Proxy Statement - Merger or Acquistion (definitive) (defm14a)

ABOUT THIS PROXY STATEMENT/PROSPECTUS

This proxy statement/prospectus, which forms part of a registration statement on Form S-4 filed with the SEC by Rayonier and Opco (File No. 333-237246), constitutes a prospectus of Rayonier and Opco under Section 5 of the Securities Act of 1933, as amended, referred to as the Securities Act, with respect to Rayonier shares and Opco units to be issued to Pope unitholders pursuant to the merger agreement. This document also constitutes a proxy statement of Pope under Section 14(a) of the Securities Exchange Act of 1934, as amended, referred to as the Exchange Act. It also constitutes a notice of meeting with respect to the special meeting, at which Pope unitholders will be asked to consider and vote upon the approval of the merger agreement and the transactions contemplated thereby.

Rayonier and Opco have supplied all information contained or incorporated by reference into this proxy statement/prospectus relating to Rayonier, Opco, ROC, Rayonier Operating Company Holdings, LLC, Pacific GP Merger Sub I, LLC, Pacific GP Merger Sub II, LLC, Pacific LP Merger Sub III, LLC, and Pope has supplied all such information relating to Pope, Pope EGP, Inc. and Pope MGP, Inc.

You should rely only on the information contained in or incorporated by reference into this proxy statement/prospectus. Rayonier, Opco and Pope have not authorized anyone to provide you with information that is different from that contained in or incorporated by reference into this proxy statement/prospectus. This proxy statement/prospectus is dated April 6, 2020, and you should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than such date. Further, you should not assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of any date other than the date of the incorporated document. Neither the mailing of this proxy statement/prospectus to Pope unitholders nor the issuance by Rayonier of shares of its common stock or by Opco of units representing limited partnership interests of Opco pursuant to the merger agreement will create any implication to the contrary.

This proxy statement/prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, or the solicitation of a proxy, in any jurisdiction in which or to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.

 

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QUESTIONS AND ANSWERS ABOUT THE MERGER AND POPE MEETING

The following questions and answers are intended to briefly address some commonly asked questions regarding the merger, the merger agreement and the special meeting. These questions and answers may not address all questions that may be important to you as a Pope unitholder. Please refer to the section entitled “Summary” beginning on page 17 of this proxy statement/prospectus and the more detailed information contained elsewhere in this proxy statement/prospectus, the annexes to this proxy statement/prospectus and the documents referred to in this proxy statement/prospectus, which you should read carefully and in their entirety. You may obtain the information incorporated by reference into this proxy statement/prospectus without charge by following the instructions under the section entitled “Where You Can Find More Information” beginning on page 287 of this proxy statement/prospectus.

 

Q:	What is the merger?

 

A:

Rayonier, Opco and Pope have agreed to a business combination under the terms of the merger agreement, pursuant to which Opco (which will be the operating company of Rayonier) will acquire Pope through a merger of Merger Sub 3 with and into Pope, with Pope surviving such merger as an indirect wholly owned subsidiary of Opco. As a limited partner of Pope, you are being asked to approve the merger.

Concurrently with the merger, Rayonier will acquire MGP, the managing general partner of Pope, and EGP, the equity general partner of Pope.

 

Q:	What will I receive in the merger?

 

A:

Each holder of a unit representing limited partnership interests of Pope, referred to as Pope units, outstanding immediately prior to the merger effective time (other than Pope units held by Rayonier, Opco or certain of their controlled affiliates) will, at the option of its holder, have the right to elect to receive for each Pope unit and subject to proration as described below:

 

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3.929 Rayonier shares, referred to as the stock election consideration;

 

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3.929 Opco units, referred to as the Opco election consideration; or

 

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$125.00 in cash, referred to as the cash election consideration.

Pope unitholders that do not make a valid election will receive the stock election consideration.

 

Q:	Are the elections subject to proration?

 

A:

Yes. Pope unitholders’ elections will be subject to proration so that approximately 70% of the Pope units converted into merger consideration will be exchanged for Rayonier shares or Opco units and approximately 30% of the Pope units converted into merger consideration will be exchanged for cash. Specifically, the proration will ensure the aggregate amount of Rayonier shares and Opco units, on the one hand, and cash, on the other hand, that will be issued in the merger will equal the amounts issued as if every Pope unit converted into merger consideration would receive 2.751 Rayonier shares or Opco units and $37.50 in cash. If stock election consideration and Opco election consideration are oversubscribed, then to reduce the effect of such proration, Rayonier can, in its discretion, add additional equity (and decrease the amount of cash) payable to the Pope unitholders making the stock election and the Opco election. Pope unitholders that make the cash election will have the right to elect, in the event that the cash election consideration is oversubscribed and is therefore subject to proration, whether each Pope unit for which they have made a cash election is prorated into (i) a combination of cash and Rayonier shares or (ii) a combination of cash and Opco units, referred to as the proration election. Pope unitholders may make a different proration election for each Pope unit for which they make a cash election. If a Pope unitholder does not make a valid proration election by the election deadline and the cash election consideration is oversubscribed, then all of such holder’s Pope units for which a cash election was made shall be converted into a combination of cash and Rayonier shares.

 

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Q:	Why am I receiving this proxy statement/prospectus and proxy card?

 

A:

Pope is holding a special meeting to ask its unitholders to consider and vote upon a proposal to approve the merger agreement and the transactions contemplated thereby, including the merger. Pope unitholders are also being asked to consider and vote upon (i) a proposal to approve, by advisory (non-binding) vote, the merger-related executive compensation and (ii) a proposal to grant authority to proxy holders to vote in favor of adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

This proxy statement/prospectus includes important information about the merger, the merger agreement (a copy of which is attached as Annex A to this proxy statement/prospectus) and the special meeting. Pope unitholders should read this information carefully and in its entirety. The enclosed voting materials allow unitholders who are limited partners to vote their units (or, in the case of Pope unitholders who are not limited partners, to direct MGP to vote their Pope units) without attending the special meeting in person. Your vote is important. You are encouraged to vote as soon as possible.

 

Q:	What is the vote required to approve each proposal at the special meeting?

 

A:

Approval of the merger requires that limited partners (including MGP acting in its capacity as limited partner of record for Pope units held by assignees) holding a majority of the Pope units issued and outstanding as of the record date vote in favor of approval of the merger agreement. If you fail to submit a proxy or to vote in person at the special meeting, including a vote cast by means of the virtual meeting facility, described below, or abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will not be counted as a vote “FOR” and will thus have the same effect as a vote against the merger agreement and the merger. Accordingly, your vote is important and you are encouraged to vote as soon as possible.

If you own Pope units but have not been admitted as a limited partner, the Pope limited partnership agreement generally provides that you are an “assignee” for purposes of your ownership of Pope units. This means that you hold the economic rights associated with those Pope units, but unless you are admitted as a limited partner, you do not have the right to vote your Pope units directly. Instead, assignees are being asked to direct MGP to vote their Pope units as instructed in their proxy, and MGP, in its capacity as managing general partner and limited partner of record for all Pope units held by assignees, and as required by the merger agreement, will vote those Pope units in accordance with those instructions.

The proposal to approve the merger-related executive compensation requires that a majority of the votes cast at the special meeting are voted in favor of the proposal; however, such vote is advisory (non-binding). If you fail to submit a proxy or to vote in person at the special meeting, or abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will not be counted as “FOR” or “AGAINST” and will not have an effect on the advisory (non-binding) vote to approve the merger-related executive compensation except to the extent it results in there being insufficient Pope units present at the special meeting to establish a quorum.

The approval of adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement requires that a majority of the votes cast at the special meeting are voted in favor of the proposal, whether or not a quorum is present. If you fail to submit a proxy or to vote in person at the special meeting, or abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will not be counted as “FOR” or “AGAINST” and will thus not have an effect on the vote to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

See the section entitled, “Information About the Special Meeting—Record Date and Quorum” beginning on page 56 of this proxy statement/prospectus.

 

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Q:	Who may attend the special meeting? Are there procedures for attending?

 

A:

Only unitholders of record at the close of business on the record date, or their legal proxy holders are entitled to attend the special meeting or any adjournments or postponements thereof. Unitholders of record as of the record date that are admitted as substituted limited partners prior to the special meeting will be considered limited partners of record as of the record date and will be able to attend the special meeting. In light of the ongoing COVID-19, or coronavirus, pandemic, MGP amended the Pope limited partnership agreement effective as of March 29, 2020, to permit Pope to conduct meetings of unitholders by Internet or other electronic means, and to provide that such participation is equivalent for all purposes to attendance in person at any such meeting. While Pope will conduct the special meeting in person, unitholders wishing to attend are strongly encouraged to attend by registering at the Internet website http://www.virtualshareholdermeeting.com/POPE2020 using the 16-digit control number found on the accompanying proxy card, referred to as the “virtual meeting facility,” and references in this proxy statement/prospectus to in-person attendance at the special meeting includes attendance by means of the virtual meeting facility. Pope unitholders are further advised that, as of the date of this proxy statement/prospectus, the State of Washington, where the special meeting will occur, remains under an executive order that prohibits the conduct of non-essential businesses and restricts public gatherings, regardless of the number of people in attendance. Before attempting to attend the special meeting in person, Pope unitholders are strongly advised to consider any and all legal restrictions on in-person attendance, and are further cautioned that the Seattle, Washington, area has been identified as one of the regions most substantially affected by the pandemic.

To be admitted to the special meeting, to the extent in-person attendance is permissible under applicable laws, regulations, ordinances and executive orders governing public gatherings and the conduct of business in effect on the date of the special meeting, you must present valid proof of ownership of Pope units as of March 30, 2020, or a valid proxy. All in-person attendees must also provide a form of government-issued photo identification, such as a driver’s license or passport. In addition, if you hold your Pope units in street name, such as through a bank, brokerage firm or other nominee, you must provide proof of ownership of your Pope units, such as a the voting instruction card from your broker or other nominee or an account statement showing your ownership as of the record date. Additionally, attendance via the virtual meeting facility will permit Pope unitholders to vote their units during the special meeting if they so desire. If you arrive at the special meeting without the required items, Pope will admit you only if it is able to verify that you are a unitholder as of close of business on the record date, and even then only if attendance is permissible under then-applicable law.

 

Q:	Must I become a limited partner to vote my Pope units?

 

A:

No. If you hold Pope units but have not been admitted as a limited partner, the Pope limited partnership agreement provides that you are an “assignee” with respect to your Pope units. If you are an assignee, you should complete and sign the enclosed proxy card, and MGP, in its capacity as managing general partner and limited partner of record for all Pope units held by assignees, and as required by the merger agreement, will vote your Pope units in accordance with your instructions.

 

Q:	Who is entitled to vote at the special meeting?

 

A:

Only unitholders that are limited partners as of March 30, 2020, the record date, or are admitted as substituted limited partners as of the record date in connection with this solicitation, or their legal proxy holders, are entitled to vote at the special meeting or any adjournments thereof, unless such adjournment is for more than 45 days, in which event MGP is required to set a new record date. As of the close of business on the record date, there were 4,367,215 Pope units outstanding and entitled to vote. Each limited partner, including each substituted limited partner, is entitled to one vote for each unit held by such limited partner on the record date on each of the proposals presented in this proxy statement.

If you are a unitholder and a limited partner as of the record date (that is, if you held Pope units in your own name in the unit transfer records maintained by Pope’s transfer agent, Computershare Limited) you may

 

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vote in person at the special meeting or by proxy. Whether or not you intend to attend the special meeting, you are encouraged to vote now, online, by phone or proxy card to ensure that your vote is counted.

If you are an assignee as of the record date, then you may direct MGP to vote your Pope units as instructed in your proxy, and MGP, in its capacity as managing general partner and limited partner of record for all Pope units held by assignees, and as required by the merger agreement, will vote those Pope units in accordance with your instructions.

Pope unitholders may vote their Pope units (or, in the case of assignees, may direct MGP to vote their Pope units) at the special meeting using the virtual meeting facility. However, whether or not you intend to attend the special meeting, you are encouraged to vote now, either online, by phone or by mailing your proxy card to ensure that your vote is counted.

