At the Open Innovation Summit last week in Orlando, there were a number of companies there discussing their various initiatives for open innovation. What is open innovation? UC Berkeley professor Henry Chesbrough, perhaps the father of the movement, formulated this definition several years ago:

Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology.

At the Summit, several companies expressed their growth related to and/or impact of open innovation:

Cisco: Cisco’s internally generated growth is at 5%. Its partner-based growth is 10%. #ois09

Clorox: Clorox target for growth from innovation is 4%. Last few years around 2.5% to 3.5% = significant portion of growth. #ois09

Royal Dutch Shell: Conser: About 40% of projects in Shell’s R&D program come from GameChanger. #ois09 [GameChanger is its open innovation program]

Rockwell Collins: Aggarwal: 75% of firms expect 40% of innovation to come from external sources by 2012. #ois09

Hewlett Packard: McKinney: 60% of ideas generated internally. Via HP Garage. Use employee crowdsourcing to filter and refine these. #ois09

Given the way these companies described their open innovation efforts, I decided to check out their stock performance. Hat tip to Jackie Hutter for suggesting this idea.

The table below compares the 5-year performance of the companies presenting at the Open Innovation Summit against the S&P 500:

It’s not a clean sweep, but most of the companies have outperformed the S&P 500 handily the past five years. While it’s not all due to initiating open innovation, it appears that you can’t rule out its influence on company performance.

Here’s how industry consultant Stefan Lindegaard describes the open innovation landscape:

I also argued that only about 10% of all companies are adept enough at open innovation to get significant benefits today. Another 30% have seen the light and are scrambling to make open innovation work and provide results that are worth the bother. I call them contenders.

The other 60% are pretenders—companies that don’t really know what open innovation is and why or how it could be relevant for them.

Looking for growth ideas? See what the firms in this open innovators stock index are doing right.

TechDex (apps|provider|hardware|var)

Central Business District

Shiftwise – Harrison Square | 1800 SW First Ave | 6,988 SF

Westside

Arrow Electronics – Creekside 6 | 8905 SW Nimbus | 5,952 SF

HealthDex (hospital/provider|managed care|equipment)

Vancouver

Interdent – First Place Plaza | 12503 SE Mill Plain Blvd | 3,221 SF

Kurt Davis, DPM – Two River Place | 2415 SE 165th Ave | 1,917 SF

GeneralBizDex (consulting|finance|insurance|legal|other)

Vancouver

Sage Harbor IRA Investments – 4200 SE Columbia Way | 2,500 SF

Weyerhaeuser NR Company – Thurston 500 | 4317 NE Thurston Way | 9,056 SF

Central Business District

Holland & Knight – US Bancorp Tower | 111 SW Fifth Ave | 18,240 SF extension

Eastside

Chicago Title – Two Town Center | 10135 SE Sunnyside | 11,012 SF renewal

NonProfDex (charitable|education|trade assoc)

Eastside

Concorde Career College – Lloyd Plaza | 1425 NE Irving | 825 SF expansion

This past Wednesday I had the rare opportunity to ride along with the crew of the Weyerhaeuser Landfill Train that runs out of Longview, WA. Ed, Steve and Harvey were super friendly and the experience was fantastic! The line is very scenic and runs through the middle of nowhere and is mostly inaccessable except by rail. Thanks to Zach and the crew for arranging this fun ride.

Once again I’m shooting another really cool event. For the next couple of weeks I’ll be shooting the U.S. Open Swimming championships in Federal Way, WA. There’s a lot going on, events going all day, some of them quick and others, like the 1500m freestyle, that take forever.

I’ve often found it quite ironic that as I’d end up shooting so many different sporting events when I’ve never really been a sports person. Sure, I played soccer as a kid and later on in life I was drafted by the roller hockey team some of my co-workers had formed when I worked at The Mac Zone. I’d never even watched a hockey game, but when they found I was was born in Canada they decided that Hockey was in my blood and I should be the goalie. Other than that my interest in sports has been pretty minimal since Magic Johnson left the Lakers.

