Editorial: The PALCO bankruptcy – MRC offers the solution
April 2, 2008
Next Tuesday, in a courtroom in Corpus Christi, Texas, competing plans will be presented for a post-bankruptcy future for the Pacific Lumber Company and its related firms.
Three of these plans were devised by PALCO itself and, if none of them are chosen by the court, Maxxam will remain in the picture. The Texas takeover company that acquired PALCO 22 years ago has since taken it from having no debt, all the way to bankruptcy. During those years, it has been mired in controversy and contention over the accelerated logging it initiated soon after it acquired PALCO.
A second contender, the Indenture Trustee Plan, has secured the services of former Gov. Pete Wilson to be its leader and spokesman. It represents the holders of $800 million worth of notes secured by PALCO’s timberlands. This plan seeks to get control of those timberlands. If the noteholders succeed, it is probable they will dispose of the lands to the highest bidders. If so, there goes the integrity of those lands. They could be sold off and logged by several companies. Also, the Indenture Trustee Plan does not address the future of PALCO, its sawmill or, for that matter, the town of Scotia. If it prevails in court, we see the ultimate liquidation of PALCO and the loss if its jobs.
The third contender, which will be the first to present its case to U.S. bankruptcy judge Richard Schmidt, is the Mendocino Lumber Company-Marathon Structure Finance Fund plan (MRC for short). MRC, owned by the Fisher family of San Francisco (of Gap stores fame) took former Louisiana-Pacific timberlands in Mendocino County and managed them to the high certification standards set by the Forest Stewardship Council. They promise the same approach for PALCO timberland. Their aim is a long-term sustainable future for PALCO. They plan to keep the sawmill operating and to keep its 250 employees. They will also invest nearly $8 million in mill improvements and have put forward the idea of selling mill workers their Scotia homes.
PALCO’s unsecured creditors have endorsed the MRC plan. We recognize that the noteholders have a lot of money on the table. Nevertheless, the judge, when he weighs all the factors, will be taking into consideration the effect of his decision on the livelihood of those who work at PALCO, the economy of Humboldt County and a petitioner’s commitment to the integrity of the environment. We hope he chooses the MRC plan.Posted in PALCO | Tagged HRC, MRC |