If you are the beneficial owner of units held in “street name” as of the record date (that is, if you held Pope units through your bank, brokerage firm or other nominee) then these materials are being forwarded to you by your broker. You may direct such nominee how to vote your Pope units by following the instructions on the form provided by such nominee. If you wish to attend the special meeting and vote in person, and assuming in-person attendance is lawful as of the meeting date, you may attend the special meeting but may not be able to vote in person unless you first obtain a legal proxy issued in your name from your broker. Attendance via the virtual meeting facility is accomplished by entering the 16-digit control number found on the accompanying proxy card, and such attendance will permit a Pope unitholder to vote or direct the voting of the related Pope units during the special meeting.

A list of limited partners entitled to vote at the special meeting will be open to the examination of any limited partner during ordinary business hours for a period of ten days before the special meeting at Pope’s corporate offices, 19950 Seventh Ave., NE, Poulsbo, Washington 98370 and at the place of the special meeting during the special meeting. Pope unitholders are reminded that, as of the date of this proxy statement/prospectus, the State of Washington, where Pope’s offices are located, remains under an executive order that prohibits the conduct of non-essential businesses and restricts public gatherings, regardless of the number of people in attendance. Before attempting to inspect the list of limited partners entitled to attend and vote at the special meeting, Pope unitholders are strongly advised to consider any and all legal restrictions on non-essential travel and business activities.

 

Q:	How does the Pope board recommend that I vote at the special meeting?

 

A:

The Pope board unanimously recommends that Pope unitholders vote “FOR” the approval of the merger agreement, the merger and related transactions, “FOR” the approval, by advisory (non-binding) vote, of the merger-related executive compensation and “FOR” adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement. See the section entitled “The Merger—Recommendation of the Pope Special Committee; Recommendation of the Pope Board of Directors; Pope’s Reasons for the Merger” beginning on page 91 of this proxy statement/prospectus.

 

Q:	What is the difference between holding units as a unitholder of record and as a beneficial owner?

 

A:

You are a “limited partner of record” if your limited partner units are registered directly in your name with Pope’s transfer agent, Computershare. As the limited partner of record, you have the right to vote in person at the special meeting. You may also vote by Internet or telephone, as described in the notice and below under the heading “How do I vote?”

You are deemed to beneficially own Pope units in “street name” if your units are held by a bank, brokerage firm or other nominee or other similar organization. Your bank, brokerage firm or other nominee will send you, as the beneficial owner, a package describing the procedure for voting your units. You should follow the instructions provided by them to vote your units. You may not vote your units in person at the special

 

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meeting unless you obtain a “legal proxy” from your bank, brokerage firm or other nominee that holds your units, giving you the right to vote the shares at the special meeting. Please take note of the restrictions on in-person attendance described elsewhere in this proxy statement/prospectus if you are considering attending the special meeting in person.

 

Q:	What is the difference between a unitholder and a limited partner?

 

A:

Any person who owns Pope units, whether they hold them directly, by holding depositary receipts relating to such units or hold such units in street name, such as through a bank, brokerage firm or other nominee, is a unitholder for purposes of the special meeting. However, under the Pope limited partnership agreement, only persons who have been admitted as a limited partner may directly vote their units. If you are not a limited partner of record, you are being asked to direct MGP to vote your Pope units as instructed in your proxy, and MGP, in its capacity as managing general partner and limited partner of record for all Pope units held by assignees, will vote those Pope units in accordance with your instructions.

 

Q:	Am I being asked to vote to approve the GP mergers?

 

A:

The merger agreement also contemplates that, substantially concurrent with the merger effective time, each of MGP and EGP, the general partners of Pope, will be acquired by merger subsidiaries of Rayonier for an aggregate consideration of $10,000,000 in cash payable to their respective stockholders, subject to certain adjustments set forth in the merger agreement and described in the section entitled “Interests of Pope’s Directors and Executive Officers in the Merger” beginning on page 128. These mergers, referred to as the GP mergers, only require the consent of a majority of the stockholders of each of MGP and EGP, which consents were delivered promptly after the execution of the merger agreement and are irrevocable.

Accordingly, and consistent with the governing documents of each of Pope, MGP and EGP, Pope is only seeking your vote with respect to the approval of the merger agreement, the merger and the related transactions, together with a proposal to approve, by advisory (non-binding) vote, the merger-related executive compensation and a proposal to grant authority to proxy holders to vote in favor of adjournment of the special meeting. No additional or specific approvals are being sought in respect of the GP mergers.

 

Q:	Why did the Pope board approve the merger agreement and the transactions contemplated by the merger agreement, including the merger?

 

A:

To review the Pope board’s reasons for approving and recommending approval of the merger agreement and the transactions contemplated by the merger agreement, including the merger, see the section entitled “The Merger—Recommendation of the Pope Special Committee; Recommendation of the Pope Board of Directors; Pope’s Reasons for the Merger” beginning on page 91.

See the section entitled “Merger—Per Share Merger Consideration” beginning on page 59 of this proxy statement/prospectus for a further description of the merger consideration and proration procedures.

 

Q:	What is the value of the merger consideration?

 

A:

The exact value of the merger consideration that Pope unitholders receive will depend on the election a Pope unitholder makes, the aggregate elections of other Pope unitholders and the value of the Rayonier shares or Opco units at the time of the merger. The number of Pope unitholders electing certain types of consideration will not be known at the time of the special meeting or at the time that elections are made, and may change the type of consideration a unitholder receives. Likewise, the price of Rayonier shares and the value of the Opco units will not be known at the time of the special meeting and may be less than the current price or the price at the time of the special meeting.

Assuming each Pope unit is converted into 2.751 Rayonier shares and $37.50 in cash, the value of the merger consideration was $127.51, based on the closing price of Rayonier common stock on January 14,

 

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2020, the date of the merger agreement, and was $98.43, based on the closing price of Rayonier common stock on April 3, 2020, the trading day prior to the date of this proxy statement/prospectus. However, because the merger agreement provides for a fixed exchange ratio for the equity component, the actual value you receive will vary depending on the trading price of Rayonier shares until the effective time of the merger. You are urged to obtain current market quotations for shares of Rayonier shares and Pope units.

Rayonier shares are listed on the NYSE and therefore have an active quoted price, but the Opco units will not be listed on any exchange, will have restrictions on their transferability and are not expected to have an active quoted price. Pursuant to the Opco limited partnership agreement, holders of Opco units will have redemption rights, which will enable them to cause Opco to redeem their Opco units in exchange for cash or, at Rayonier’s option, Rayonier shares on a one-for-one basis. These redemption rights, however, cannot be exercised by an Opco limited partner more than once per quarter, and a redemption request must be made no less than 60 days prior to the redemption date, so, if a holder will receive Rayonier shares on the redemption date, the market price of the Rayonier shares will not be known at the time that the holder makes its redemption request.

 

Q:	What happens if I am eligible to receive a fraction of a Rayonier share or a fractional Opco unit as part of the per Pope unit merger consideration?

 

A:

If you elect to receive Rayonier shares or Opco units and the aggregate number Rayonier shares or Opco units that you are entitled to receive as part of the merger consideration includes a fraction of a Rayonier share or a fraction of an Opco unit, you will receive cash in lieu of that fractional share or Opco unit, as the case may be. See the section entitled “The Merger Agreement—Certain Effect of Merger” beginning on page 106 of this proxy statement/prospectus.

 

Q:	What will holders of restricted Pope unit awards receive in the merger?

 

A:

If the merger is completed, each outstanding and unvested restricted Pope unit award will be converted into 3.929 restricted Rayonier shares, except as discussed below, with such awards having substantially the same terms and vesting schedule that were previously applicable to the restricted Pope unit awards. Restricted Pope unit awards held by directors, including Mr. Ringo, will become 100% vested immediately prior to the merger effective time, and such units will be treated the same as other Pope units in the merger. Converted awards that are held by employees whose employment terminates under certain circumstances between the merger effective time and the second anniversary thereof generally will vest in full to the extent not previously vested. For a more complete summary of the treatment of restricted Pope unit awards pursuant to the merger agreement, see the section entitled “The Merger Agreement—Treatment of Pope Equity Compensation” beginning on page 108 of this proxy statement/prospectus.

 

Q:	What will happen to Pope as a result of the merger?

 

A:

If the merger is completed, Opco, which will be the operating company of Rayonier, and ROC, which will be a wholly owned subsidiary of Opco, will together directly or indirectly own all of the general partner interests and limited partner interests of Pope. As a result of the merger, Pope will no longer be a publicly held company. Following the merger, Pope units will be delisted from the Nasdaq and deregistered under the Exchange Act, and the Pope units will no longer be traded on the Nasdaq or any other public market.

 

Q:	What equity stake will Pope unitholders hold in Rayonier immediately following the merger?

 

A:

Based on the number of issued and outstanding Rayonier shares and Pope units as of January 14, 2020, and assuming that Pope unitholders elect to receive Rayonier shares and Opco units up to the available equity amount, Pope unitholders as of immediately after the closing of the merger will hold, in the aggregate, approximately 9% of the issued and outstanding Rayonier shares and Opco units, collectively.

 

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Q:	What are the expected U.S. federal income tax consequences of the merger to Pope unitholders?

 

A:

Although for state law purposes Pope will become an indirect wholly owned subsidiary of Opco in the merger, for U.S. federal income tax purposes Opco will be treated as a continuation of Pope (and Opco shall not exist) following the merger pursuant to U.S. Treasury regulations promulgated under Section 708 of Code.

As a result, U.S. holders (as defined in the discussion under the heading “Material U.S. Federal Income Tax Consequences of the Merger”) that receive Opco units in the merger should not recognize any income, gain or loss with respect to the Opco units that they receive as part of the exchange, except to the extent that any net decrease in such holder’s share of partnership liabilities pursuant to Section 752 of the Code exceeds such holder’s adjusted tax basis in the Pope units exchanged for Opco units at the closing of the merger. However, it is not anticipated that gain or loss generally should be recognized by a U.S. holder solely as a result of a decrease in such holder’s share of partnership liabilities. A U.S. holder that receives Opco units in the merger will recognize gain to the extent that the amount of cash received in lieu of fractional units (if any) exceeds such holder’s adjusted tax basis allocable to such portion of Pope units sold.

On the other hand, the merger will be a taxable transaction for any U.S. holder to the extent that such holder receives cash or Rayonier shares in the merger. Each U.S. holder that receives cash or Rayonier shares (and any cash it receives in lieu of fractional Rayonier shares) in exchange for its Pope units pursuant to the merger will recognize gain or loss in an amount equal to the difference between (1) the sum of (A) the amount of any cash received, (B) the fair market value of the Rayonier shares received and (C) such U.S. holder’s share of Pope’s liabilities immediately prior to the merger effective time attributable to its Pope units exchanged for cash and/or Rayonier shares and (2) such U.S. holder’s adjusted tax basis in Pope units exchanged therefor (which includes such U.S. holder’s share of Pope’s liabilities attributable to such Pope units immediately prior to the merger effective time). Gain or loss recognized by a U.S. holder will generally be taxable as capital gain or loss. However, a portion of this gain or loss, which portion could be substantial, will be separately computed and taxed as ordinary income or loss under Section 751 of the Code to the extent attributable to assets giving rise to depreciation recapture or other “unrealized receivables” or to “inventory items” owned by Pope and its subsidiaries.

The U.S. federal income tax consequences of the merger to a U.S. holder will depend on such holder’s own personal tax situation. Accordingly, you are strongly urged to consult your own tax advisor for a full understanding of the particular tax consequences of the merger. In addition, please read the discussion under the heading “Material U.S. Federal Income Tax Consequences of the Merger—Tax Consequences of the Merger to U.S. Holders.”

 

Q:	What are some considerations in determining whether I elect to receive Rayonier shares or Opco units?

