Item 8.01 — Other Events
On October 14, 2021, two subsidiaries of CatchMark, Creek Pine Holdings, LLC (the “CTT Partner”) and Triple T GP, LLC (the “General Partner”), entered into a Recapitalization and Redemption Agreement with Triple T, and the preferred limited partners of Triple T (the “Preferred Partners”) for the redemption of the common equity interests in Triple T held by the CTT Partner and the general partner interest held by the General Partner in exchange for a total of $35 million in cash. The Recapitalization and Redemption Agreement also provided for the redemption of certain of the Preferred Partners and the recapitalization of the interests of certain of the other Preferred Partners in Triple T. The transaction closed concurrently with signing.
In connection with the transactions that occurred pursuant to the Recapitalization and Redemption Agreement, including the General Partner no longer serving as the general partner of Triple T, that certain amended and restated asset management agreement by and among CatchMark TRS Creek Management, LLC (the “Manager”), Creek Pine REIT, LLC and Crown Pine Realty 1, Inc., each subsidiaries of Triple T, dated as of June 24, 2020 (the “Asset Management Agreement”), terminated on October 14, 2021. In connection with such termination, the parties to the Asset Management Agreement entered into the Transition Services Agreement pursuant to which the Manager and its affiliates will provide transition services in exchange for a one-time payment of $5 million dollars in cash to the Manager. The asset management fees payable under the Asset Management Agreement ceased, under the terms of the Transition Services Agreement, as of September 1, 2021. CatchMark will provide transition services to Triple T through March 31, 2022.
CatchMark will use the $40 million dollars in proceeds to pay down existing debt.
Due to the subordinated nature of CatchMark’s investment in Triple T and the preferred return accruing on the interests held by the Preferred Partners, CatchMark had previously written down its investment in Triple T to zero on its balance sheet in 2019 in accordance with GAAP using the hypothetical-liquidation-at-book-value method. The $35 million received upon the redemption of CatchMark’s interests in Triple T will be recognized as a gain from the unconsolidated joint venture and the $5 million services fee received in connection with entering into the Transition Services Agreement will be recognized as asset management fee revenue on a straight-line basis over the term of the Transition Services Agreement.
CatchMark also announced that it expects to pay a new annualized dividend rate of $0.30 per common share, beginning with the fourth quarter of 2021. The company has declared a cash dividend of $0.075 per share for its common stockholders of record as of November 30, 2021, payable on December 15, 2021.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by CatchMark’s use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “should,” “anticipate,” “estimate,” “believe,” “continue,” or other similar words. However, the absence of these or similar words or expressions does not mean that a statement is not forward-looking. Forward-looking statements are not guarantees of performance and are based on certain assumptions, discuss future expectations, describe plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. Forward-looking statements in this Current Report on Form 8-K include, but are not limited to, future dividend rates. Risks and uncertainties that could cause CatchMark’s actual results to differ from these forward-looking statements include, but are not limited to, that (i) the supply of timberlands available for acquisition that meet its investment criteria may be less than CatchMark currently anticipates; (ii) CatchMark may be unsuccessful in winning bids for timberland that are sold through an auction process; (iii) CatchMark may not be able to access external sources of capital at attractive rates or at all; (iv) potential increases in interest rates could have a negative impact on CatchMark’s business; (v) timber prices may not increase at the rate CatchMark currently anticipates or could decline, which would negatively impact its revenues; (vi) CatchMark may not generate the harvest volumes from its timberlands that CatchMark currently anticipates; (vii) the demand for CatchMark’s timber may not increase at the rate CatchMark currently anticipates or could decline due to changes in general economic and business conditions in the geographic regions where its timberlands are located, including as a result of the COVID-19 pandemic and the measures taken as a response thereto; (viii) a downturn in the real estate market, including decreases in demand and valuations, may adversely impact CatchMark’s ability to generate income and cash flow from sales of higher-and-better use properties; (ix) CatchMark may not be able to make large dispositions of timberland in capital recycling transactions at prices that are attractive to us or at all; (x) CatchMark’s dividends are not guaranteed and are subject to change; (xi) CatchMark’s share repurchase program may not be successful in improving stockholder value over the long-term; (xii) CatchMark’s joint venture strategy may not enable CatchMark to access non-dilutive capital and enhance CatchMark’s ability to make acquisitions; and (xiii) the factors described in Part I, Item 1A. Risk Factors of CatchMark’s Annual Report on Form 10-K for the year ended December 31, 2020 and CatchMark’s other filings with the Securities and Exchange Commission. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Current Report on Form 8-K. CatchMark undertakes no obligation to update its forward-looking statements, except as required by law.
Item 9.01 — Exhibits.
(b) Pro forma financial information
Unaudited Pro Forma Consolidated Balance Sheet as of June 30, 2021
Unaudited Pro Forma Consolidated Statement of Operations for the six months ended June 30, 2021
Unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2020
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
The unaudited pro forma condensed consolidated financial statements listed above are filed as Exhibit 99.3 to this report.
(d) Exhibits:
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Exhibit No.
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Description
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99.1
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99.2
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99.3
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104
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Cover Page Interactive Data File (embedded within the Inline XBRL document)
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