Hedge fund wants Spokane's Clearwater Paper sold in parts

Hedge fund titan Steven A. Cohen wants the board of Clearwater Paper to separate the Spokane-based company's consumer products from its pulp and paper operations so either or both can be sold off, according to a regulatory filing Friday.

Cohen's SAC Capital Advisors met with Clearwater's directors Thursday to urge they split the company and "pursue the divestiture of one or both businesses to one or more strategic and/or financial buyers," the SAC filing says.

The fund also proposed hiring an investment bank to identify potential buyers, and expanding the six-member board with two new independent directors.

SAC -- among the biggest and most successful hedge funds -- owns 1.6 million shares, or 7.1 percent, of Clearwater's stock.

Clearwater calls itself the largest producer of tissue paper for private-label brands sold by grocery, drug, mass merchants and discount stores, and is a leading producer of bleached paperboard used in food packaging and commercial printing. It has 15 manufacturing plants in the U.S. and Canada, and reported second-quarter net income of $21.5 million on sales of $473 million.

The company, created in 2008 as a spinoff of the non-timber operations of Potlatch, has 3,700 employees.

SAC first disclosed in May that it owns more than 5 percent of Clearwater. It sent company chairman and CEO Gordon Jones a letter calling the stock "deeply undervalued by the public markets." The hedge fund outlined its calculations for why the two parts of Clearwater could be sold separately for a total of $1.07 to $1.66 billion, or 37 percent to 112 percent more than the company traded for at the time.

The company's stock has climbed about 11 percent since then, giving it a market capitalization of $849 million. In midday trading Monday the shares were essentially flat after gaining 2 percent at the open.

Seattle Times business staff