 

A:

The merger will be a taxable transaction for any U.S. holder of Pope units to the extent that such holder receives cash or Rayonier shares. Rayonier shares are listed on the NYSE under the symbol “RYN,” and, therefore, Rayonier shares can be purchased and sold on a public trading market and are generally freely transferable.

A U.S. holder of Pope unit that receives Opco units in the merger should not recognize any income, gain or loss with respect to the Opco units that they receive in the merger (except to the extent that any net decrease in such holder’s share of partnership liabilities pursuant to Section 752 of the Code exceeds such holder’s adjusted tax basis in the Pope units exchanged for Opco units at the closing of the merger). However, the Opco units will not be listed on any exchange, will have restrictions on their transferability and are not expected to have an active quoted price. Pursuant to the Opco limited partnership agreement, holders of Opco units will have redemption rights, which will enable them to cause Opco to redeem their Opco units in exchange for cash or, at Rayonier’s option, Rayonier shares on a one-for-one basis. These redemption rights, however, cannot be exercised by a limited partner more than once per quarter, and a redemption request

 

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must be made no less than 60 days prior to the redemption date, so, if a holder will receive Rayonier shares on the redemption date, the market price of the Rayonier shares will not be known at the time that the holder makes its redemption request.

 

Q:	How do I make an election for the form of merger consideration that I prefer?

 

A:

Pope unitholders should carefully review and follow the instructions in the election form and related documentation, which will be mailed substantially concurrently with this proxy statement/prospectus, to Pope unitholders of record. Each Pope unitholder may specify in the election form the number of Pope units with respect to which the unitholder elects to receive either the cash election consideration, stock election consideration or Opco election consideration. A Pope unitholder that submits an election form is not required to elect the same form of merger consideration for all of his, her or its Pope units. Pope units for which a valid election is not received by the election deadline will receive the stock election consideration.

Because of proration mechanics in the merger agreement, Pope unitholders may not receive all of their consideration in the form they elect. Under the merger agreement, Pope unitholders’ elections will be subject to proration so that approximately 70% of the Pope units converted into merger consideration will be exchanged for Rayonier shares or Opco units and approximately 30% of the Pope units converted into merger consideration will be exchanged for cash. These proration procedures will ensure that the aggregate amount of Rayonier shares and Opco units, on the one hand, and cash, on the other hand, that will be issued in the merger will equal the amounts issued as if every Pope unit converted into merger consideration would receive 2.751 Rayonier shares or Opco units and $37.50 in cash. If stock election consideration and Opco election consideration are oversubscribed, then to reduce the effect of such proration, Rayonier can, in its discretion, add additional equity (and decrease the amount of cash) payable to the Pope unitholders making the stock election and the Opco election.

In addition, the election form will enable Pope unitholders that make the cash election to elect, in the event that the cash election consideration is oversubscribed and is therefore subject to proration, whether each Pope unit for which they have made a cash election is prorated into (i) a combination of cash and Rayonier shares or (ii) a combination of cash and Opco units, referred to as the proration election. Pope unitholders may make a different proration election for each Pope unit for which they make a cash election. If a Pope unitholder does not make a valid proration election by the election deadline and the cash election consideration is oversubscribed, then all of such holder’s Pope units for which a cash election was made shall be converted into a combination of cash and Rayonier shares.

An exchange agent appointed by Rayonier will handle the distribution of consideration to Pope unitholders, provided such unitholders deliver to such exchange agent properly completed election forms prior to the election deadline.

See the section entitled “The Merger Agreement—Exchange and Payment Procedures” beginning on page 111 of this proxy statement/prospectus for additional information on exchange and payment procedures.

 

Q:	Will my Rayonier shares acquired in the merger receive a dividend?

 

A:

After the closing of the merger, if you elect Rayonier shares as your merger consideration, you will be a holder of Rayonier shares, and you will receive the same dividends on Rayonier shares that all other holders of Rayonier shares will receive based on a dividend record date that occurs after the merger is completed.

Rayonier currently pays regular quarterly dividends and anticipates paying dividends on its common stock in the foreseeable future. Under the terms of the merger agreement, during the period before completion of the merger, Rayonier is not permitted to pay any dividends on or make any distributions other than its regular cash dividends not to exceed $0.27 per share. Pursuant to the merger agreement, Rayonier and Pope will coordinate with the other with respect to the declaration of any dividend in respect of Rayonier shares or Pope units and the record dates and payment dates relating thereto, in order to ensure that Pope unitholders shall not receive both a distribution from Pope and a dividend from Rayonier, or fail to receive one dividend, in any calendar quarter with respect to their Pope units and any Rayonier shares that any such holder receives in exchange therefor in the merger.

 

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See the section entitled “Comparative Per Share Market Price and Dividend Information” beginning on page 35 for a comparison of the historical dividend practices of the two companies.

 

Q:	Why am I being asked to consider and vote on a proposal to approve, by advisory (non-binding) vote, the merger-related executive compensation?

 

A:	Under SEC rules, Pope is required to seek an advisory (non-binding) vote with respect to the compensation that may be paid or become payable to its named executive officers that is based on, or otherwise relates to, the merger.

 

Q:	What will happen if Pope unitholders do not approve the compensation proposal?

 

A:

Approval of the compensation that may be paid or become payable to Pope’s named executive officers that is based on, or otherwise relates to, the merger is not a condition to completion of the merger. The vote is an advisory vote and will not be binding on Pope or the surviving company in the merger. If the merger is completed, the merger-related executive compensation may be paid to Pope’s named executive officers to the extent payable in accordance with the terms of their compensation agreements and arrangements even if Pope unitholders do not approve, by advisory (non-binding) vote, the merger-related executive compensation.

 

Q:	Do any of Pope’s directors or executive officers have interests in the merger that may differ from those of Pope unitholders?

 

A:

Pope’s directors and executive officers have certain interests in the merger that may be different from, or in addition to, the interests of Pope unitholders generally. The Pope board was aware of and considered these interests, among other matters, in evaluating the merger agreement and the mergers and in recommending that Pope unitholders approve the merger agreement. For a description of these interests, refer to the section entitled “Interests of Pope’s Directors and Executive Officers in the Merger” beginning on page 128.

 

Q:	If my Pope units are held in “street name” by my bank, brokerage firm or other nominee, will my bank, brokerage firm or other nominee automatically vote those shares for me?

 

A:	Your bank, brokerage firm or other nominee will only be permitted to vote your Pope units if you instruct your bank, brokerage firm or other nominee how to vote. You should follow the procedures provided by your bank, brokerage firm or other nominee regarding the voting of your Pope units.

Banks, brokerage firms and other nominees are precluded from exercising their voting discretion with respect to non-routine matters, such as the approval of the merger agreement, the proposal to approve, by advisory (non-binding) vote, the merger-related executive compensation and adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement. As a result, absent specific instructions from the beneficial owner of such units, banks, brokerage firms and other nominees are not empowered to vote such units. A so-called “broker non-vote” results when banks, brokerage firms and other nominees return a valid proxy but do not vote on a particular proposal because they do not have discretionary authority to vote on the matter and have not received specific voting instructions from the beneficial owner of such units.

If you do not instruct your broker on how you wish your units to be voted (or, in the case of Pope units held by assignees, how to direct MGP to vote your units) those units will not be counted as voting “FOR” the merger and will (i) have the same effect as a vote against the merger agreement and the merger, (ii) will not have an effect on the advisory (non-binding) vote to approve the merger-related executive compensation except to the extent it results in there being insufficient Pope units present at the special meeting to establish a quorum and (iii) not have an effect on the vote to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

 

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Q:	When and where is the special meeting?

 

A:

The special meeting will be held on Tuesday, May 5, 2020, at 11:00 a.m. local time, at the offices of Davis Wright Tremaine LLP, 920 Fifth Ave., Suite 3300, Seattle, Washington 98104. To attend the special meeting in person, an admission card or proof of ownership of Pope units and limited partner status as of the record date is required. All Pope unitholders planning to attend the special meeting can request an admission card and register to attend by contacting the Pope Investor Relations Department at (360) 697-6626. In light of the ongoing COVID-19, or coronavirus, pandemic, MGP amended the Pope limited partnership agreement effective as of March 29, 2020, to permit Pope to conduct meetings of unitholders by Internet or other electronic means, and to provide that such participation is equivalent for all purposes to attendance in person at any such meeting. While Pope will conduct the special meeting in person, unitholders wishing to attend are strongly encouraged to attend by registering at the Internet website http://www.virtualshareholdermeeting.com/POPE2020 using the 16-digit control number found on the accompanying proxy card. We refer to this process as the “virtual meeting facility,” and references in this proxy statement/prospectus to in-person attendance at the special meeting includes attendance by means of the virtual meeting facility. Pope unitholders are further advised that, as of the date of this proxy statement/prospectus, the State of Washington remains under an executive order that prohibits the conduct of non-essential businesses and restricts public gatherings, regardless of the number of people in attendance. Before attempting to attend the special meeting in person, Pope unitholders are strongly advised to consider any and all legal restrictions on in-person attendance, and are further cautioned that the Seattle, Washington, area has been identified as one of the regions most substantially affected by the pandemic.

 

Q:	How many votes do I have?

 

A:	Each Pope unitholder is entitled to one vote for each unit of Pope held of record as of the record date.

As of the close of business on the record date, there were 4,367,215 Pope units outstanding. As summarized above, there are some important distinctions between Pope units held of record and those owned beneficially in street name as well as some important distinctions between how your Pope units will be voted if you are a limited partner or an assignee.

 

Q:	What constitutes a quorum for the special meeting?

 

A:	The presence, in person or represented by proxy, of more than 50% of the outstanding Pope units.

 

Q:	How do I vote if I am a record holder, Pope assignee or my units are held in street name?

 

A:	Unitholder of Record. If you are a unitholder of record, you can vote in the following ways:

 

•

By Internet: by following the Internet voting instructions on the proxy card at any time up until 11:59 p.m. eastern standard time on May 4, 2020 at www.proxyvote.com. If you vote by Internet, you need not return your proxy card;

 

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By Telephone: by following the telephone voting instructions included in the proxy card at any time up until 11:59 p.m. eastern standard time on May 4, 2020 by calling (800) 690-6903. If you vote by telephone, you need not return your proxy card;

 

•

By Mail: by completing, signing and dating the enclosed proxy card and returning it in the self-addressed envelope provided with the proxy materials. You must sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as an officer of a corporation, executor or trustee), you must indicate your name and title; or

 

•

By attending the meeting using the virtual meeting facility and voting your Pope units during the meeting. You may access the virtual meeting facility by registering at the Internet website http://www.virtualshareholdermeeting.com/POPE2020 using the 16-digit control number found on the accompanying proxy card.

 

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Pope assignee. If you are a Pope assignee, i.e. you hold Pope units but have not been admitted to Pope as a limited partner, you can direct MGP, in its capacity as limited partner of record for Pope units held by assignees, to vote your Pope units using the steps outlined above, indicating how you wish your units to be voted and returning it in the self-addressed envelope provided with the proxy materials. You must sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as an officer of a corporation, executor or trustee), you must indicate your name and title.

Beneficial Owner. If your units are held in street name, your plan trustee or your bank, broker or other nominee should give you instructions for voting your Pope units.

If you satisfy the admission requirements to the special meeting, as described above under the heading “When and where is the special meeting?” you may vote your units in person at the meeting. If you decide to attend the special meeting and vote in person, your vote by ballot will revoke any proxy previously submitted. Even if you plan to attend the special meeting, you are encouraged to vote in advance by Internet, telephone or mail so that your vote will be counted in the event you later decide not to attend the special meeting. You are reminded that, as of the date of this proxy statement/prospectus, the State of Washington remains under an executive order that prohibits the conduct of non-essential businesses and restricts public gatherings, regardless of the number of people in attendance. Before attempting to attend the special meeting in person, Pope unitholders are strongly advised to consider any and all legal restrictions on in-person attendance. Attendance using the virtual meeting facility will have the same effect as attending in person.

 

Q:	How can I change or revoke my vote?