How is it then that I ended up spending so much of my time shooting sports? Some 15 years ago I was hired by a medical device company to travel around the country taking photos of their products in various hospitals and I was thrilled to finally be making money doing something that I love. When I got back from that trip I started contacting all the local newspapers until finally I badgered the editor at the Federal Way News enough that they finally gave me a couple of assignments and I kept after them until finally the sports editor started giving me regular work. I was so excited to be doing the work that it didn’t matter a bit to me what I was taking pictures of, I was being paid to take pictures and they were being published in a newspaper! I did this as a sideline along with my day job for a few years until I finally decided I’d had enough of the day job and quit without any real plan other than I knew that I wanted to take pictures for a living.

It took a few months, but I finally got in touch with a company that specializes in sports photography and since that was what I’d been doing with the paper I thought it was a good match. I started doing contract work for them 7 years ago now and I still love it. While I’ve never really been into professional sports, at least not since I spent my youth watching Lakers games with my dad, I do really love getting to go to all the high school tournaments. I also get to travel quite a bit and see a lot of places I’d never get to see otherwise.

‘A/C Condenser’ defined: The outside fan unit of an air conditioning system that removes heat from freon gas and converts the gas back into a liquid, then pumps the liquid to a furnace coil. (Source: www.homebuildingmanual.com)

Construction industry hard fact: High temperatures have led Weyerhaeuser to temporarily halt timber land operations. (Source: The Columbian)

Construction industry fun fact: Studies show that humor helps workers with productivity and stress management. (Source: FoundationSoft.com)

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America’s web-based construction printshop. Click here to save money on printing!

Blueprint Bytes content created by Charity Thompson, Write It Communications.

First published Oct. 6, 2008

Quick, which publicly traded Seattle financial services giant ceased to exist in September leaving a whole lot of smiling, happy shareholders in its wake? That would be Safeco. Liberty Mutual Group completed its $68.25-a-share purchase of Safeco on Sept. 22. The share price closed that day at $68.21, up 25 percent from its price on Jan. 2.

The example goes to show that even amidst some severe market turmoil, there are still companies doing well, and still stocks that make sense for investors. That seems particularly true here in Washington, where our self-styled CEO Washington Index* – which tracks the stock of 20 of the state’s largest companies – out-performed the Dow, the S&P 500 and the Nasdaq composites for the quarter, and year-to-date. Our index is down 13 percent for the year, but slipped only 0.4 percent in the third quarter on some strong performances.

WaMu, of course, wasn’t one of the success stories. The New York Stock Exchange suspended trading of WM shares on Sept. 29, after the forced sale of WaMu’s core banking assets to JPMorgan Chase. WaMu still exists – at least an empty shell of a holding company – and the stock is now trading over-the-counter. It ended September at 8 cents a share, a 99.6 percent decline from the start of the year.

The other stock showing a serious decline: Expedia. Its shares are down 50.5 percent so far this year, and it fell nearly 18 percent in the third quarter, as investors moved away from industries that rely on shaky consumer spending, despite some up-beat analysis.

So where did the money go? A lot of it went to timber stocks. Plum Creek shares had a strong 10.6 percent gain for the quarter, and Potlatch increased a more-modest 2.8 percent. What’s the attraction? Dividends. In a volatile stock market, the big dividend payments guaranteed by Plum Creek and Potlatch’s status as Real Estate Investment Trusts are more attractive than ever. Weyerhaeuser isn’t a REIT – but it announced in September that it could make the switch in 2009. That news sparked a $5-a-share jump in the price, and helped WY finish the third quarter up more than 18 percent (although it’s still down 15 percent for the year).

The biggest upward movers, however, were two regional banks: Everett-based Frontier, which was up 58 percent for the quarter, and Sterling Financial of Spokane, up a whopping 250 percent. Both banks, it seems, benefited strongly from the Security and Exchange Commission’s temporary ban on short-selling. Both stocks have been heavily shorted this year, with between 10 and 20 percent of their outstanding shares tied up by investors betting the stock price would fall. The short-selling ban was set to expire Oct. 2, but the SEC last week was considering extending it further.

