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Thursday, September 29, 2005 By MIKE GENIELLA For the first time, Maxxam Inc. and investors who hold $700 million in timber notes sparred publicly Wednesday over the fate of Pacific Lumber Co.'s <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Humboldt County timberlands. Maxxam, the parent company of Pacific Lumber, halted talks this week with bondholders because of "insufficient progress" in a bid to reach an agreement to avoid bankruptcy. In response, investors outlined a plan to spin off a Pacific Lumber subsidiary, Scotia Pacific, that owns the company's 210,000 acres of timberlands. The land and volume of trees growing on it were used as collateral for $700 million in bonded debt issued on behalf of Pacific Lumber. The revamped subsidiary would own and manage the timberlands independently of Pacific Lumber, and have the freedom to make its own harvesting decisions while selling logs on the open market. Pacific Lumber, which is largely dependent on Scotia Pacific logs, would be forced to compete with other timber companies for logs in order to keep its mills and wood product manufacturing plants going. Evan Blaschen, a New York attorney representing more than 80 percent of the note holders, said Wednesday that Scotia Pacific should have an independent board of directors and deal directly with regulatory agencies and environmental groups. "In the note holders' view, it reinforces our belief that we need to create a new (Scotia Pacific) that is independent of Pacific Lumber's influence," Blaschen said. Pacific Lumber and representatives of its corporate parent, Houston-based Maxxam, have been hoping to refinance the $700 million debt and avoid bankruptcy. Currently, the company is struggling to make interest-only payments on the debt ranging from $50 million to $60 million annually. Blaschen said note holders would not oppose a bankruptcy filing by Pacific Lumber, as long as an "independent" timberland company emerges from the process. Pacific Lumber representatives said Wednesday they would not comment on the latest twist in the company's financial struggles. Note holders took the unusual step of publicly responding Wednesday, one day after Pacific Lumber ended weeks of talks over how Scotia Pacific could satisfy note holders and stay in business. In a filing with federal securities regulators, Scotia Pacific said "insufficient progress" had been made in the negotiations with a committee of note holders. The company contended that less than 15 percent of the note holders were members of the committee. Committee members, represented by the powerhouse New York
City law firm of Bingham McCutchen, responded publicly to the announcement.
Bingham McCutchen is a national firm, with more than 850 lawyers in
11 offices nationwide, whose focus includes complex financial transactions
and high-stakes litigation. |
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