 

A:	If you are a unitholder of record, you may change your vote or revoke your proxy by:

 

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executing and delivering to Pope’s executive offices, to the attention of Pope’s corporate secretary, or its transfer agent, Computershare, a proxy card relating to the same units bearing a later date than the original proxy card;

 

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giving notice of revocation in writing to the Pope secretary, at 19950 Seventh Avenue NE, Suite 200, Poulsbo, Washington 98370 (by mail or overnight delivery), prior to the time the special meeting begins; or

 

•

voting in person or through the virtual meeting facility at the special meeting.

Please note, however, that under the rules of the national stock exchanges, any Pope unitholder whose units are held in street name by a member brokerage firm may revoke his, her or its proxy and vote his, her or its units in person at the special meeting only in accordance with applicable rules and procedures of those exchanges, as employed by the street name holder’s brokerage firm. In addition, if you hold your units in street name, you must have a valid proxy from the record holder of the Pope units to vote (or, in the case of Pope units held by assignees, to direct MGP to vote) in person or through the virtual meeting facility at the special meeting.

 

Q:	If a unitholder gives a proxy, how are the Pope units voted?

 

A:

Regardless of the method you choose to vote, the individuals named on the enclosed proxy card will vote your Pope units in the way that you indicate. When completing the Internet or telephone processes or the proxy card, you may specify whether your Pope units should be voted “FOR” or “AGAINST” or to “ABSTAIN” from voting on all, some or none of the specific items of business to come before the special meeting.

If you properly sign your proxy card but do not mark the boxes showing how your units should be voted on a matter, the Pope units represented by your properly signed proxy will be voted “FOR” the approval of the merger agreement, the merger and the related transactions, “FOR” the proposal to approve, by advisory

 

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(non-binding) vote, the merger-related executive compensation, and “FOR” adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

 

Q:	What should I do if I receive more than one set of voting materials?

 

A:

If you hold Pope units in “street name” and also directly as a record holder or otherwise or if you hold Pope units in more than one brokerage account, you may receive more than one set of voting materials relating to the special meeting. Please complete, sign, date and return each proxy card (or cast your vote by telephone or Internet as provided on your proxy card) or otherwise follow the voting instructions provided in this proxy statement/prospectus in order to ensure that all of your Pope units are voted. If you hold your units in “street name” through a bank, brokerage firm or other nominee, you should follow the procedures provided by your bank, brokerage firm or other nominee to vote your units.

 

Q:	What happens if I sell my Pope units before the special meeting?

 

A:

The record date is earlier than both the date of the special meeting and the merger effective time. If you transfer your Pope units after the record date but before the special meeting, you will, unless the transferee requests a proxy from you, retain your right to vote at the special meeting but will transfer the right to receive the merger consideration for such Pope units to the person to whom you transfer your units. In order to receive the merger consideration, you must hold your Pope units at the merger effective time.

 

Q:	Who will solicit and pay the cost of soliciting proxies?

 

A:

Pope has engaged MacKenzie Partners at an estimated cost of $12,500, plus reimbursement of reasonable expenses, to assist in the solicitation of proxies from brokers, nominees, institutions and individuals. Proxies may also be solicited on Pope’s behalf by Pope’s directors, officers or employees (for no additional compensation). Arrangements will also be made with custodians, nominees and fiduciaries for forwarding a notice or printed proxy materials, as applicable, to beneficial owners of units held of record by such custodians, nominees and fiduciaries, and Pope will reimburse such custodians, nominees and fiduciaries for reasonable expenses incurred in connection therewith.

 

Q:	What do I need to do now?

 

A:

Even if you plan to attend the special meeting in person, after carefully reading and considering the information contained in this proxy statement/prospectus, including the annexes attached hereto and other information incorporated herein by reference, please vote promptly to ensure that your units are represented at the special meeting. Each Pope unitholder as of the record date may vote (or, in the case of Pope units held by assignees, direct MGP to vote) his, her or its Pope units as described above under the heading “How do I vote?”

 

Q:	Where can I find the voting results of the special meeting?

 

A:	The preliminary voting results will be announced at the special meeting. In addition, within four business days following certification of the final voting results, Pope intends to file the final voting results with the SEC on a Current Report on Form 8-K.

 

Q:	Am I entitled to exercise appraisal rights instead of receiving the merger consideration for my units?

 

A:

No. Appraisal rights are not available in connection with the merger under the Delaware Revised Uniform Limited Partnership Act, or the “DRULPA”, under the merger agreement or under the Pope limited partnership agreement. For additional information, please see the merger agreement attached as Annex A to the proxy statement, and Pope limited partnership agreement.

 

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Q:	When is the merger expected to be consummated?

 

A:

The parties currently anticipate that the merger will close within several business days after the special meeting, but the parties cannot be certain when or if the conditions of the merger will be satisfied (or if permissible under applicable law, waived). The merger cannot be consummated until the conditions to closing of the merger are satisfied (or if permissible under applicable law, waived).

 

Q:	What are the conditions to completion of the merger?

 

A:

In addition to the approval of the merger proposal by Pope unitholders as described above, completion of the merger is subject to the satisfaction of a number of other conditions, including the accuracy of representations and warranties under the merger agreement (subject to the materiality standards set forth in the merger agreement) and Pope’s and Rayonier’s performance of their respective obligations under the merger agreement in all material respects. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the merger, see the section entitled “The Merger Agreement—Conditions to Completion of the Merger” beginning on page 124, of this proxy statement/prospectus.

 

Q:	What if I hold depositary receipts?

 

A:	For purposes of this proxy statement and the merger agreement, depositary receipts representing Pope units are treated as indistinguishable from the Pope units themselves, and a unitholder includes a holder of depositary receipts.

 

Q:	Who can help answer my questions?

 

A:	If you need assistance in completing your proxy card or have questions regarding the special meeting, please contact the firm assisting us with the solicitation of proxies, MacKenzie Partners, as follows:

 

•

Unitholders in the U.S. and Canada call toll-free: (800) 322-2885

 

•

Unitholders in other locations dial direct: (212) 929-5500

 

•

Banks, brokers and other nominees call collect: (212) 929-5500

 

Q:	Are there any risks that I should consider in deciding whether to vote for the approval of the merger agreement?

 

A:

Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” beginning on page 39 of this proxy statement/prospectus. You also should read and carefully consider the risk factors of Rayonier and Pope contained in the documents that are incorporated by reference into this proxy statement/prospectus.

 

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RAYONIER OPERATING COMPANY LLC

Selected Unaudited Pro Forma Condensed Combined Financial Data

 

($ in millions)		For the year ended December 31, 2019
Operating Data:
Sales		$	821.5
Cost of Sales			(679.2	)
Gross Margin			17.3	%
Net Income			29.2
Net Income Avaliable to Unitholders		$	33.0
Balance Sheet Data:
Cash and cash equivalents		$	71.3
Total Assets			3,905.7
Total Liabilities			1,700.4
Total Capital			2,070.8

 

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RISK FACTORS

In addition to the other information contained or incorporated by reference into this proxy statement/prospectus, including the matters addressed in “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 37 of this proxy statement/prospectus, Pope unitholders should carefully consider the following risk factors in determining whether to vote for the approval of the merger agreement. Because Pope unitholders may receive Rayonier shares and Opco units in the merger, they should also consider the risks associated with each of the businesses of Rayonier and Pope because these risk factors may affect the operations and financial results of the combined company. Rayonier and Opco will be operated as one business, and, after the closing of the merger, Pope will be part of that business. These risk factors may be found under Item 1A. “Risk Factors” in Rayonier’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, Pope’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and in future Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q filed by Pope and Rayonier and incorporated by reference into this proxy statement/prospectus. All of the “Risk Factors” in Rayonier’s annual and quarterly reports, and incorporated herein by reference, apply equally to the ownership of Rayonier shares and Opco units. See the section entitled “Where You Can Find More Information” beginning on page 287 of this proxy statement/prospectus.

Risks Relating to the Merger

Because the amount of consideration is fixed and the elections that will be made by other unitholders is not yet known, you cannot be sure what merger consideration you will receive.

Each Pope unitholder (other than Rayonier, ROC or certain of their controlled affiliates) may elect to receive, for each Pope unit that they hold: (i) $125.00 in cash, referred to as the cash election; (ii) 3.929 Rayonier shares, referred to as the stock election; or (iii) 3.929 Opco units, referred to as the Opco election. Pope unitholders that do not make a valid election will be treated as if they made the stock election.

Pope unitholders’ elections will be subject to proration so that approximately 70% of the Pope units that will be converted into merger consideration will be exchanged for Rayonier shares or Opco units and approximately 30% of the Pope units that will be converted into merger consideration will be exchanged for cash. Accordingly, the aggregate amount of Rayonier shares and Opco units, on the one hand, and cash, on the other hand, that will be issued in the merger will equal the amounts issued as if every Pope unit converted into merger consideration would receive 2.751 Rayonier shares or Opco units and $37.50 in cash.

As a result of this proration and the fact that it will depend on the number of elections that are made by the Pope unitholders and whether the election that you make is oversubscribed, you will not know the precise merger consideration that you will receive at the time that you make an election.

The aggregate number of Rayonier shares and Opco units that will be issued in the merger is fixed and will not change based on the market price of Rayonier shares. Pope unitholders cannot be certain of the market value of the consideration they will receive in exchange for their Pope units to the extent that they receive Rayonier shares or Opco units in the merger or the value of Rayonier shares or Opco units thereafter.

In connection with the merger, Pope unitholders will receive, at their election, the cash election consideration, the stock election consideration or the Opco election consideration. The stock election consideration and Opco election consideration provide for a fixed number of Rayonier shares or Opco units for each Pope unit. In addition, if the cash election is oversubscribed, Pope unitholders that make the cash election will also receive a fixed number of Rayonier shares or Opco units. Because the number of Rayonier shares being offered in the merger will not vary based on the market value of Rayonier shares, the market value of the merger consideration that you will receive in the merger that is based on the value of Rayonier shares will vary based on the price of such stock at the time you receive the merger consideration. The market price of Rayonier shares

 

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may decline after the date of this proxy statement/prospectus, after you elect your preferred form of merger consideration and/or after the merger is completed. There will be no trading market for Opco units, but to the extent that some value the Opco units as being equal to the market value of Rayonier shares, the number of Opco units being offered in the merger similarly will not vary based on the market value of Rayonier shares and the value of the Opco units may decline after the date of this proxy statement/prospectus, after you elect your preferred form of merger consideration and/or after the merger is completed.

A decline in the market price of Rayonier shares could result from a variety of factors, some of which are beyond Rayonier’s control, including, among other things, those factors described below under the risk factor entitled “—The market price of Rayonier shares after the merger will continue to fluctuate and may be affected by factors different from those affecting shares of Pope units currently.”

See “Comparative Per Share Market Price and Dividend Information” of this proxy statement/prospectus. You are urged to obtain current market quotations for Rayonier shares and Pope units.

The market price of Rayonier shares after the merger will continue to fluctuate and may be affected by factors different from those currently affecting shares of Pope units.

The trading price of Rayonier shares has fluctuated in the past. The trading price of Rayonier shares could fluctuate significantly in the future and could be negatively affected in response to various factors, including:

 

•

market conditions in the broader stock market in general, as well as conditions in markets outside of the United States in which Rayonier operates;

 

•

the effect of the COVID-19 pandemic and related economic consequences, including the potential effects of such events on the market for timber products and debt and equity capital markets;

 

•

Rayonier’s ability to make investments with attractive risk-adjusted returns;

 

•

market perception of Rayonier’s current and projected financial condition, potential growth, future earnings and future cash dividends;

 

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announcements Rayonier makes regarding dividends;

 

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actual or anticipated fluctuations in Rayonier’s quarterly financial and operating results;

 

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actions by rating agencies;

 

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short sales of Rayonier shares;

 

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any decision to pursue a distribution or disposition of a meaningful portion of Rayonier’s assets;

 

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issuance of new or changed securities analysts’ reports or recommendations;

 

•

market perception or media coverage of Rayonier or other similar companies;

 

•

the outlook of the markets and industries in which Rayonier competes;

 

•

major reductions in trading volumes on the exchanges on which Rayonier operates;

 

•

legislative or regulatory developments, including changes in the status of Rayonier’s regulatory approvals or licenses; and

 

•

litigation and governmental investigations involving Rayonier.