One more interesting stock to watch – TruBlue Inc., the Tacoma-based parent company of Labor Ready. Savvy watchers of the economy look to temporary services firms like TBI as an indicator of a rebound in the economy, as employers coming out of a downturn will add a temp worker rather than risk hiring someone permanent. TruBlue shares are up 22 percent year-to-date. That says to me that investors are loading up on shares in anticipation the company will win big whenever the economy finally turns.

* Our CEO Washington Index is comprised of what were the 12 largest companies in the state in 2007: (MSFT, WM, SBUX, COST, WY, PCAR, AMZN, JWN, EXPD, PCL, SAF and EXPE); plus the eight largest companies from outside King County (PCH, STSA, IN, AVA, ITRI, FTBK, TBI, ZUMZ). With the demise of WM, and the sale of SAF, we’ll have to change the line-up for the fourth quarter report.

First published Aug. 8, 2008

The housing market collapse has claimed another high-profile Northwest victim: Weyerhaeuser. The Federal Way-based timber stalwart announced it will lay off more than half its headquarters staff over the next 18 months, after posting a $96 million loss for the most-recent quarter.

Weyerhaeuser took a twofold hit: The national housing market collapse has dried up demand for lumber – the company reported a 42-percent drop from last year’s second quarter – and it’s also hurting sales for the company’s real estate division, which includes  Quadrant Homes, Washington’s biggest home builder. Revenue for the real estate division – which includes Los Angeles-based Pardee Homes, plus units in Arizona, Texas and Virginia – fell sharply, with sales of single-family homes dropping to $346 million from $495 million. Sales volumes fell 18 percent, average sale prices were down 14 percent, and buyer traffic was off 40 percent across the division.

The state of the Seattle area’s real estate market is a topic that’s been clogging up the blogosphere. My take is based mainly on reports from the Washington Center for Real Estate Research, which suggests serious softening in the market (sales off 32 percent year-over-year), but with some pockets of strength (demand for condos is good in King County; same with homes in neighborhoods close to employment centers). Still, foreclosures are up (as predicted).

Likewise, the employment outlook could be described as soft, with pockets of strength.

The Weyerhaeuser layoffs won’t take place all at once, but they will hurt a King County job market that had been quite strong, before the recent jolts of corporate headquarters layoffs at Washington Mutual and Starbucks. (See this week’s “By the Numbers” report.)

Overall, King County outperformed the state as a whole in June, creating 26,700 jobs over the past year (2.2 percent growth), with a gain of 7,200 between May and June.

Crucially, the software industry continues to expand. The most-recent monthly jobs report showed King County software companies added 2,300 employees over the past year, growth of 5.5 percent. As I note elsewhere this week, these are very high-paying jobs – averaging just under $100,000 a year. The hiring should continue: A separate state jobs report showed there were nearly 1,000 openings for software engineers this spring. As long as Microsoft continues to ramp up to compete with Google – with deals like last year’s aQuantive purchase – this sector will boost the local economy.

Retail activity is growing at a much slower pace, however, with countywide sales up a slim 2.8 percent. As we noted last month, there’s a wide range of variance between sales in the different cities. (On the east side of Lake Washington, for example, Redmond was up 12 percent, while Kirkland was down 13 percent.)

It will be interesting to see what effect the newly renovated Southcenter Mall stores will have in the months ahead. New fashion-forward retailers should attract shoppers. On the flip side, the stagnant retail picture in Bellevue – sales up a scant 1.3 percent, and some high-profile projects on hold – has got to be disconcerting to developers of The Bravern, the ultra-high-end retail project set to open next March, with Neiman Marcus as the anchor tenant.

Originally published July 27, 2008

“Drive till you qualify,” real estate agents used to say – reflecting the notion that home buyers can just keep moving farther out in the suburbs until they find a home they can afford. But with gas at $4.30 a gallon, can this concept really survive?  

