Jul 29, 2009. /Lesprom Network/. Potlatch Corporation reported financial results for the second quarter ended June 30, 2009 and announced that it has entered into a $50.2 million timber deed agreement to sell 50,700 acres of pre-merchantable timber to Forest Investment Associates L.P. (FIA). “We made progress on three key initiatives during the quarter, in spite of the challenging market conditions,” said Michael Covey, chairman, president and chief executive officer of Potlatch Corporation. “We significantly improved our balance sheet, as Clearwater Paper deposited $106.3 million of cash with the trustee for the credit sensitive debentures that will be used to retire the debt when it matures in December. In addition, we recently entered into a $50.2 million timber deed sale that we expect to close later in Q3 which will further improve our balance sheet and provide additional liquidity. Finally, we made solid progress improving the performance of our wood products business during the quarter,” concluded Mr. Covey. “Looking ahead, harvest levels for the remainder of 2009 are dependent to a large degree on pricing and demand. In May 2009, we announced a reduction in the planned sawlog harvest, primarily in Idaho, of approximately 500,000 tons, or 18 percent of the planned 2009 sawlog harvest. Selling high quality sawlogs at current prices is not in the best long-term interest of our shareholders. Current markets for softwood lumber remain depressed, which has applied downward pressure on log pricing across the country, especially in the West. We believe these markets will come back at more favorable prices when the housing market recovers, at which time we will increase harvest levels. “Regarding our Real Estate segment, we continue to see interest in our HBU and rural recreation properties as evidenced by the consistent number of sales transactions from quarter to quarter. In addition, the demand for non-strategic timberland remains relatively high, with the Arkansas timber deed transaction as an example. Our Wood Products business will likely continue to experience weakness through the remainder of 2009, but we believe the worst is behind us. We will continue to closely monitor raw material and other costs in order to successfully compete in these depressed markets,” concluded Mr. Covey.