Upon completion of the merger, Pope unitholders may become holders of Rayonier shares. The market price of Rayonier shares may fluctuate significantly following consummation of the merger and holders of Rayonier shares could lose the value of their investment in Rayonier shares if, among other things, the combined company is unable to achieve the expected growth in earnings, or if the operational cost savings estimates in connection

 

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with the integration of Rayonier’s and Pope’s businesses are not realized, or if the transaction costs relating to the merger are greater than expected. The market price also may decline if the combined company does not achieve the perceived benefits of the merger as rapidly or to the extent anticipated by financial or industry analysts or if the effect of the merger on the combined company’s financial position, results of operations or cash flows is not consistent with the expectations of financial or industry analysts. In addition, Rayonier’s business differs from that of Pope, and accordingly, the results of operations of the combined company and the market price of Rayonier shares after the completion of the merger may be affected by factors different from those currently affecting the independent results of operations of each of Rayonier’s and Pope’s businesses. For a discussion of the businesses of Rayonier and Pope and of some important factors to consider in connection with those businesses, see the documents incorporated by reference into this proxy statement/prospectus and referred to under “Where You Can Find More Information” beginning on page 287 of this proxy statement/prospectus.

When the market price of a stock has been volatile or has decreased significantly in the past, holders of that stock have, at times, instituted securities class action litigation against the company that issued the stock. If any of Rayonier’s shareholders brought a lawsuit against Rayonier, Rayonier could incur substantial costs defending, settling or paying any resulting judgments related to the lawsuit. Such a lawsuit could also divert the time and attention of Rayonier’s management from Rayonier’s business and reduce Rayonier’s share price.

Sales of Rayonier shares after the completion of the merger may cause the market price of Rayonier shares to fall.

Rayonier could issue approximately 17.3 million shares, including share equity awards, in connection with the merger, based on the number of outstanding shares, including restricted Pope units as of January 14, 2020. Many Pope unitholders may decide not to hold the Rayonier shares they may receive in the merger. Other Pope unitholders, such as funds with limitations on their permitted holdings of stock in individual issuers, may be required to sell the Rayonier shares that they may receive in the merger. Such sales of Rayonier shares could have the effect of depressing the market price for Rayonier shares and may take place promptly following the merger.

In addition, in the future Rayonier may issue additional securities to raise capital. Rayonier may also acquire interests in other companies by using a combination of cash and Rayonier shares and Opco units or just Rayonier shares and/or Opco units. Rayonier may also issue securities convertible into Rayonier shares.

Any of these events may dilute your ownership interest in Rayonier and have an adverse impact on the price of Rayonier shares.

Completion of the merger is subject to conditions, and if these conditions are not satisfied or waived, the merger will not be completed.

The obligations of Rayonier and Pope to complete the merger are subject to satisfaction or waiver of a number of conditions, including approval of the merger agreement by the Pope unitholders, the accuracy of the representations and warranties of the other party under the merger agreement (subject to the materiality standards set forth in the merger agreement) and the performance by the other party of its respective obligations under the merger agreement in all material respects. See the section entitled “The Merger Agreement—Conditions to Completion of the Merger” beginning on page 124 of this proxy statement/prospectus.

The failure to satisfy any required condition could delay the completion of the merger for a significant period of time or prevent it from occurring. If the merger is not completed, Pope’s ongoing business may be materially adversely affected and, without realizing any of the benefits of having completed the merger, Pope will be subject to a number of risks, including the following:

 

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the market price of Pope units could decline;

 

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if the merger agreement is terminated and the Pope board seeks another business combination, Pope unitholders cannot be certain that they will be able to find a party willing to enter into a transaction on terms equivalent to or more attractive than the terms that Rayonier has agreed to in the merger agreement;

 

•

time and resources, financial and other, committed by Pope’s management to matters relating to the merger could otherwise have been devoted to pursuing other beneficial opportunities for Pope;

 

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Pope may experience negative reactions from the financial markets or from Pope’s customers or employees; and

 

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Pope will be required to pay its respective costs relating to the merger, including legal, accounting, financial advisory, financing and printing fees, whether or not the merger is completed.

In addition, if the merger is not completed, either party could be subject to litigation related to any failure to complete the merger or related to any enforcement proceeding commenced against either party to perform its obligations under the merger agreement. The materialization of any of these risks could materially and adversely impact the parties’ ongoing business.

Similarly, any delay in completing the merger could, among other things, result in additional transaction costs, loss of revenue or other negative effects associated with uncertainty about completion of the merger and cause Pope not to realize some or all of the benefits that Pope expects to achieve if the merger is successfully completed within their expected timeframe. There can be no assurance that the conditions to the closing of the merger will be satisfied or waived or that the merger will be consummated. See the risk factor entitled “—Failure to complete the merger could negatively impact the unit price and the future business and financial results of Pope” below.

Each party is subject to business uncertainties while the proposed merger is pending, which could adversely affect each party’s or the combined company’s business and operations.

In connection with the pendency of the merger, it is possible that some customers, suppliers and other persons with whom Rayonier or Pope have a business relationship may delay or defer certain business decisions or might decide to seek to terminate, change or renegotiate their relationships with Rayonier or Pope, as the case may be, as a result of the merger, which could negatively affect Rayonier’s or Pope’s respective revenues, earnings and cash flows, regardless of whether the merger is completed. If the merger is completed, such terminations, changes or renegotiations could negatively affect the revenues, earnings and cash flows of the combined company.

These risks may be exacerbated by delays or other adverse developments with respect to the completion of the merger.

Pope’s executive officers and directors have interests in the merger that may be different from, or in addition to, your interests as a Pope unitholder.

When considering the recommendation of the Pope board that Pope unitholders approve the merger agreement, Pope unitholders should be aware that directors and executive officers of Pope have certain interests in the transactions contemplated by the merger agreement, including the merger, that may be different from, or in addition to, the interests of Pope unitholders and Rayonier shareholders generally. These interests include, among others, the cash consideration payable in connection with the GP mergers, potential severance benefits and other payments, treatment of outstanding equity awards pursuant to the merger agreement and Pope’s equity plan and rights to ongoing indemnification and insurance coverage by the surviving company for acts or omissions occurring prior to the merger. See the section entitled “Interests of Pope’s Directors and Executive Officers in the Merger” beginning on page 128 of this proxy statement/prospectus for a more detailed description of these interests. As a result of these interests, these directors and executive officers of Pope might be more likely to

 

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support and to vote in favor of the proposals described in this proxy statement/prospectus than if they did not have these interests. Pope unitholders should consider whether these interests might have influenced these directors and executive officers to recommend approval of the merger agreement.

The merger agreement limits Pope’s ability to pursue alternatives to the merger and may discourage other companies from trying to acquire Pope for greater consideration than what Rayonier has agreed to pay.

The merger agreement contains provisions that make it more difficult for Pope to sell its business to a person other than Rayonier. These provisions include a general prohibition on Pope soliciting any acquisition proposal or offer for an alternative transaction. In some circumstances upon termination of the merger agreement, Pope may be required to pay to Rayonier a termination fee of $20 million. Further, there are only limited exceptions to Pope’s agreement that the Pope board will not withdraw or modify in a manner adverse to Rayonier the recommendation of the Pope board in favor of the approval of the merger agreement.

These provisions might discourage a third-party that has an interest in acquiring all or a significant part of Pope from considering or proposing that acquisition, even if that party were prepared to pay consideration with a higher per Pope unit cash or market value than the market value proposed to be received or realized in the merger, or might result in a potential competing acquiror proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee.

Certain voting agreements between Pope unitholders and Rayonier may discourage other companies from trying to acquire Pope for greater consideration than what Rayonier has agreed to pay.

As a condition to entering into the merger agreement with Pope, Rayonier required certain Pope unitholders holding approximately 17% of Pope’s outstanding units as of January 14, 2020 to agree to support and vote in favor of the merger agreement at the special meeting. Unless the merger agreement is terminated and subject to certain limited exceptions, these unitholders have irrevocably agreed to vote in favor of the merger agreement at the special meeting. This fact might discourage a third-party that has an interest in acquiring all or a significant part of Pope from considering or proposing that acquisition, even if that party were prepared to pay consideration with a higher per Pope unit cash or market value than the market value proposed to be received or realized in the merger, or might result in a potential competing acquirer proposing to pay a lower price than it might otherwise have proposed to pay because the likelihood of receiving majority support for its proposal from Pope unitholders will be decreased by the support agreements.

Failure to complete the merger could negatively affect the unit price and the future business and financial results of Pope.

If the mergers are not completed for any reason, including as a result of Pope’s unitholders failing to approve the merger agreement, the ongoing business of Pope may be adversely affected and, without realizing any of the benefits of having completed the merger, Pope would be subject to a number of risks, including the following:

 

•

Pope may experience negative reactions from the financial markets, including negative impacts on its unit price;

 

•

Pope may experience negative reactions from its customers, suppliers and employees;

 

•

the merger agreement places certain restrictions on the conduct of Pope’s businesses prior to completion of the merger. Such restrictions, the waiver of which is subject to the consent of Rayonier (not to be unreasonably withheld, conditioned or delayed), may prevent Pope from making certain acquisitions or taking certain other specified actions during the pendency of the merger that may be beneficial to Pope (see the section entitled “The Merger Agreement—Conduct of Businesses of Pope and Rayonier Prior to Completion of the Merger” beginning on page 115 of this proxy statement/prospectus for a description of the restrictive covenants applicable to Pope); and

 

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•

matters relating to the merger (including integration planning) will require substantial commitments of time and resources by Pope management, which would otherwise have been devoted to day-to-day operations and other opportunities that may have been beneficial to Pope as an independent company.

In addition to the above risks, Pope may be required, under certain circumstances, to pay to Rayonier a termination fee of $20 million, which may adversely affect Pope’s financial results. Further, Pope could be subject to litigation related to any failure to complete the merger or related to any enforcement proceeding commenced against Pope to perform its obligations under the merger agreement. If the merger is not completed, these risks may materialize and may adversely affect Pope’s businesses, financial condition, financial results and unit price.

The Rayonier shares or Opco units to be received by Pope unitholders as a result of the merger will have rights different from the Pope units.

Upon completion of the merger, Pope unitholders will no longer be unitholders of Pope but may instead become holders of Rayonier shares or Opco units, and their rights as shareholders or unitholders will be governed by the terms of the Rayonier charter and by-laws and by North Carolina corporate law or by Opco’s limited partnership agreement and the DRULPA, as applicable. The terms of the Rayonier charter and by-laws or Rayonier, L.P. limited partnership agreement are in some respects different from the terms of the Pope limited partnership agreement, which currently govern the rights of Pope unitholders. See the section entitled “Comparison of Shareholders’/Unitholders’ Rights” beginning on page 279 of this proxy statement/prospectus for a discussion of the different rights associated with Rayonier shares and Opco units.

After the merger, Pope unitholders will have a significantly lower ownership and voting interest in Rayonier than they currently have in Pope and therefore may exercise less influence over management.

Based on the number of shares of Pope units outstanding as of January 14, 2020, and the number of Rayonier shares outstanding as of January 14, 2020, it is expected that, immediately after completion of the merger, former Pope unitholders will own approximately 9% of the outstanding Rayonier shares (including Opco units exchangeable into Rayonier shares) immediately after the completion of the merger. Consequently, former Pope unitholders may have less influence over the management and policies of Rayonier than they currently have over the management and policies of Pope.

The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus is preliminary and the actual financial condition and results of operations after the merger may differ materially.

