RELATED PARTIES

12 Months Ended

Dec. 31, 2019

Related Party Transactions [Abstract]

RELATED PARTIES

NOTE 8: RELATED PARTIES

This note provides details about our transactions with related parties. For the years presented, our material related parties have consisted of:

• variable interest entities and

• our Twin Creeks Venture.

VARIABLE INTEREST ENTITIES

From 2002 through 2004, we sold certain nonstrategic timberlands. As a result of these sales, buyer-sponsored and monetization variable interest entities, or special purpose entities (SPEs), were formed. We are the primary beneficiary and consolidate the assets and liabilities of the SPEs involved in these transactions.

The assets of the buyer-sponsored SPEs are financial investments which consist of bank guarantees. These bank guarantees are in turn backed by bank notes, which are the liabilities of the monetization SPEs. Interest earned from the financial investments within the buyer-sponsored SPEs is used to pay interest accrued on the corresponding monetization SPE’s note.

We have an equity interest in the monetization SPEs, but no ownership interest in the buyer-sponsored SPEs. The following disclosures refer to assets of buyer-sponsored SPEs and liabilities of monetization SPEs. However, because these SPEs are distinct legal entities:

• Assets of the SPEs are not available to satisfy our liabilities or obligations.

• Liabilities of the SPEs are not our liabilities or obligations.

During first quarter 2019, we received a $253 million payment from a buyer-sponsored SPE. As of December 31, 2019, we had an asset totaling $362 million related to one buyer-sponsored SPE remaining on our Consolidated Balance Sheet. This asset matured and the related payment was received in January 2020.

We paid $302 million and $209 million related to liabilities from our monetized SPEs in third quarter 2019 and fourth quarter 2018, respectively. These payments were made upon maturity and there are no further obligations remaining.

Our Consolidated Statement of Operations includes:

• Interest income on buyer-sponsored SPE investments of:

– $22 million in 2019,

–  $34 million in 2018 and

–  $34 million in 2017.

• Interest expense on monetization SPE notes of:

– $12 million in 2019,

– $29 million in 2018 and

–  $29 million in 2017.

The weighted average interest rate on our buyer-sponsored SPEs was 5.5 percent during 2019 and 2018. The interest rate on the monetization SPE that matured in 2019 and the weighted average interest rate on our monetization SPEs during 2018 was 5.6 percent.

TWIN CREEKS VENTURE

Ownership Redemption, Agreement Termination and Sale Recognition

During October 2017, we redeemed our 21 percent ownership interest in the Twin Creeks Venture for $108 million in cash. We did not recognize a material gain or loss on the redemption of our ownership interest. The cash received was classified as a cash flow from investing activities on our Consolidated Statement of Cash Flows.

Effective December 31, 2017, we terminated the agreements under which we had managed the Twin Creeks timberlands. Following termination of these agreements, Weyerhaeuser has no further responsibilities or obligations related to the Twin Creeks Venture and our continuing involvement in the contributed timberlands ceased. In fourth quarter 2017, we recognized the sale of the original contribution of timberlands that occurred in April 2016.

Sale of Additional Timberlands to Twin Creeks

In conjunction with the redemption and termination discussed above, we also entered an agreement to sell 100,000 acres of Southern timberlands to Twin Creeks for $203 million. The sale, which included 80,000 acres of timberlands in Mississippi and 20,000 acres in Georgia, closed December 29, 2017. The sale resulted in a $99 million gain recognized during fourth quarter 2017.