes County property records show there were 41 tax accounts related to the Skyline Forest timberland with the assessor's estimated real market value of approximately $330 per acre, or $10,890,000 for 33,000 acres. The county clerk's office reports the deed was transferred to Whitefish Cascade on Feb. 17. The deed does not give a sale price but references an "asset purchase agreement" dated Oct. 19, 2014, although that document is not found in the clerk's records.
            In 2010 the Rooster Rock wildfire burned through more than 6,000 acres starting at the western boundary of the land.  The Two Bulls fire in the summer of 2014 burned nearly 7,000 acres and forced the evacuation of subdivisions on Bend’s west side.
A section of Bull Springs Tree Farm in distance
            In an Associated Press report, Klamath Tribal chairman Don Gentry raised the prospect that the inability of the Klamath Tribes to acquire the timberland in Klamath County could affect a provision in the  Klamath Basin Restoration Agreement intended to resolve issues related to water rights allocated for fish habitat and irrigators. 
           The tribe reportedly agreed in late 2008  to purchase 90,000 acres of the timberland that was formerly part of the reservation for $21 million.
           Gentry was quoted by the AP  that the option the tribe had to purchase the land, known as Mazama Tree Farm, had expired.  A notice regarding the option coming due was overlooked when emailed to a tribal member who was no longer involved in tribal government, he said.
Buyers are connected through a Chinese interactive internet company

            Both principals recorded as members of the new timberland LLC appear to be, or have been, associated with companies that were part of the Shanda Group, a Chinese interactive entertainment and online gaming conglomerate.

            The managing member of the Whitefish Cascade LLC is recorded as Ting Kong Lee, who Bloomberg Business reports was or is senior vice president and chief tax officer for Shanda Group.

            The other member is Quian Quian Chrissy Luo. In November of 2011 Reuters reported that Luo’s husband, Tianquia Chen, at the time chief executive of Shanda Interactive, led an effort to take the company private in a transaction valued at $2.3 billion. Chen, his brother, David, and Luo became the new owners.

            At the time of its SEC 13D filing for companies traded on US exchanges through ADRs, or American Depository Receipts, the new company was listed as having a Hong Kong address.
The Two Bulls Fire as seen from Awbrey Butte in Bend

            Reuters said that Shanda Interactive had in 2009 spun off Shanda Games, its online games operation.

            According to SEC filings in August of 2013,  Luo also owned nearly 5 million shares, or about 6% of the stock, in Millenial Media, a Boston-based company providing  mobile advertising and data platform for apps. It is traded on the NYSE under the symbol MM and recently closed at $1.60 per share.
            Fidelity sought to find "another use" for cash in the timberland
  The seller, Cascade Timberlands, is one of numerous entities controlled by Financial National Financial, a Fortune 500 company  whose holdings also include Fidelity National Title Co., the nation's largest title insurance company.
            Fidelity Chairman William Foley has diversified FNF into a broad range of holdings, including a group of branded chain restaurants. Through his personal ventures in a spectrum of other companies he acquired  Whitefish Mountain Resort in Whitefish, MT (formerly Big Mountain ski area) and developed the Rock Creek Cattle Company, an exclusive gated working residential estate ranch with a golf course near Deer Lodge, MT.
            Foley’s personal holdings also include the Foley Wine Group, which owns vineyards and more than a dozen wine labels including Firestone and Sebastiani in California and Three Rivers in Walla Walla, as well as in Italy and other countries.
          "We are excited to monetize the value of Cascade for our shareholders," Foley said in a statement posted Feb 18 on the FNF's web site.
          "We have been owners of Cascade for approximately eight years and believe it is in the best interest of our shareholders to monetize the value of this land at this time and seek another use for this cash in the hopes of maximizing the value of our FNFV assets."
            It is not clear from company annual reports and other documents how much it paid for the timberland. However, the 2013 annual report notes it recorded a "$6 million impairment" in 2012 related to Cascade Timberlands.
           FNF's core business is a collection of title companies including Fidelity National Title, Chicago Title, Commonwealth Land Title and Alamo Title, which the company says lead the nation in the number of title insurance policies issued. Fidelity National Financial Ventures, the holding entity for Cascade Timberlands, trades on the New York Stock Exchange as what the company identifies as a "tracking stock" under the symbol FNFV.  Company statements say the stock performance is intended to  "highlight the inherent value of the portfolio company investments of Fidelity National Financial Inc."
--photos by Lee Hicks


 

Posted by at
Labels: , ,