The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what Rayonier’s and Opco’s actual financial condition or results of operations would have been had the merger and the related financing transactions been completed on the dates indicated. The unaudited pro forma condensed combined financial information reflects adjustments, which are based upon assumptions, preliminary estimates and accounting reclassifications, to record the Pope identifiable assets acquired and liabilities assumed at fair value and the resulting goodwill recognized. The purchase price allocation reflected in the unaudited pro forma condensed combined financial information in this proxy statement/prospectus is preliminary, and final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of Pope as of the date of the completion of the merger. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in the unaudited pro forma condensed combined financial information in this proxy statement/prospectus. For more information, see “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 245.

 

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The unaudited prospective financial information of Pope included in this proxy statement/prospectus involves risks, uncertainties and assumptions, many of which are beyond the control of Pope. As a result, it may not prove to be accurate and is not necessarily indicative of current values or future performance.

The unaudited prospective financial information of Pope contained in “The Merger—Certain Unaudited Prospective Financial Information” and referred to in “The Merger—Opinion of the Pope Special Committee’s Financial Advisor” involves risks, uncertainties and assumptions and is not a guarantee of future performance. The future financial results of Pope may materially differ from those expressed in the unaudited prospective financial information due to factors that are beyond Pope’s ability to control or predict. Pope cannot provide any assurance that Pope’s unaudited prospective financial information will be realized or that Pope’s future financial results will not materially vary from the unaudited prospective financial information. The unaudited prospective financial information covers multiple years, and the information by its nature becomes subject to greater uncertainty with each successive year. The unaudited prospective financial information does not reflect Pope’s current estimates and does not take into account any circumstances or events occurring after the date it was prepared.

More specifically, the unaudited prospective financial information:

 

•

necessarily makes numerous assumptions, many of which are beyond the control of Pope and may not prove to be accurate;

 

•

does not necessarily reflect revised prospects for Pope’s business, changes in general business or economic conditions, or any other transaction or event that has occurred or that may occur and that was not anticipated at the time the unaudited prospective financial information was prepared;

 

•

is not necessarily indicative of current values or future performance, which may be significantly more favorable or less favorable than is reflected in the unaudited prospective financial information; and

 

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should not be regarded as a representation that the unaudited prospective financial information will be achieved.

The unaudited prospective financial information was not prepared with a view toward public disclosure or compliance with published guidelines of the SEC or the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information or GAAP and does not reflect the effect of any proposed or other changes in GAAP that may be made in the future.

Lawsuits may be filed against Pope, Rayonier and their and their affiliates’ directors and officers challenging the merger agreement and transactions contemplated thereby, including the merger, and an adverse ruling in such lawsuits may prevent the merger from becoming effective or from becoming effective within the expected timeframe.

Rayonier and Pope and their respective directors and officers may be named as defendants in putative class action lawsuits brought by purported Pope unitholders challenging the transactions contemplated by the merger agreement, including the merger, and seeking, among other things, equitable relief to enjoin consummation of the merger, rescission of the merger and/or rescissionary damages. Under the terms of the merger agreement, one of the conditions to the completion of the merger is that no injunction by any court of competent jurisdiction or other governmental authority will be in effect that restrains, prohibits or makes illegal the consummation of the transactions contemplated by the merger agreement, including the merger. As such, if any such lawsuits are filed and any potential plaintiffs are successful in obtaining an injunction prohibiting the consummation of the transactions contemplated by the merger agreement, including the merger, then such injunction may prevent the merger from becoming effective or from becoming effective within the expected timeframe.

As of the date of this proxy statement/prospectus, two putative stockholder class action lawsuits have been filed by purported Pope unitholders challenging the disclosures made in connection with the merger. The

 

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lawsuits seek to enjoin the merger, to recover damages if the merger is consummated, attorneys’ fees, and other relief. Additional lawsuits arising out of the merger may be filed in the future. For a more detailed description of litigation in connection with the merger, see “The Merger—Litigation Relating to the Merger” beginning on page 109 of this proxy statement/prospectus.

The outcome of these lawsuits or any other lawsuit that may be filed challenging the merger is uncertain. One of the conditions to the closing of the merger is that no governmental authority has issued or entered any order after the date of the merger agreement having the effect of enjoining or otherwise prohibiting the consummation of the merger. Accordingly, if these lawsuits or any future lawsuit is successful in obtaining any order enjoining consummation of the merger, then such order may prevent the merger from being consummated, or from being consummated within the expected time frame, and could result in substantial costs to Pope and Rayonier, including but not limited to, costs associated with the indemnification of directors and officers. Any such injunction or delay in the merger being completed may adversely affect Pope’s or Rayonier’s business, financial condition, results of operations, and cash flows.

Uncertainties associated with the merger may cause a loss of management personnel and other key employees of Pope or Rayonier, which could adversely affect the future business and operations of the combined company following the merger.

Rayonier and Pope are dependent on the experience and industry knowledge of their respective officers and other key employees to execute their respective business plans. The combined company’s success after the merger will depend in part upon its ability to retain key management personnel and other key employees of Rayonier and Pope. Current and prospective employees of Rayonier and Pope may experience uncertainty about their future roles with the combined company following the merger, which may materially adversely affect the ability of each of Rayonier and Pope to attract and retain key personnel during the pendency of and after the merger. Accordingly, no assurance can be given that the combined company will be able to retain key management personnel and other key employees of Rayonier and Pope.

Completion of the merger may trigger change in control or other provisions in certain agreements to which Pope is a party.

The completion of the merger may trigger change in control or other provisions in certain agreements to which Pope is a party. If Rayonier or Pope are unable to negotiate waivers of those provisions, the counterparties may exercise their rights and remedies under the agreements, potentially terminating the agreements or seeking monetary damages. Even if Rayonier or Pope are able to negotiate waivers, the counterparties may require a fee for such waivers or seek to renegotiate the agreements on terms less favorable to Pope.

Risks Relating to Business of the Combined Company

You should consider the risks associated with each of the businesses of Rayonier and Pope found under Item 1A. “Risk Factors” in Rayonier’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, Pope’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, and in future Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q filed by Pope and Rayonier, all of which are incorporated by reference into this proxy statement/prospectus. All of the risks associated with the business of Rayonier set forth in such Annual Report apply equally to the ownership of Rayonier shares and Opco units. See the section entitled “Where You Can Find More Information” beginning on page 287 of this proxy statement/prospectus.

Recent social, geopolitical and securities markets effects associated with the COVID-19 pandemic may pose risks to Pope, Rayonier, or both.

Both Pope and Rayonier conduct significant portions of their operations outside the United States, with Rayonier having timberlands in New Zealand and both companies having substantial portions of their sales derived from Japan, Korea and China. The recent, rapid expansion of COVID-19, commonly known as

 

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coronavirus, has created significant uncertainties in U.S. and global markets and has been associated with a substantial increase in price volatility among publicly traded securities. In particular, Pope derived some 6% of its fiscal 2019 sales from exports to China, where COVID-19 was initially discovered and where its effects have been most pronounced. Further, there have been a significant number of reported cases of coronavirus in the United States, with the Puget Sound region of Washington State, where a substantial majority of Pope’s timberlands, and a significant portion of Rayonier’s timberlands, are located having among the highest incident of both infection and deaths of any region in the United States. The ultimate risk posed by coronavirus remains highly uncertain; however, reports as of the date of this proxy statement/prospectus suggest that COVID-19 spreads more quickly and has a higher mortality rate than flu-like epidemics of the recent past. COVID-19 therefore poses a material risk to the business, financial condition and results of operation of both Pope and Rayonier and potentially could create risks for the combined company, including:

 

•

risks to the capital markets that may delay or prevent the completion of any securities offering that Rayonier may seek to use to finance the merger;

 

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effects on key employees, including operational management personnel and those charged with preparing, monitoring and evaluating the companies’ financial reporting and internal controls;

 

•

declines in production owing to the effects on contract logging operations, transportation and other critical third-party providers;

 

•

declines in demand resulting from adverse impacts of the disease on building construction, particularly in critical markets such as China; and

 

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increasing or protracted volatility in the prices of both Rayonier’s and Pope’s equity securities.

These factors, together or in combination with other events or occurrences not yet known or anticipated, could adversely affect the value of the merger consideration or could delay or prevent the consummation of the merger and the related transactions.

Combining the two companies may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the merger may not be realized.

Rayonier and Pope have operated and, until the completion of the merger, will continue to operate, independently. The success of the merger, including anticipated benefits and cost savings, will depend, in part, on Rayonier’s ability to successfully combine and integrate Pope’s business with Rayonier’s existing business.

The merger will involve the integration of Pope’s business with Rayonier’s existing business, which is a complex, costly and time-consuming process. It is possible that the pendency of the merger and/or the integration process could result in material challenges, including, without limitation:

 

•

the diversion of management’s attention from ongoing business concerns and performance shortfalls at one or both of the companies as a result of the devotion of management’s attention to the merger;

 

•

managing a larger combined company;

 

•

maintaining employee morale and retaining key management and other employees;

 

•

attracting and recruiting prospective employees;

 

•

the possibility of faulty assumptions underlying expectations regarding the integration process;

 

•

retaining existing business and operational relationships and attracting new business and operational relationships;

 

•

consolidating corporate and administrative infrastructures and eliminating duplicative operations and inconsistencies in standards, controls, procedures and policies;

 

•

coordinating geographically separate organizations;

 

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•

unanticipated issues in integrating information technology, communications and other systems;

 

•

litigation challenging the merger; and

 

•

unforeseen expenses or delays associated with the merger.

Many of these factors will be outside of the combined company’s control and any one of them could result in delays, increased costs, decreases in revenues and diversion of management’s time and energy from ongoing business concerns, which could materially affect the combined company’s financial position, results of operations and cash flows.

If Rayonier experiences difficulties with the integration process, the anticipated benefits of the merger may not be realized fully or at all, or may take longer to realize than expected. These integration matters could have an adverse effect on (i) each of Rayonier and Pope during this transition period and (ii) the combined company for an undetermined period after completion of the merger. In addition, the actual cost savings of the merger could be less than anticipated.

In addition, certain risks associated with Rayonier’s industry and business described herein and in Rayonier’s public filings may become more significant following consummation of the merger, including, but not limited to, risks relating to: the cyclical and competitive nature of the industries in which Rayonier operates; fluctuations in demand for, or supply of, forest products and real estate offerings; entry of new competitors into Rayonier’s markets; changes in global economic conditions and world events; fluctuations in demand for Rayonier’s products in Asia, and especially China; the uncertainties of potential impacts of climate-related initiatives; the cost and availability of third party logging and trucking services; the geographic concentration of a significant portion of Rayonier’s timberland; Rayonier’s ability to identify, finance and complete timberland acquisitions; changes in environmental laws and regulations regarding timber harvesting, delineation of wetlands, and endangered species, that may restrict or adversely impact Rayonier’s ability to conduct its business, or increase the cost of doing so; adverse weather conditions, natural disasters and other catastrophic events such as hurricanes, wind storms and wildfires, which can adversely affect Rayonier’s timberlands and the production, distribution and availability of Rayonier’s products; the cyclical nature of the real estate business generally; a delayed or weak recovery in the housing market; the lengthy, uncertain and costly process associated with the ownership, entitlement and development of real estate, especially in Florida, which also may be affected by changes in law, policy and political factors beyond Rayonier’s control; unexpected delays in the entry into or closing of real estate transactions; changes in environmental laws and regulations that may restrict or adversely impact Rayonier’s ability to sell or develop properties; the timing of construction and availability of public infrastructure; and the availability of financing for real estate development and mortgage loans.

The combined company is expected to incur substantial expenses related to the completion of the merger and the integration of Rayonier and Pope.

Rayonier and Pope have incurred, and expect to continue to incur, a number of non-recurring costs associated with the merger and combining the operations of the two companies. The substantial majority of non-recurring expenses will be comprised of transaction costs related to the merger.

Rayonier also will incur transaction fees and costs related to formulating and implementing integration plans. Rayonier continues to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the merger and the integration of the two companies’ businesses. Although Rayonier expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow Rayonier to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all. See the risk factor entitled “—Combining the two companies may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the merger may not be realized” above.

