Letter to the editor of the Times-Standard: Wilson misleading about MRC’s PALCO plan (author: Sandy Dean, Chairman of Mendocino Redwood Company)
April 3, 2008
On behalf of Mendocino Redwood Co. and also personally, I want to publicly thank all the unsecured creditors who voted for the MRC/Marathon plan.
I also want to express my strong thanks to each of the nearly 400 people who came to the meetings we held to talk about our plan for a reorganized Pacific Lumber Co. There remain some important questions to clarify.
Former Gov. Pete Wilson, in his recent My Word piece said: “Another critical issue for me concerning Marathon/MRC is their previously made claims about being the plan that best protects jobs in the region. Recently, Marathon has begun stepping away from this commitment. Just last week, the Times-Standard reported that MRC Chairman Sandy Dean now admits that their plan will cut Palco jobs at least by 100 employees — and I believe that number could be substantially higher.”
Here are the facts:
1. A reorganized Palco will be controlled and managed by MRC. Since our draft plan was first filed with the court in January, we have publicly talked about our expectation to run the Scotia sawmill one shift, as well as to run the fence line in Scotia and to maintain the forestry staff.
2. Our best estimate of employment associated with our plan is 240 to 250 positions. Marathon is expected to also require a number of positions for the Cogen plant and the town. All of these are estimates due to the difficulty of getting reliable information from Pacific Lumber Co.
3. Whatever Governor Wilson may assert, the success of the Scotia sawmill is a central element of our plan of reorganization (visit our Web site to get the history of the MRC plans, www.mrc.com).
4. The MRC plan offers the best long-term employment prospects for Humboldt County amongst the choices before the court.
Governor Wilson also said: “This plan also requires the unsecured creditors — largely the local mom-and-pop service and supply businesses — to accept less than full payment for money rightly owed to them.”
More important facts:
1. The MRC plan provides $10.6 million in cash for the existing identified unsecured creditors of both Palco and Scotia Pacific. The Official Committee of the Unsecured Creditors will administer this cash.
2. While creditors may receive less than 100 percent of their claims due to additional claims that may result from broken contracts and litigation, they will surely fare far better than Governor Wilson’s plan.
3. Governor Wilson’s plan provides $1.5 million in cash for only the unsecured creditors of Scotia Pacific, leaving the Palco unsecured creditors to fend for themselves in what we expect would most likely turn into a Chapter 7 liquidation. Of note, far more unsecured claims reside at Palco, which Governor Wilson ignores, than at Scotia Pacific.
4. After much study, the Official Committee of Unsecured Creditors has recommended for the MRC/Marathon plan, and a vote against the indenture trustee plan. I believe the committee carefully considered the merits of each plan in coming out with this public recommendation.
Governor Wilson is advocating for the narrow financial interests of bonds owned by hedge funds over the interests of Scotia mill employees, and the long-term health of the Palco lands and the public interest. That is his right. Let’s be clear, however: The MRC plan for Palco and Scotia Pacific is designed to address all the stakeholders in the Pacific Lumber Co./Scotia Pacific bankruptcy.
Sandy Dean is chairman of the Mendocino Redwood Co.Posted in PALCO | Tagged HRC, MRC |