We’re starting to see the answers down in Cowlitz County, where sales of homes in the bedroom town of Woodland seem to be tanking. Woodland’s about 30 miles north of Portland – a reasonable commute – and since 2000, it’s been Cowlitz’s fastest-growing city, growing by 26.5 percent (to 4,760 people). The overwhelming majority of the newcomers commute into Portland and Vancouver.

But now, no one wants to drive out to buy those big 3,000-square-foot homes. Sellers are settling for $300,000 on houses that use to fetch $500,000. Woodland city tax revenues have fallen along with the market. As a result, the city’s planning layoffs.

It’s just more bad news for Cowlitz County, which already had plenty. (You know things are bad when thieves try to steal copper wire in broad daylight.)

The data confirms it – the Cowlitz housing market is soft. A recent report showed a one-month up-tick, but don’t be fooled: home sales were down 39 percent, in the most-recent quarter, and new building permits were down 13 percent. Median home prices inched up 1.1 percent to $180,500.

The job market is worse. Cowlitz County had an annual loss of 900 jobs in the most-recent state unemployment report, a drop of 2.3 percent. Traditional industries – sawmills and paper making – are shedding workers: sawmill employment was down almost 23 percent over the year (300 jobs); paper mill employment was down about 15 percent, or 400 jobs. Construction and logging lost a combined 500 people – a 15 percent decline.

The unemployed will have a hard time. A separate state jobs report says only 10.5 percent of the roughly 4,000 open jobs in southwest Washington this spring had pay comparable to or better than the state average wage of $850 a week. (The report included Clark, Cowlitz and Wahkiakum counties.) Even those who have secure jobs are feeling some pain – average pay for Cowlitz County workers increased by only 2.8 percent in the most-recent 12-month period. That’s not even half the current rate of inflation. 

Given all that, Cowlitz County consumers are cutting corners. The new state taxable retail sales report shows that retail activity fell 3.3 percent countywide in the first quarter of this year; Longview (3.2 percent) and Kelso (2.9 percent) had comparable declines.  

There’s been a little good news: a big new warehouse has opened; Weyerhaeuser is starting up a new sawmill and recalling some of its recently laid-off workers; backers of a proposed $100 million ethanol plant say the project is merely stalled, not sunk for good.

But most of Cowlitz County’s recent growth has been driven by commuters moving north in search of bigger, cheaper homes. Without those commuters, and with continued weakness in the traditional local resource industries, then the county will struggle greatly in the months ahead.

First published July 7, 2008

Stock prices for Washington’s largest companies stabilized during the second quarter, following sharp drops to start the year.

Our self-styled CEO Washington Index* of 20 leading companies slipped 0.6 percent during the quarter – beating the S&P 500 (down 3.2 percent), Dow Jones industrials (down 7.4) and New York Stock Exchange composite (down 1.6) indices in the process.

Thank Liberty Mutual for a big part of that. The Boston life insurer’s April announcement of plans to purchase Seattle-based Safeco for $68.25 a share, sent the price of SAF soaring. Safeco closed the quarter at $67.16, a jump of 54 percent for the period.

That off-set some brutal losses in the banking sector. We all know about Washington Mutual, which has been battered by the credit crunch and finished the quarter at $4.93 a share, down 52 percent. But regional bank Sterling Financial of Spokane was crushed after warning investors that some of its borrowers were running out of cash. Its shares fell 72 percent during the quarter, down to $4.14. Everett-based Frontier Financial also took a dive in June after slashing its dividend by two-thirds and warning it too is facing significant increases in delinquent loans. Its shares fell 51 percent, to $8.52.

Still, some Washington companies posted strong gains during the period, with all three of the best performers being based in Spokane.

Shares in Spokane-based Potlatch climbed 10.6 percent to $45.12. In April, Potlatch reported a return to profitability in the first quarter, earning $10.3 million after a loss of $29.8 million in the year-ago quarter. Management also floated the idea of splitting the company in two, creating a tax-favored real estate investment trust to manage its timberlands, and a separate company to manufacture pulp and paper.