 

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The combined company may incur adverse tax consequences if Rayonier has failed or fails to qualify as a REIT for U.S. federal income tax purposes.

Rayonier has operated in a manner that it believes has allowed it to qualify as a REIT for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2004. Rayonier intends to continue to operate in the same manner through the time of the merger, and the combined company also intends to continue to operate so as to qualify for REIT status. It is a condition to the closing of the merger that Pope receives a written tax opinion of counsel to the effect that, beginning with Rayonier’s taxable year ended December 31, 2004 and through the closing date, Rayonier has been organized and operated in conformity with the requirements for qualification and taxation as a REIT under the Code, and Rayonier’s proposed method of organization and operation will enable Rayonier to continue to satisfy the requirements for qualification and taxation as a REIT under the Code. Rayonier, however, has not requested nor plans to request a ruling from the Internal Revenue Service (“IRS”) that it qualifies as a REIT. Qualification as a REIT involves the application of highly technical and complex Code provisions for which there are only limited judicial and administrative interpretations. The determination of various factual matters and circumstances not entirely within the control of Rayonier may have affected its ability to qualify as a REIT.

If, notwithstanding the opinion described above, Rayonier fails to qualify as a REIT, or is determined to have failed to qualify as a REIT in a prior year, Rayonier would face serious tax consequences that would substantially reduce the funds available for distribution to its shareholders:

 

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Rayonier would be subject to U.S. federal, state and local income tax on its net income at regular corporate rates for the years it did not qualify as a REIT (and, for such years, would not be allowed a deduction for dividends paid to shareholders in computing its taxable income) and the combined company would succeed to the liability for such taxes;

 

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unless Rayonier was entitled to relief under certain U.S. federal income tax laws, it could not re-elect REIT status until the fifth calendar year after the year in which it failed to qualify as a REIT; and

 

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the combined company would succeed to any earnings and profits, or E&P, accumulated by Rayonier for tax periods in which it did not qualify as a REIT and the combined company would have to pay a special dividend and/or employ applicable deficiency dividend procedures (including interest payments to the IRS) to eliminate such earnings and profits to maintain its REIT qualification.

If there is an adjustment to Rayonier’s taxable income or dividends paid deductions, the combined company could elect to use the deficiency dividend procedure to maintain Rayonier’s REIT status. That deficiency dividend procedure could require the combined company to make significant distributions to its shareholders and to pay significant interest to the IRS.

As a result of these factors, Rayonier’s failure to qualify as a REIT could impair the combined company’s ability after the merger to expand its business and raise capital and could materially adversely affect the value of the combined company’s stock.

If Opco (as a continuation of Pope for U.S. federal income tax purposes) failed to qualify as a partnership for U.S. federal income tax purposes, Rayonier would cease to qualify as a REIT and suffer other adverse consequences.

Rayonier believes that Opco (as a continuation of Pope for U.S. federal income tax purposes) will be treated as a partnership for U.S. federal income tax purposes. As a partnership, Opco will not be subject to U.S. federal income tax on its income. Instead, each of its partners, including Rayonier and the holders of Opco units, will be allocated, and may be required to pay tax with respect to, its share of Opco’s income. No assurance can be given, however, that the IRS will not challenge the status of Opco or any other subsidiary that is intended to be treated as a partnership for U.S. federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating Opco as an entity taxable as a corporation for U.S. federal income tax purposes,

 

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Rayonier would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, Rayonier would likely cease to qualify as a REIT. Also, the failure of Opco or any subsidiary partnership to qualify as a partnership for U.S. federal income tax purposes could cause such entity to become subject to U.S. federal, state and local corporate income tax, which would reduce significantly the amount of cash available for debt service and for distribution to its partners, including Rayonier and holders of Opco units.

The Tax Protection Agreement may limit Rayonier’s ability to sell or otherwise dispose of certain properties.

In connection with the merger, Opco, Rayonier and Pope will enter into a tax protection agreement in favor of certain large Pope unitholders, many of whom may be directors or officers of Pope. The tax protection agreement will require Opco to indemnify certain historic Pope unitholders for the time value of money (determined based on the prime rate plus 2%) in the event that Opco triggers, at any time during the five year period following the closing, a certain amount of U.S. federal, state and local income taxes with respect to such holder’s share of built-in gain with respect to the real property assets directly or indirectly owned by Pope immediately before the mergers, with certain exceptions. The tax protection agreement may make it economically prohibitive to sell such real property assets even though it may otherwise be in Rayonier shareholders’ best interests to do so.

Risks Relating to Ownership of Opco Units

Opco units will not be listed on any national exchange, may be illiquid and are subject to restrictions in the limited partnership agreement that will govern Opco and its units.

The merger agreement does not require Opco, and Opco does not intend, to list its units on a national securities exchange. As a result, Opco units may not trade and may be illiquid. Moreover, under the terms of the Opco limited partnership agreement, the Opco units will generally not be transferable without the approval of the Opco general partner, which approval the Opco general partner may withhold in its sole and absolute discretion, except in limited circumstances as described in the section titled “Description of Opco Units” on page 281. The Opco units may not ever be traded on a stock exchange or transferrable at prices Opco unitholders may find attractive, or at all.

Although holders of Opco units will have redemption rights, which will enable them to cause Opco to redeem their Opco units in exchange for cash or, at Rayonier’s option, Rayonier shares on a one-for-one basis, these redemption rights cannot be exercised by a limited partner more than once per quarter, and a redemption request must be made no less than 60 days prior to the redemption date. Therefore, a holder will not have knowledge of the market price of the Rayonier shares at the time that it makes a redemption request. For more information, see “Description of Rayonier, L.P. limited partner units” beginning on page 281 of this proxy statement/prospectus.

Opco is controlled by Rayonier, and Opco unitholders will have limited governance rights.

As a limited partnership, substantially all of Opco’s day-to-day affairs will be controlled by its general partner, Rayonier. Unlike the holders of common stock in a corporation, holders of Opco units will have only limited voting rights on matters affecting Opco’s business and operations and, therefore, limited ability to influence management’s decisions regarding Opco’s business and operations. The Opco limited partnership agreement also provides that, subject to limited exceptions, the Opco general partner may amend the provisions of the Opco limited partnership agreement without the approval of the Opco unitholders. As a result, the limited rights inuring to the benefit of the Opco unitholders, and the other terms and conditions in the Opco limited partnership agreement, may be changed by the Opco general partner in its sole discretion if such amendment is not one of the specified amendments requiring approval of the Opco unitholders (other than the Opco general partner), as described in the section titled “Description of Opco Units” on page 281.

Holders of Opco units also will not be able to directly elect its general partner or the directors thereof at any time. Stockholders of Rayonier, whose interests may differ from the Opco unitholders, will elect the directors of

 

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the Opco general partner, and Rayonier cannot be removed as the Opco general partner without its consent. Accordingly, if unitholders are dissatisfied with the performance of the Opco general partner, they will not be able to directly remove Opco’s general partner or its directors, or otherwise influence the management of the Opco general partner.

The redemption rights with respect to the Opco units are subject to significant limitations

Under the Opco limited partnership agreement, Opco unitholders will have the right to cause Opco to redeem their units for cash or, at the Opco general partner’s election, Rayonier shares on a one-for-one basis. This redemption right, however, is subject to significant limitations. Opco unitholders’ ability to cause the redemption for cash or exchange for Rayonier shares of their Opco units is subject to a 60-day delay, during which period, in the case of an exchange for Rayonier shares, the value of shares of Rayonier may decrease and the holder may be unable to either cancel the exchange or, once consummated, sell the Rayonier shares at an attractive price.

In addition, each holder of Opco units may effect a redemption or exchange for Rayonier shares no more than once per quarter, and the holder must submit for redemption at least 1,000 Opco units or, if such holder owns fewer than 1,000 Opco units, all the Opco units owned by such holder. The Opco general partner may also prohibit any redemptions for cash or exchange for Rayonier shares if such transactions, in the Opco general partner’s sole and absolute discretion, would, among other things, create a significant risk of specified adverse tax consequences for the Opco general partner. As a result, Opco unitholders may not be able to quickly and in the ordinary course exercise their redemption rights in response to market conditions and their investment objectives.

Opco’s general partner has limited duties to Opco and Opco unitholders, which may permit it to favor its stockholders over Opco unitholders.

To the extent that the Opco general partner has any duties (including fiduciary duties) to Opco and the Opco unitholders, under the terms of the Opco limited partnership agreement, the Opco limited partnership agreement provides that the Opco general partner cannot be liable for any actions taken in good faith reliance on the Opco limited partnership agreement. The Opco limited partnership agreement also limits the liability of the Opco general partner (including its affiliates, officers and directors) for any errors in judgments, mistakes of fact or law or acts or omissions if those errors, mistakes, acts or omissions were made in good faith. In addition, the Opco limited partnership agreement expressly provides that in the event there is a conflict between the interests of the stockholders of the Opco general partner and the Opco unitholders, the Opco general partner may, without liability, prioritize its stockholders over the Opco unitholders. As a result, the Opco general partner may from time to time and in the ordinary course take actions that disproportionately inure to the benefit of itself or its holders, or, subject to the terms of the Opco limited partnership agreement, are disproportionally adverse to Opco unitholders relative to stockholders of the Opco general partner, without any liability to the Opco unitholders, and, as described under the Risk Factor titled “— Opco is controlled by Rayonier and Opco’s unitholders will have limited governance rights”, the Opco unitholders will be significantly limited in their ability to affect the taking of such actions and generally not have any approval rights with respect thereto.

The Opco general partner can issue additional units without the consent of the Opco unitholders.

Under the Opco limited partnership agreement, the Opco general partner may from time to time issue additional units in one or more classes, or one or more series of any of such classes, with such designations, preferences and relative, participating, optional or other special rights, powers and duties as determined by the Opco general partner, in its sole and absolute discretion. These issuances may dilute the value of the Opco units to be issued as merger consideration, and Opco unitholders will not have any voting or approval rights with respect to such issuances, and therefore, the value of their units may decrease without their consent.

 

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If Opco failed to qualify as a partnership for U.S. federal income tax purposes, then the amount of cash available for distribution to holders of Opco units could be substantially reduced and Rayonier would cease to qualify as a REIT and suffer other adverse consequences.

Opco believes that it will be treated as a partnership for U.S. federal income tax purposes. As a partnership, Opco will not be subject to U.S. federal income tax on its income. Opco cannot assure you, however, that the IRS will not challenge its status as a partnership for U.S. federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating Opco as an entity taxable as a corporation for U.S. federal income tax purposes, Opco could be subject to significant entity-level taxation, which could substantially reduce its cash available for distribution to holders of Opco units. Additionally, Rayonier would fail to meet the gross income tests and certain of the asset tests applicable to REITs and, accordingly, Rayonier would likely cease to qualify as a REIT.

If the IRS makes audit adjustments to Opco’s income tax returns, it may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustments directly from Opco in which case the amount of cash available for distribution to holders of Opco units could be substantially reduced.

The Bipartisan Budget Act of 2015 changed the rules applicable to U.S. federal income tax audits of partnerships. Under the rules, among other changes and subject to certain exceptions, any audit adjustment to items of income, gain, loss, deduction, or credit of a partnership (and any partner’s distributive share thereof) is determined, and taxes, interest, or penalties attributable thereto could be assessed and collected, at the partnership level. In the event of an IRS audit, absent available elections, it is possible Opco could be required to pay additional taxes, interest and penalties as a result of an audit adjustment. If Opco is required to make any such payments of taxes, penalties and interest, its cash available for distributions to holders of Opco units could be substantially reduced.

 

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INFORMATION ABOUT RAYONIER AND OPCO

Rayonier Inc.

