SAC urges Clearwater Paper to ready itself for sale

BOSTON Mon Aug 20, 2012 5:08pm EDT

BOSTON Aug 20 (Reuters) - Hedge fund titan SAC Capital Advisors is applying fresh pressure on Clearwater Paper Corp to raise its share price by urging the company to split itself into two parts and consider selling one or both businesses, according to a regulatory filing.

Steven Cohen's $14 billion hedge fund, which ranks as the company's third biggest investor with a 7.1 percent stake, proposed that the board consider separating the main businesses, hire an investment bank to explore a sale and grow its board by two members.

SAC, whose investment decisions have long been closely followed in the investment world, first made its interest in Clearwater Paper known in May when fund manager David Rosen wrote to chief executive officer Gordon Jones that Clearwater Paper was "deeply undervalued."

Nearly four months later, the Stamford, Connecticut-based fund followed up with specific prescriptions for the Spokane, Washington-based paper company, according to filings made with the Securities and Exchange Commision late on Friday.

SAC, which is known for having delivered double-digit returns over decades, owns 1.64 million shares of Clearwater Paper, according to the filing.

A spokesman for the fund declined to comment beyond the filing.

"Clearwater Paper has had an open dialogue with SAC and continues to carefully analyze its proposals," said company spokesman Matt Van Vleet.

The fund proposed to the company's board that it "initiate the separation of the Issuer's Consumer Products business from its Pulp and Paperboard business, to enable the Issuer to pursue the divestiture of one or both businesses to one or more strategic and/or financial buyers," the filing said.

It also urged the board to "engage an investment banking firm to advise on the feasibility and prospective terms of such potential divestitures, including identifying potential buyers; and nominate and elect two new independent members of the Board (thereby increasing the board's size from six to eight members)," the filing said.

Clearwater Paper was itself spun off from forestry company Potlatch Corp. in 2008 but its share price has failed to dazzle, rising only 2.95 percent since January.

While SAC is generally not known as an activist investor, its interest in Clearwater Paper may have given the stock a shot in the arm, however. In the last three months, roughly the time since which SAC's interest in the company was first disclosed, the share price has climbed 18 percent.