Madison Dearborn Files For Boise Offering –

Just about six months after acquiring the paper and forest products business of Boise Cascade, Chicago-based Madison Dearborn Partners has filed to take the company public in a $575 million IPO on the New York Stock Exchange. The company has proposed to be listed under the ticker symbol “BCC.”

Madison Dearborn acquired the business from what is now known as OfficeMax, formerly the Office Solutions retail group of Boise Cascade. The firm paid $3.7 billion for paper, forest product and timberland asset operations in what was a true “wheelhouse” investment for Madison Dearborn. The firm has made large investments in the space in the past, including deals for Jefferson Smurfit Group, Packaging Corp. of America, Graphic Packaging Corp. and Bay State Paper Holding. Overall, Madison Dearborn has completed roughly $15.5 billion worth of buyout transactions in the paper and packaging industry.

Target: Boise Cascade
Sponsor: Madison Dearborn Capital Partners
IPO Value: $575M
Underwriters: Goldman, Sach & Co., JPMorgan, Lehman Brothers, Deutsche Bank Securities
Legal Counsel: Kirkland & Ellis LLP; Cravath, Swaine & Moore LLP

Following the deal’s close, Madison Dearborn installed MacMillan Bloedel Vet Tom Stephens as the company’s new chief executive officer. Stephens hit the ground running and soon after his appointment, Boise Cascade announced the $1.65 billion sale of its timberland assets to Forest Capital Partners, a Boston-based investment firm that focuses exclusively on forest assets.

According to the filing, Goldman, Sachs & Co., JPMorgan, Lehman Brothers and Deutsche Bank Securities have been hired as the joint book-running managers for the IPO, while Kirkland & Ellis LLP and Cravath, Swaine & Moore LLP will provide legal counsel.

The company has not yet determined how many shares of Class A common stock will be made available in the offering nor has the company given an expected price range for the offered shares. The registration did indicate that holders of Class B common shares, which will be controlled by all of Boise Cascade’s existing stockholders, will receive a dividend estimated to be around $175 million, depending on the offering price. Additionally, proceeds from the IPO will go toward the redemption of the company’s preferred stock from OfficeMax, which has a liquidation value of $36.4 million, and the repayment of a loan valued at roughly $250 million.

However, in order to move forward with the offering, the company will need to gain the consent from the lenders of its senior credit agreement, which currently dictates that in the case of an IPO, Boise Cascade must apply 50% of all proceeds to prepay indebtedness under the senior credit facilities. If the company is unable to garner consent, it will look to amend and restate the senior facility, the registration filing said.

While the investment is on its way to being a boon for Madison Dearborn, OfficeMax has seen its fortunes trampled since the sale. The company has found itself entangled in an accounting imbroglio since December and last week its CEO Christopher Milliken resigned amid the turmoil. Additionally, the company is the third player in an increasingly competitive office supply retail market. Both Staples and Office Depot, the one and two players respectively, have their sights on increasing marketshare with new store openings, while the mass merchandisers, drugstores, warehouse outlets and other parties have continued to bolster their office-product offerings.

The forest products and paper industry has continued to receive attention from financial investors. Most recently Cerberus Capital Management agreed to shell out $2.3 billion to acquire MeadWestvaco’s paper business, and last year Key Principal Partners acquired Honsador Lumber Corp.

Madison Dearborn invested out of its $4 billion Madison Dearborn Capital Partners IV LP, fund, which is a 2001-vintage vehicle. The firm is reportedly eyeing a follow up fund, and early reports indicate Madison Dearborn will look to corral around $5 billion for its next vehicle.