1 Rayonier Way

Wildlight, FL 32097

Rayonier Inc., referred to as Rayonier, a North Carolina corporation, is a leading timberland real estate investment trust with assets located in some of the most productive softwood timber growing regions in the U.S. and New Zealand. The focus of Rayonier’s business is to invest in timberlands and to actively manage them to provide current income and attractive long-term returns to its shareholders. As of December 31, 2019, Rayonier owned, leased or managed approximately 2.6 million acres of timberlands located in the U.S. South (1.84 million acres), U.S. Pacific Northwest (379,000 acres) and New Zealand (414,000 gross acres, or 295,000 net plantable acres). In addition, Rayonier engages in the trading of logs from New Zealand and Australia to Pacific Rim markets, primarily to support its New Zealand export operations. Rayonier has an added focus to maximize the value of its land portfolio by pursuing higher and better use land sales opportunities.

Rayonier common stock is publicly traded on the New York Stock Exchange under the symbol “RYN.”

Rayonier Operating Company LLC

c/o Rayonier Inc.

1 Rayonier Way

Wildlight, Florida 32097

(904) 357-9100

Rayonier Operating Company LLC, referred to as ROC, is a Delaware limited liability company and a wholly owned subsidiary of Rayonier. ROC holds, directly or indirectly, substantially all of Rayonier’s assets and conducts substantially all of Rayonier’s business. ROC currently does not have any publicly traded equity. Prior to the closing of the merger, Rayonier will contribute all of its interest in ROC to Rayonier, L.P., and in connection therewith Rayonier, L.P. will become Rayonier’s operating company and successor-in-interest to ROC.

Rayonier, L.P.

c/o Rayonier Inc.

1 Rayonier Way

Wildlight, Florida 32097

(904) 357-9100

Rayonier, L.P., referred to as Opco, is a Delaware limited partnership. Rayonier is Opco’s sole general partner, and, as of the date of this proxy statement/prospectus, 100% of Rayonier, L.P.’s limited partner interests are held by Rayonier Operating Company Holdings, LLC, a wholly owned subsidiary of Rayonier. Opco currently does not have any publicly traded equity. Prior to the closing of the merger, Rayonier will contribute all of its interest in ROC to Opco, and in connection therewith Opco will become Rayonier’s operating company and successor-in-interest to ROC.

Rayonier Operating Company Holdings, LLC

c/o Rayonier Inc.

1 Rayonier Way

Wildlight, Florida 32097

(904) 357-9100

Rayonier Operating Company Holdings, LLC, referred to as Opco Holdings, is a Delaware limited liability company, a wholly owned subsidiary of Rayonier and the initial and sole limited partner of Opco. Opco Holdings has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the merger agreement.

 

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Pacific GP Merger Sub I, LLC

c/o Rayonier Inc.

1 Rayonier Way

Wildlight, Florida 32097

(904) 357-9100

Pacific GP Merger Sub I, LLC, referred to as Merger Sub 1, is a Delaware limited liability company and a wholly owned subsidiary of Rayonier formed solely for the purpose of facilitating the merger of Merger Sub 1 and MGP, referred to as GP merger 1. Merger Sub 1 has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the merger agreement. By operation of GP merger 1, Merger Sub 1 will be merged with and into MGP, with Merger Sub 1 surviving such merger as a wholly owned subsidiary of Rayonier.

Pacific GP Merger Sub II, LLC

c/o Rayonier Inc.

1 Rayonier Way

Wildlight, Florida 32097

(904) 357-9100

Pacific GP Merger Sub II, LLC, referred to as Merger Sub 2, is a Delaware limited liability company and a wholly owned subsidiary of Rayonier formed solely for the purpose of facilitating the merger of Merger Sub 2 and EGP, referred to as GP merger 2. Merger Sub 2 has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the merger agreement. By operation of the GP merger 2, Merger Sub 2 will be merged with and into EGP, with Merger Sub 2 surviving such merger as a wholly owned subsidiary of Rayonier.

Pacific LP Merger Sub III, LLC

c/o Rayonier Inc.

1 Rayonier

Wildlight, Florida 32097

(904) 357-9100

Pacific LP Merger Sub III, LLC, referred to as Merger Sub 3, is a Delaware limited liability company and a wholly owned subsidiary of ROC. formed solely for the purpose of facilitating the merger. Merger Sub 3 has not carried on any activities or operations to date, except for those activities incidental to its formation and undertaken in connection with the transactions contemplated by the merger agreement. By operation of the merger, Merger Sub 3 will be merged with and into Pope, with Pope surviving such merger as a wholly owned subsidiary of ROC and an indirect wholly-owned subsidiary of Opco.

 

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INFORMATION ABOUT POPE

Pope Resources, A Delaware Limited Partnership

19950 Seventh Avenue NE, Suite 200

Poulsbo, Washington 98370

(360) 697-6626

Pope Resources, A Delaware Limited Partnership, referred to as Pope, and its subsidiaries operate in four primary business segments: (i) Partnership Timber, (ii) Funds Timber, (iii) Timberland Investment Management and (iv) Real Estate. Pope’s two timber segments consist of growing, managing, harvesting, and marketing timber from Pope’s 119,000 acres of direct timberland ownership, plus another 3,500 acres under timber deeds, in Washington (Partnership Timber) and Pope’s private equity timber funds’ 141,000 acres (as of December 31, 2019) of timberland in Washington, Oregon, and California that Pope co-own with third-party investors (Funds Timber). Pope’s Timberland Investment Management segment is engaged in organizing and managing private equity timber funds using capital invested by third parties and Pope. Pope’s Real Estate segment’s operations are focused on a portfolio of approximately 1,500 acres in the west Puget Sound region of Washington, most of which are legacy timberlands that have become suitable as development property owing to the expansion of the Puget Sound metropolitan and suburban areas.

Port Gamble was established by Pope & Talbot in 1853 and was operated as a company town for over 165 years and served as the location for a lumber mill for most of that time.

Pope units are listed on the NASDAQ under the symbol “POPE.”

Pope MGP, Inc.

19950 Seventh Avenue NE, Suite 200

Poulsbo, Washington 98370

(360) 697-6626

Pope MGP, Inc., referred to as MGP, is a Delaware corporation and serves as Pope’s managing general partner. MGP’s shares are not listed and the transfer of MGP’s shares are restricted by the shareholders’ agreement.

Pope EGP, Inc.

19950 Seventh Avenue NE, Suite 200

Poulsbo, Washington 98370

(360) 697-6626

Pope EGP, Inc, referred to as EGP, is a Delaware corporation and serves as Pope’s equity general partner. EGP’s shares are not listed and the transfer of EGP’s shares are restricted by the shareholders’ agreement.

 

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INFORMATION ABOUT THE SPECIAL MEETING

Time, Place and Purpose of the Pope Meeting

The special meeting will be held on Tuesday, May 5, 2020, at 11:00 a.m. local time, at the offices of Davis Wright Tremaine LLP, 920 Fifth Avenue Suite 3300, Seattle, Washington 98104, and electronically via the virtual meeting facility that can be accessed by Pope unitholders by registering at the Internet website http://www.virtualshareholdermeeting.com/POPE2020 using the 16-digit control number found on the accompanying proxy card. At the special meeting, Pope unitholders will be asked to consider and vote upon (i) a proposal to approve the merger agreement, the merger and the related transactions, (ii) a proposal to approve, by advisory (non-binding) vote, the merger-related executive compensation and (iii) a proposal for adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

Record Date and Quorum

The Pope board has determined that the record date for determining the Pope unitholders who are entitled to notice of, and to vote at, the special meeting, is March 30, 2020. Only Pope unitholders at the close of business on the record date will be entitled to notice of, and to vote at, the special meeting, unless a new record date is set in connection with any adjournment or postponement of the special meeting. As of the record date there were 4,367,215 Pope units issued and outstanding, which were held by approximately 3,000 beneficial owners. In order for the special meeting to be convened, there must be present, in person or by proxy, at least a majority of the Pope units outstanding as of the record date.

Vote Required

Approval of the merger proposal requires that a majority of the Pope units issued and outstanding as of the record date vote in favor of approval of the merger agreement, the merger and the related transactions. If you fail to submit a proxy or to vote in person at the special meeting, or abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will not be counted as “FOR” or “AGAINST” and will have the same effect as a vote against the merger agreement, the merger and the related transactions. Accordingly, your vote is important and you are encouraged to vote as soon as possible.

The proposal to approve the merger-related executive compensation requires that a majority of the votes cast at the special meeting are voted in favor of the proposal; however, such vote is advisory (non-binding) only. If you fail to submit a proxy or to vote in person at the special meeting, or abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will not be counted as “FOR” or “AGAINST” and will not have an effect on the advisory (non-binding) vote to approve the merger-related executive compensation except to the extent it results in there being insufficient Pope units present at the special meeting to establish a quorum.

The approval of adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement requires that a majority of the votes cast at the special meeting are voted in favor of the proposal, whether or not a quorum is present. If you fail to submit a proxy or to vote in person at the special meeting, or abstain, or you do not provide your bank, brokerage firm or other nominee with instructions, as applicable, this will not be counted as “FOR” or “AGAINST” and will not have an effect on the vote to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the merger agreement.

 

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Proxies and Revocations

You may submit your proxy either by telephone, through the Internet or by mailing the enclosed proxy card, or, if you are a limited partner of record, you may vote in person at the special meeting.

 

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To submit your proxy by telephone, dial (800) 690-6903 using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number from the enclosed proxy card. To submit your proxy through the Internet, visit http://www.proxyvote.com. You will be asked to provide the company number and control number from the enclosed proxy card. Proxies submitted by telephone or through the Internet must be received by 11:59 p.m., Eastern Time, on May 4, 2020.

 

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To submit your proxy by mail, complete, date and sign each proxy card you receive and return it as promptly as practicable in the enclosed prepaid envelope. If you sign and return your proxy card, but do not mark the boxes showing how you wish to vote, your shares will be voted “FOR” the approval of the merger agreement, the merger and the related transactions, “FOR” the advisory vote on certain merger-related compensation to Pope’s executive officers, and “FOR” the proposal to adjourn the meeting if necessary to permit the solicitation of additional proxies.

 

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By attending the meeting using the virtual meeting facility and voting your Pope units during the meeting. You may access the virtual meeting facility by registering at the Internet website http://www.virtualshareholdermeeting.com/POPE2020 using the 16-digit control number found on the accompanying proxy card.

 

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If you intend to vote in person, please bring proper identification, together with proof that you are a record owner of Pope units. If your Pope units are held in “street name,” please bring acceptable proof of ownership, such as a letter from your broker or an account statement showing that you beneficially own such shares on the applicable record date. You are reminded that, as of the date of this proxy statement/prospectus, the State of Washington remains under an executive order that prohibits the conduct of non-essential businesses and restricts public gatherings, regardless of the number of people in attendance. Before attempting to attend the special meeting in person, Pope unitholders are strongly advised to consider any and all legal restrictions on in-person attendance. Attendance using the virtual meeting facility will have the same effect as attending in person.

Any proxy given by a Pope unitholder pursuant to this solicitation may be revoked at any time before the vote is taken at the special meeting in any of the following ways:

 

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submitting a later proxy by telephone or through the Internet prior to 11:59 p.m., Eastern Time, on May 4, 2020;

 

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filing with the Secretary of Pope, before the taking of the vote at the special meeting, a written notice of revocation bearing a later date than the proxy card;

 

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duly executing a later dated proxy card relating to the same shares and delivering it to the Secretary of Pope before the taking of the vote at the special meeting; or

 

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voting in person at the special meeting (or, in the case of Pope units held by assignees, attending in person and directing MGP to vote such units), although attendance at the special meeting will not by itself constitute a revocation of a proxy.

Any written notice of revocation or subsequent proxy card should be sent to Pope Resources, A Delaware Limited Partnership, 19950 Seventh Avenue NE, Poulsbo, Washington 98370, Attention: Secretary, or hand delivered to the Secretary of Pope before the taking of the vote at the special meeting.

IT IS IMPORTANT THAT YOU VOTE YOUR POPE UNITS PROMPTLY. WHETHER OR NOT YOU PLAN TO ATTEND POPE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN, AS PROMPTLY AS POSSIBLE, THE ENCLOSED PROXY CARD IN THE PRE-ADDRESSED

 

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