953,446 Deltic Timber shares move

Massachusetts-based company’s stock purchase worth $69 million

— An investment company bought 7.5 percent of Deltic Timber Corp.’s outstanding stock Thursday, the day after Deltic said it would purchase the remaining interest in an El Dorado-based fiberboard plant.

Shares of Deltic rose 1.7 percent on the New York Stock Exchange Thursday to close at $72.44, raising the value of Wellington Management Co. LLP’s stock purchase to about $69 million.

Massachusetts-based Wellington Management bought 953,446 shares of Deltic, according to records.

Deltic’s largest shareholder is First Eagle Investment Management LLC of New York, which owns 12.7 percent of the company, according to Deltic’s proxy statement last March.

Wellington Management declined to comment about the stock purchase.

El Dorado-based Deltic announced late Wednesday it would purchase the remaining 50 percent interest of Del-Tin Fiber, LLC for $20 million.

Del-Tin Fiber is a subsidiary of Temple-Inland Inc., which is a subsidiary of International Paper Co., a paper and packaging manufacture.

“Deltic Timber has owned 50 percent of the Del-Tin Fiber facility since the completion of its construction in June 1998, and we are excited about the opportunity to own the plant outright and utilize Deltic’s proven ability to be very efficient operators of manufacturing facilities to improve operating performance and efficiencies within this operation,” said Ray C. Dillon, president and chief executive officer of Deltic, in a statement released Wednesday.

A spokesman for the company could not be reached Thursday.

The purchase includes about $5.16 million in cash and undertaking of Temple-Inland, Inc.’s $14.844 million debt guarantees associated with Union County, Arkansas Taxable Industrial Development Revenue Bonds, according to the news release.

The bonds, which have a maturity date of Dec. 1, 2027, were issued in 1998 to fund the construction of the Del-Tin Fiber plant.

Deltic’s purchase of Del-Tin Fiber shows that the company’s outlook for the industry is strong, said Bob Williams, senior vice president and managing director of Delta Trust Investments Inc.

“To me, what it says is that Deltic thinks timber prices are cheap and in the future they think it will go higher,” he said.

The timber industry in Arkansas and the rest of the South has been weakened since the U.S. housing market slowed to a crawl during the recession.

Joe Fox, director of the Arkansas Forestry Commission, said Arkansas is growing a third more timber than it is harvesting.

He said the forests could use thinning, so making sure a manufacturing plant, such as Del-Tin Fiber, stays in the state is good thing.

Williams also said Deltic’s purchase Del-Tin Fiber “bodes well” for companies in the timber industry.

He said Wellington Management acquiring Deltic stock could mean the investment company supports Deltic’s purchase of Del-Tin Fiber.

“If nothing else, I think it tells us that someone else is in agreement with Deltic that this is a good time to be buying cheap.”

Business, Pages 28 on 02/15/2013

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