Spokane-based utility Avista also saw shares up 10.6 percent for the quarter, to $21.46.

Avista reported improved first-quarter profits, moved toward building its first wind farm, southeast of Spokane, and bought a management consulting company.

And Itron, the Spokane-based manufacturer, saw stocks climb 9 percent during the quarter, to $98.35. Last year’s purchase of rival Actaris Metering Systems makes Itron the global leader in building water, gas and power meters. As a result, Itron’s first-quarter numbers popped, with sales up 224 percent. Itron’s margin was an obscene 31 percent.

For the year so far, Safeco shares are up 25 percent, which leads the 20 companies in the index. Potlatch (up 4.8 percent), Everett-based Intermec (up 4.6), Costco (up 3.4), Itron (up 2.5) and Avista (up 2) are the only companies with stocks showing gains for the year.

The banks lead the decliners, with Sterling recording a devastating 74 percent drop since Jan. 2, WaMu’s down nearly 64 percent, and Frontier’s down 51. Among other falling stocks were Expedia (down 39 percent), Weyerhaeuser (down 27), Everett teen clothing retailer Zumiez (down 25), Amazon.com (down 24) and Microsoft (down 21).

Overall, the CEO index is down 11.9 percent for the year, which is right in line with the major indices.

*The index is comprised of the top 12 companies from Washington CEO’s 2007 list of the state’s largest publicly traded companies, plus the eight next-largest companies from outside King County: MSFT, WM, SBUX, COST, WY, PCAR, AMZN, JWN, EXPD, PCL, SAF and EXPE; plus PCH, STSA, IN, AVA, ITRI, FTBK, TBI and ZUMZ.

First published April 4, 2008

Amazing what gas at $3.50 a gallon will do. For starters, it might just be solving some of Puget Sound’s chronic traffic woes. My main traffic guru, KCPQ-TV’s Adam Gehrke, says he can’t swear to it, but it certainly seemed during February and March, that traffic on I-5 was lighter.

“One contributing factor is certainly the cost of gas,” says Gehrke (who is a wicked karaoke singer, by the way). “I definitely think folks are starting to change their driving habits.”

High prices for petroleum-based fuel are also spurring a lot of research into alternatives.

Alternative energy is another one of those high-stakes games that’s hard for most investors to play. There aren’t many publicly traded companies, and while many of the private ones are eager for investment, you’ve got to be willing to risk a lot, says Rebecca Lovell at Seattle’s Alliance of Angels. Most angel investors are investing $10,000 or $15,000 – the companies really need about $10 million. It’s a high-risk field, she adds, and returns might be a decade away. “Capital intensive, time frame and high risk – it’s just not the space for angels.”

That said, there is an angel investment group – Northwest Energy Angels – that’s focused on the sector. And if you’ve got a couple million to play with, and you’d like to save the planet – with a shot at a healthy ROI – there are a lot of Washington companies into various forms of the alternative energy business, which at least some Northwest investors think will be a recession-proof play.

Imperium Renewables is one, known for its Grays Harbor biodiesel plant, its collaboration with Boeing and Virgin Atlantic on biofuels for jets – and for last winter’s surprising departure of CEO Martin Tobias, which was followed by a decision to withdraw a planned IPO.

And, recently, Infinia in the Tri-Cities also recently completed a $50 million financing package that will help it develop advanced solar-powered electrical generators.

Or the individual investor could invest in companies that touch on alternative fuels: like Weyerhaeuser, in a joint venture with Chevron to develop biofuel from wood waste (some pundits think that wood-waste technology has the potential to benefit many forest-product companies), or Florida Power & Light, which operates the huge Vansycle and Stateline wind farms near Walla Walla.

