IP now 'intrigued' by MLP tax structure for virgin containerboard mills

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IP now 'intrigued' by MLP tax structure for virgin containerboard mills

September 11, 2014 - 10:31

SAN FRANCISCO, Sept. 11, 2014 (RISI) -International Paper (IP) has "moved from a study phase to a more serious evaluation phase" of a master limited partnership (MLP) tax structure for its virgin containerboard mills, CEO John Faraci told a UBS investment conference on Thursday.

"We discussed (the concept) with our board and frankly we were intrigued," he noted.

Faraci said the company is working with advisors to be ready to file for a private letter ruling with the Internal Revenue Service (IRS) if moving assets into an MLP would "create value for shareholders."

He noted that IP set up an MLP for its timberlands in 1985 though the structure would be different for its containerboard mills.

IP was initially somewhat skeptical of the MLP concept for its virgin containerboard mills, saying it was "far from convinced" that the concept would create shareholder value even if it could get an IRS letter ruling.

The idea created a stir on Wall Street after a New York hedge fund Perry Capital discussed the concept in a letter to investors which became public in July.