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Contact: Karen Pickett, BACH: 510-548-3113 Maxxam Suspends Negotiations With bondholders . . . . But Barrels Ahead With Controversial Logging Plan in Endangered Marbled Murrelet Habitat Named "Bonanza" Humboldt County-Financial institutions holding Maxxam/Pacific Lumber subsidiary Scotia Pacific's (ScoPac) bonds responded yesterday to the suspension by ScoPac of negotiations over the distressed company in light of what ScoPac called "insufficient progress". Representatives of an "ad hoc committee" of bondholders agreed there is lack of progress, but they and the timber company differ on the reasons. ScoPac's characterization of insufficient progress refers to the bondholders reluctance to agree to terms proposed on Aug. 1, 2005 by ScoPac to receive 90% equity in a reorganized company plus issuance of $300 million in new debt securities. The bondholders, however, point to the difficulty in negotiating with ScoPac as if it were an independent entity capable of making business decisions about financial matters. In fact, ScoPac, the product of a Maxxam/Pacific Lumber 1998 corporate reorganization, has no corporate officers of its own in senior management positions, nor does it have a Board of Directors separate from Maxxam/PL. The 1998 reorganization separated ScoPac from PL on paper, saddling the timber owner ScoPac with the massive debt, standing in 2005 at over $700 million, little reduced from the junk bond-financed purchase in 1985. Maxxam subsidiary Pacific Lumber holds ownership of the mills and town of Scotia. While still managed by PL executives and Maxxam Board of Directors, the heavy debt would drive the timber harvest rate of ScoPac. Community leaders, economists and agency staff have long held that rate unsustainable. In fact, a 1986 study commissioned by Maxxam itself to assess asset liquidation feasibilities, predicted that more than doubling the rate of harvest, which they did, would put the company back to pre-1986 harvest levels after a 20-year "boom" cycle. That is where we have now arrived. The unsustainability of the harvest Maxxam was pursuing evidenced by the fact that in the decade 1987-1997, their rate of harvest-300 million board feet/year-was equivalent to a 20-year harvest cycle. Though the financially troubled Pacific Lumber/ScoPac has been predicting likely bankruptcy for nearly a year, over $ 724 million has flowed out of the timber region to parent company Maxxam in Houston without benefit coming back. When sale of assets and other dividends are considered, the figure is much higher. Dividends paid by Scotia Pacific to Maxxam and subsidiaries through 2002 total over $927 million. Meanwhile, start-up notice was filed for a logging plan
cynically named Bonanza (HUM-05-097) without the required waste discharge
permit from the Water Quality Control Board. 192 acres of the 250-acre
Timber Harvest Plan (THP) are occupied by the federally- and state-listed
Marbled Murrelet. The old growth redwood groves providing murrelet habitat
are known to biologists as the Nanning Creek Murrelet complex, in a
canyon between Nanning Creek and an un-named tributary which flows into
the Eel River. The Nanning Complex is the largest, contiguous, unprotected
occupied Murrelet stand left on PL land. Bay Area Coalition for Headwaters (BACH) 2530 San Pablo Ave. http://www.HeadwatersPreserve.org |
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