“The Pacific Northwest has a bright future in alternative fuel development,” Cascadia Capital CEO Michael Butler said in a report last month he co-wrote with some of his staff. “Despite several misguided stumbles, we are still believers and look forward to the revenue and profits that Biofuel 2.0 is certainly capable of generating.”

On March 3rd, ECOSS’s Executive Director Kevin joined Alex and me in Tacoma to be part of the Northwest Environmental Business Council’s (NEBC) conference on Managing Stormwater in Washington.

Held at the Hotel Murano, the conference was well attended and designed to address the current issues in construction and industrial stormwater management.

The opening panel in the morning was a controversial one, but an interesting way to kick start the conference. The panel was comprised of Ken Johnson from Weyerhaeuser, Josh Baldi from the Washington State Department of Ecology, Van Collins from the Associated General Contractors, and Sue Joerger from the Puget Soundkeeper Alliance. These stakeholders addressed the potential impacts of upcoming changes in stormwater regulation, representing a diverse spectrum of differing opinions on how to manage stormwater. Understanding the relationship between these parties made the tension in the room quite palpable.

The rest of the day was divided along two tracks, one for those interested in industrial stormwater and the other for people involved with the management of stormwater from construction sites.

There were several big take away points that I thought were important to address in this blog. Firstly, the copper and zinc benchmarks are going to be lowered drastically. Some of the numbers being thrown around were 14 ug/L and 63 ug/L respectively. This is a considerable change, which leads me to the second take away point addressed in the afternoon by Calvin Noling from StormwateRx . StomwateRx designs and installs industrial stormwater treatment and filtration systems, but during his presentation on pollution removal efficiency he declared that filtration systems alone will most likely not be sufficient to achieve the newly proposed copper and zinc benchmarks.

Finally, I wanted to address the overall content of the conference. Every single solution presented to manage stormwater was focused on dealing with water that had already been polluted. There was no discussion about prevention. All of the exhibitors were presenting highly engineered treatment devices, but there was no one there talking about how to keep stormwater from being polluted in the first place.

Americans have a habit of relying heavily on technological solutions to our problems. This alone is not the problem. However, what I am concerned about is we are talking exclusively about engineered technology as the solution to stormwater management. With drastically changing benchmarks, we are finding that technology alone cannot save us. We need to start thinking about stormwater in a more systemic way, relying less on technology to clean up our pollution and more on not polluting in the first place. Stormwater is as much an issue of source control and responsible purchasing as that of engineering and technological solutions.

-Todd Hunsdorfer

These past two weeks have been probably the most stressful weeks I’ve ever been through. About a month ago I was notified about an official position in my lab, with my exact job duties. Basically they are getting rid of my intern position and giving the production team another official tech. There was also a position for the other group that works in our lab, Germination Research. I am currently working with the production team so I applied that position. They told us that the research position and the production position would be interview together as a pool and they would pick from the pool. I then was giving a date for a phone interview on the 12th. It was weird. I have never been in a position where I can’t see the people asking the important questions. I guess I really like to be able to see if they think I’m complete idiot or not.

The phone interview was 30 minutes, 8 questions. I got through it in about 10 minutes. I must have done O.K. because I was then scheduled an in person interview on the 17th. Yeah, I was freaking out with nervousness. I have to say that I didn’t think the interview went that bad. My answers had a little more substance to them as to take up more time. Then next day we had a “meet and greet” and program overview. They served us lunch and went over the basic idea of the project. Then, they brought in everyone from the lab. The people that I know and work with. This was the worst part of the whole experience. I didn’t want to be that person who was “buddy-buddy” with everyone in the room, making the other candidates feel awkward so I just hung back and watched everyone interact awkwardly. Then I had to leave the room so they could all give their input about the candidates. After that point I couldn’t really be nervous anymore. It was out of my control and all I could do is wait.

Then, that night at about 6pm my phone rang. It was my boss who had called to let me know that I was the best candidate for the Production position and the job was mine. So as of December 15th, 2008 I will be an official Weyerhaeuser employee with full benefits and about $35K a year. Not too shabby for a first job. Looks like my hard work paid off. Go me!

