Rayonier (NYSE:RYN) today announced pricing of the offering by its wholly owned subsidiary, Rayonier TRS Holdings Inc. ("TRS"), of $150 million aggregate principal amount of senior exchangeable notes due 2015 through an offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The notes will bear interest at a rate of 4.50% per year. The notes will be fully and unconditionally guaranteed by Rayonier Inc. ("Rayonier"). The sale of the notes to the initial purchasers is expected to close on August 12, 2009. The notes will be exchangeable into shares of common stock of Rayonier under certain circumstances based on an initial exchange rate of 19.9055 shares per $1,000 principal amount of notes, which is equal to an exchange price of approximately $50.24 per share. The initial exchange price represents a premium of approximately 22.5% relative to the last reported sale price of Rayonier's common shares on the New York Stock Exchange on August 6, 2009. Upon exchange, holders of notes will receive cash up to the principal amount, and any excess exchange value will be delivered, at Rayonier's election, in cash or Rayonier's common shares. TRS also granted the initial purchasers a 13-day option to purchase up to an additional $22.5 million aggregate principal amount of notes.

TRS will use a portion of the net proceeds of the offering to repay a portion of the indebtedness outstanding under its credit facility, repay a portion of an installment note due December 31, 2009 and make a distribution, in one or more dividend transactions, to Rayonier. TRS also intends to use a portion of the net proceeds from the offering for the cost of the exchangeable note hedge transactions that TRS entered into with affiliates of the initial purchasers of the notes. The exchangeable note hedge transactions are intended to limit exposure to potential dilution to Rayonier shareholders from noteholders who could exchange the notes for Rayonier common shares.

Rayonier intends to apply the proceeds from the dividend distribution it will receive from TRS, together with the proceeds of the warrant sale transactions Rayonier entered into (as set forth below) and cash on hand, to repay the remaining amount of the installment note due December 31, 2009 to an unrelated third party.