Redwood Reader

125. PL gets Loan, Shuts Fortuna Mill
I read this yesterday and wrote an article but my computer shut down the program and didn’t save it. I thought they were looking pretty good since it looked like they would have regular revenue to help with the debt. I was appalled at the prospect for Maxxam not helping its subsidiary out through rough times. It is one thing on a failing operation but 200,000 acres of timber is going nowhere. The main problems are environmental damage due to ignorance, and we are fixing that. Not only should it loosen restrictions on their own land, it should help get some fuel reduction and TSI logs off federal lands, over protected due to obvious mismanagement on the ground in the past. Palco should take the local lead in finding carbon markets for idled lands, and go to select cuts with minimal floor damage. Less logging means more fire protection and TSI jobs, not less. Another good opportunity is to shift some roaded lands to user fee recreation, especially for orv’s, horses and mountain bikes who would appreciate good access, conditions and opportunities to ride while not damaging Park or other preserved functioning forest lands. We point out timber is historically a cyclic industry with off seasons and bad times.
Lastly, there is a world of intellectual property waiting exploitation for glomalin studies and outreach in order to rewrite regulations, and a crying need for the innovative style of previous generations of timbermen, to whom no problem was too big or unsolvable.

Palco nets $65 million loan
By John Driscoll The Times-Standard 4/26/05
The Pacific Lumber Co. has struck a deal with two lenders to bail it out of a Bank of America loan it defaulted on, the company reported to the U.S. Securities and Exchange Commission last week.
The restructuring comes through a five-year $30 million loan from the CIT Group/Business Credit Inc., and a five-year $35 million secured loan with Credit Suisse First Boston. Nearly $11 million went to pay off its revolving credit facility with Bank of America.
Whether Palco's new liquidity could be funneled to Scotia Pacific -- a Maxxam Inc. subsidiary that holds 220,000 acres secured by $750 million in timber notes -- is unknown. But Matt Wirz, with the distressed debt news service Debtwire, quoted a Maxxam official as saying it's highly unlikely.
Kent Friedman, Maxxam board vice chairman, said, "I'd be surprised if Maxxam did that as I can't remember the last time I've seen it put money into a subsidiary."
Also in the April 20 Debtwire story, Friedman said no decision has been made as to how Scotia Pacific will pay $9 million of a total $27 million it owes on its $750 million debt in July, though negotiations with bondholders are likely to step up. With continuing revenues, the company may owe only $4 million in July, Wirz said.
Palco did not return the Times-Standard's phone call.
Wirz said that while some investors would like to see Palco go bankrupt and taken out of Maxxam's hands, he doubts Maxxam would fail to make the July payment and back away from a company that could still make money.
"Four million dollars is not a good reason to go bankrupt," he said.

Palco to shut Fortuna mill
By John Driscoll The Times-Standard
Wednesday, April 27, 2005 -
The Pacific Lumber Co. will close its Fortuna mill at the end of June, saying an unpredictable log supply won't allow it to keep all three of its mills running.
One hundred and one employees were given 60-day notice of the action, some of whom will get a shot at a job at Palco's expanding Scotia mill. It should be in operation this summer.
"The decision to close the Fortuna mill comes after one of the most difficult seven months in the company's history," said Palco President and CEO Robert Manne in a press release.
About 20 new positions are expected to be open at the Scotia mill this summer, a number that could go up with a more stable log supply, said Palco Vice President Dennis Wood.
Wood said that it was anticipated that someday the Fortuna mill property might be sold and made into a retail mall, but that the process for approval of the project was likely to take years. In the meantime, Palco expected to operate the mill.
"There's no connection between the two issues," he said.
The company has been talking with a Sacramento developer interested in building a shopping center at the site for two years and the 75-acre property is in escrow to be sold to FHK Cos.
Developer Fred Katz said when he first contacted Palco, the company said it had been considering moving the operation to Scotia. He said zoning, general plan amendments and design review still await the potential development, which is at least three years off.
The layoffs come after state water quality regulators decided not to hear Palco's request for reconsidering an earlier decision that refused to over turn a decision by the regional water board.
The State Water Resources Control Board wrote on Monday that none of its members has requested an emergency hearing be held on the decision to uphold the North Coast Regional Water Quality Control Board's limiting the logging Palco wanted to do this spring in Freshwater and Elk River to 75 percent. The state board said it was committed to expedite the matter and hear it in June.
Wood said the approval of those plans still represents a major chunk of the logs it needs, and that, in general, timely approval of timber plans by all agencies is critical.
Last spring, Palco began moving its Carlotta mill's equipment to Scotia, giving 119 employees notice. In January, Palco laid off 38 employees from Fortuna and reassigned 11 others.
Palco unveiled its new $30 million efficient Scotia mill last fall, months after it fired up a new $5 million planer.