- 1 -
The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes
no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any
loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
DISCLOSEABLE TRANSACTION
On 15 October 2008, the Vendor and the Purchaser entered into the Agreement whereby the
Vendor agreed, inter alia, to transfer the Sale Shares to the Purchaser for an aggregate
consideration of HK$200 million.
The Transaction constitutes a discloseable transaction for the Company under Rule 14.06 of the
Listing Rules. A circular containing details of the Transaction will be despatched to the
Shareholders as soon as practicable.
Terms of the Agreement
Date: 15 October 2008
Parties: (i) the Vendor, an indirect wholly-owned subsidiary of the
Company.
(ii) the Purchaser – to the best of the Directors’ knowledge,
information and belief having made all reasonable enquiries,
the Purchaser and its ultimate beneficial owners are third
parties independent of the Company and Connected Persons of
the Company.
Terms: The consideration for the Sale Shares shall be satisfied by the
Purchaser by way of a cash payment of HK$200 million and to be
satisfied as follows:-
(a) HK$20 million on Completion;
(b) HK$30 million by 31 December 2008;
(c) HK$30 million by 31 March 2009;
(d) HK$30 million by 30 June 2009;
(e) HK$30 million by 30 September 2009;
(f) HK$30 million by 31 December 2009; and
(g) HK$30 million by 31 March 2010.
- 2 -
Completion: Completion took place immediately after signing of the Agreement
on 15 October 2008. Title in and ownership of the Sale Shares
transferred on Completion. USLM and HKLM are no longer
subsidiaries of the Company immediately after Completion.
INFORMATION ON USLM AND HKLM
USLM and HKLM are companies established in Colorado, the United States of America and
were both indirect wholly-owned subsidiaries of the Company immediately prior to
Completion. Both companies were mainly engaged in the manufacture of paper pulp outside
China and the Asian region.
REASONS OF AND BENEFITS FOR THE TRANSACTION
The Transaction provides a good opportunity to enable the Group to dispose of its interests in
USLM and HKLM for cash so as to allow the Group to pursue its principal business in China
with better return. Upon completion of the disposal of interests in USLM and HKLM, the
Group will continue to focus on its principal businesses in China. The sale proceeds to be
received create additional financial resources for the Group and will be used as working
capital to support further development of the Group’s principal businesses in China. There are
no restrictions which apply to the subsequent sale of the Sale Shares.
Details of the net loss (before and after taxation and extraordinary items) attributable to the
Sale Shares for the two financial years ending 31 March 2008 immediately preceding the
transaction are approximately:
2008 2007
Before taxation and extraordinary items
HK$1 million HK$53 million
After taxation and extraordinary items HK$3 million HK$42 million
The unaudited net assets of the Sale Group as at 30 September 2008 was HK$199 million, the
estimated gain arising from the disposal of the Sale Shares is approximately HK$1million,
being the difference between the net asset value of the Sale Group and the consideration for
the Sale Shares of HK$200 million.
The consideration of the Transaction is based on the net book value of the assets of the Sale
Group and in view of the above, the Directors are of the view that the terms of the
Transaction are fair and reasonable and in the interests of the Shareholders as a whole.
GENERAL INFORMATION
The Group is a large-scale paper manufacturer and specializes in the production of
containerboard.
- 3 -
To the best of the knowledge, information and belief of the Vendor, after having made all
reasonable enquiries, the Purchaser is engaged in the business of paper manufacturing.
The Transaction constitutes a discloseable transaction for the Company under Rule 14.06 of
the Listing Rules. A circular containing details of the Transaction will be despatched to the
Shareholders as soon as practicable.
DEFINITIONS
The following terms are used in this announcement with the meanings set opposite them:-
“Agreement” the agreement dated 15 October 2008 entered into between
the Vendor and the Purchaser relating to the Transaction;
“Board” the board of directors of the Company;
“Company” Lee & Man Paper Manufacturing Limited, a company
incorporated the Cayman Islands, the shares of which are
listed on the Stock Exchange;
“Completion” completion of the Transaction under the Agreement;
“Connected Person(s)” the meaning ascribed thereto in the Listing Rules;
“Directors” the directors of the Company;
“Group” the Company and its subsidiaries (other than the Sale
Group);
“HKLM” HKLM Acquisition, Inc., a company established in
Colorado, the United States of America, and an indirect
wholly-owned subsidiary of the Company immediately
prior to Completion;
“Listing Rules” the Rules Governing the Listing of Securities on the Stock
Exchange;
“Purchaser”
“Sale Group”
Worthy Pick Group Limited, a company incorporated in
the British Virgin Islands;
USLM, HKLM and their subsidiaries;
“Sale Shares” 1,000 shares of par value of US$1.00 each in the capital of
USLM and 1,000 shares of par value US$1.00 each in the
capital of HKLM, representing the entire issued share
capital of USLM and HKLM respectively;
“Shareholders” shareholders of the Company;
14.60(2)
- 4 -
“Stock Exchange” The Stock Exchange of Hong Kong Limited;
“Transaction” the transfer of the Sale Shares as contemplated thereunder
in the Agreement;
“USLM” USLM Acquisition, Inc., a company established in
Colorado, the United States of America, and an indirect
wholly-owned subsidiary of the Company immediately
prior to Completion;
“Vendor” Deepfaith International Limited, an indirect wholly-owned
subsidiary of the Company;
“HK$” Hong Kong dollars; and
“US$” United States dollars.
By Order of the Board
Lee & Man Paper Manufacturing Limited
Lee Wan Keung Patrick
Chairman
Hong Kong, 16 October 2008
As at the date of this announcement, the board of directors of the Company comprises four executive directors,
namely Mr Lee Wan Keung Patrick, Mr Lee Man Chun Raymond, Mr Lee Man Bun, Mr Li King Wai, one nonexecutive
director, namely Professor Poon Chung Kwong and four independent non-executive directors, namely
Mr Wong Kai Tung Tony, Ms Law Kar Shui Elizabeth, Mr Peter A Davies and Mr Chau Shing Yim David.
* for identification purposes only

