Apr 17, 2006. /Lesprom Network/. Longview Fibre Company today announced that its Board of Directors voted unanimously to reject the proposal from Obsidian Finance Group, LLC and The Campbell Group, LLC (Obsidian/Campbell) to acquire all of the outstanding shares of the company. Longview Fibre's Board concluded that the Obsidian/Campbell proposal is highly conditional and, even if it could be executed on, undervalues Longview Fibre and its high quality timber assets. The Board believes that completing the company's conversion to a real estate investment trust (REIT) and implementing an improved operating plan represents a superior alternative for enhancing shareholder value. The company's improved operating plan and the REIT conversion are expected to result in: - a special distribution to shareholders of approximately $385 million, of which up to approximately $77 million, representing approximately $1.50 per share, is expected to be distributed in cash, with the remainder to be distributed in shares of the company's common stock; - an initial 20% increase in the company's annual cash dividend rate to $1.20 per share (excluding the effect of shares to be issued in the special distribution); - an increase in cash flow as a result of: - accelerating the company's timber harvest rate consistent with Sustainable Forestry Initiative (SFI) practices; - implementing a program to monetize the company's higher and better use (HBU) lands; - restructuring the company's manufacturing operations, including exploring the potential divestiture of the company's sawmill and select converting plants; and - reducing taxes; and - a reduction in the company's borrowing rate and aggregate interest expense through refinancing. Richard H. Wollenberg, Longview Fibre's President, Chief Executive Officer and Chairman of the Board, said, "We are taking steps to accelerate the delivery of value to shareholders. We expect the REIT conversion, in combination with our improved operating plan, to drive shareholder value by, among other things, increasing the company's cash flow, enabling us to pay a larger dividend and positioning the company to increase its timberland holdings. We also expect the potential divestiture of selected manufacturing assets to enhance our operating performance and provide additional cash to reduce debt." The Board of Directors, with the assistance of its financial and legal advisors, carefully considered the Obsidian/Campbell proposal and the company's improved operating plan. In making its unanimous decision to reject the Obsidian/Campbell proposal, the Board considered, among other things: - the significant shareholder value enhancements expected to be delivered by the REIT conversion and the company's improved operating plan; - management's record of delivering value to shareholders; - the highly conditional nature of the Obsidian/Campbell proposal, which is subject to significant due diligence and financing contingencies and associated risks. Mr. Wollenberg added, "We are committed to acting in the best interests of the company and its shareholders and have already taken steps to accelerate value creation. In the past few years, we have implemented a number of operational improvements and we are now poised to reap the benefits from these initiatives. We believe that the REIT conversion process has begun to unlock the inherent value in our strong portfolio of assets and that the intrinsic value of Longview Fibre is not reflected in our current or historical stock price. Engaging in a transaction with Obsidian/Campbell at this time, before the company has had the opportunity to fully implement its strategy, would prevent the company and our shareholders from realizing the potential value of the company's REIT conversion and improved operating plan." The company also announced today that Bank of America, N.A. and Goldman Sachs Credit Partners L.P. have provided commitments for the funds necessary to complete the REIT conversion. Longview Fibre Company is a diversified timberlands owner and manager, and a specialty paper and container manufacturer. Using sustainable forestry methods, the company manages approximately 587,000 acres of softwood timberlands predominantly located in western Washington and Oregon, primarily for the sale of logs to the U.S. and Japanese markets. Longview Fibre’s manufacturing facilities include a pulp-paper mill at Longview, Washington; a network of converting plants; and a sawmill in central Washington. The company’s products include: logs; corrugated and solid-fiber containers; commodity and specialty kraft paper; paperboard; and dimension and specialty lumber.