Another Last-Minute Bidder Emerges For Pacific Lumber Land
By David McLaughlin
Dow Jones Newswires
May 2, 2008
Another bidder for more than 200,000 acres of California timberlands potentially up for grabs in Pacific Lumber Co.’s bankruptcy case stepped forward on Friday, one day after Harvard University said it’s eyeing the land.
Neal Wolf, a lawyer for an unnamed bidder, said his client owns more than 1.3 million acres of timberland in four states and is preparing an offer of up to $590 million for the Pacific Lumber tract.
“We are for real,” Wolf told Judge Richard Schmidt of the U.S. Bankruptcy Court in Corpus Christi, Texas, during a Friday hearing. “We are genuinely interested in making a bid. We are putting that bid together as we speak, and we’d like the opportunity to present it to this court.”
In an interview after the hearing, Wolf declined to provide any details about his client. He told Schmidt his client is an “entity” that owns timberland in Maine, Louisiana, Arkansas and Texas worth $1.8 billion.
News of the bid came after Harvard University’s $35 billion endowment, the country’s largest, said in court Thursday that it wants to take control of Pacific Lumber with a bankruptcy plan that is similar to one that hedge fund Marathon Asset Management has offered.
Schmidt, the bankruptcy judge, is overseeing a hearing to confirm a bankruptcy plan for Pacific Lumber and its subsidiary Scotia Pacific, which owns more than 200,000 acres of timberlands in Humboldt County, Calif.
The outcome of the case will come down to one of two competing plans: one offered by Marathon and California logging company Mendocino Redwood Co. and another from Scotia Pacific’s bondholders.
Marathon and Mendocino have offered to pump new money into the company and take control of the timberlands and the mill operation. Harvard said it has negotiated a similar arrangement with lumber company Sierra Pacific Industries in Redding, Calif.
Bondholders, whose notes are secured by the timberlands, oppose the Marathon plan because it doesn’t pay them the full amount of what they’re owed, about $740 million as of January 2007. They’re calling for an auction of the land. Wolf’s client would only be able to bid if Schmidt approves an auction. Another possible bidder is Beal Bank of Plano, Texas.
Expert testimony in the confirmation hearing wrapped up Friday, and closing arguments are scheduled to take place in two weeks.
A key element in the dispute between Marathon and the bondholders is the value of Scotia Pacific’s land. Marathon and Mendocino are pushing for the lowest value to keep the payout to bondholders down. They have offered bondholders $530 million in cash, up from an earlier offer of $500 million in cash and new notes.
Schmidt said he is worried about the “plethora” of experts who testified about the value of the timberlands during the hearing.
“So how do I get certain about the value of their assets?” he said. “Maybe that’s just the bid decision that courts are faced with doing. But I think there has been a movement, lately at least, to the position that value is not supposed to be what some court just somehow looks at and decides because of all these experts. It’s supposed to be tested.”Posted in PALCO | Tagged HRC, MRC |