http://www.quamir.com/quamir/openfiledetail.action?articleId=987441

PUD pulls out of Cosi mill dealBy Leif Nesheim – The Daily World
Thursday, October 23, 2008 11:02 AM PDT

The Evergreen Pulp Mill deal is dead.

This morning the Grays Harbor PUD announced it has discontinued exclusive negotiations with Evergreen Pulp to purchase the Weyerhaeuser-owned mill’s powerhouse in Cosmopolis. The public utility district also won’t pursue the project as a stand-alone power generation facility.

The PUD entered into negotiations with Evergreen early this year to purchase the generation assets as part of a joint offer to buy the mill from the Weyerhaeuser Co. Evergreen would have bought and operated the mill, while the PUD would have purchased the powerhouse in a simultaneous deal with Evergreen.

“It is clear to the PUD that the deal with Evergreen is not moving forward and the likelihood that we would be able to successfully finalize a deal that would benefit rate payers has diminished,” PUD general manager Rick Lovely said.

Last week, Evergreen’s parent company, Hong Kong-based Lee & Man Paper Manufacturing, announced the sale of its U.S. assets, including Evergreen, which is based in northern California. The announcement came less than a week after Evergreen CEO David Tsang announced the closure of the company’s mill in Samoa, Calif.

Weyerhaeuser officials said this week that they are considering other options for the Cosmopolis Pulp Mill after Evergreen Pulp representatives missed a scheduled meeting Friday without explanation. Weyerhaeuser officials did not reply to messages left this morning by presstime.

Evergreen CEOs Tsang and Sam Wong also did not return calls this morning.

New cost estimates determined that it would be too expensive for the PUD to generate electricity at the mill without a partner using the mill, Lovely said.

more:  http://www.thedailyworld.com/articles/2008/10/23/local_news/02news.txt