“While cattle ranching will always be a very important part of our heritage and our brand, a decision to out-source the ownership and management of this business to a first class cattle operator will allow us to focus our efforts and resources on investing in our real estate assets,” said President and CEO Robert A. STINE.
“Over the past four years we believe we have maximized the value of this division and that this is the appropriate time to continue with our transition to important real estate opportunities. We have made a decision to accelerate our real estate entitlement and development program in order to unlock the embedded value of our land as expeditiously as possible. We intend to reinvest the proceeds of our cattle operations in that program.”
The disposition of the livestock division assets is expected to contain three principle elements. First, the Company anticipates selling its approximately 5,000 head cattle breeding herd to one or more purchasers along with its feedlot operation in Texas. Secondly, the same purchasers are expected to lease rangeland at Tejon Ranch for a period of years where the breeding herd and other cattle will continue to graze.
It is anticipated that this type of transaction would occur in late 2000 or early 2001. As a third element, the Company will divest itself of its 30,000 head stocker herd by the end of 2001.
“This disposition of our cattle, feedlot and stocker herd will provide a substantial amount of working capital for debt reduction and reinvestment in the Company’s real estate program. In addition, this divestiture will substantially improve Tejon’s balance sheet,” said Company CFO Allen E. Lyda. Lyda noted that the identification of potential purchasers and negotiation of the asset sale and grazing lease transaction will occur over the coming two or three months.
Stine noted that while cattle and sheep have grazed on Tejon Ranch since the 1840s, the Ranch has alternated between being a livestock owner and landlord. “Whoever owns and grazes the cattle, we will insist that they continue to be a good steward of our rangeland and manage grazing operations to our standards,” Stine said.
“This is the appropriate time for the Company to phase out of the commodity aspect of the cattle business and be a grazing lessor. The prospective acquirer of the operation will also have to be flexible in coordinating with our real estate and resource management operations to insure that these changes will not affect the superior environmental quality of our Ranch lands. A likely bidder is anticipated to be Tejon Ranch’s livestock division management.
Neither Stine nor Lyda would make any immediate comments on the value of the transaction due to pending negotiations.
This release includes forward-looking statements that are subject to many uncertainties and may turn out not to be accurate. These forward-looking statements are subject to factors beyond the control of Tejon Ranch Company, including market forces and the ability to obtain government permits. No assurance can be given that actual future events will be consistent with such forward-looking statements.