IP Looks to Three-Pronged Solution

STAMFORD, CT—In an effort to turn around its lackluster performance, International Paper (IP) revealed a transformation plan that is designed to improve returns, strengthen the balance sheet and return cash to shareholders.

The plan includes narrowing the company's portfolio to two key platform businesses—uncoated papers and industrial/consumer packaging—improving shareholder value via mill realignments in those businesses, and exploring strategic options that could entail selling or spinning off other businesses. Uncoated paper and packaging accounts for more than 70 percent of IP's sales.

Among the IP assets being re-evaluated: IP's 50 percent stake in Carter Holt Harvey, the coated and supercalendered papers business (including the coated groundwood mill and associated assets in Parana, Brazil, the Kraft papers business (and the Roanoke Rapids, NC, mill), and potentially all of its 6.8 million acres of U.S. forestlands.

"The businesses being evaluated for potential sale or spinoff are good businesses that may be better positioned with different ownership," notes John Faraci, chairman and CEO of IP.

The strategic evaluation period is expected to be completed by the first quarter of 2006, while the analysis of Carter Holt Harvey should be wrapped up by the end of this year.