New era begins for Pacific Lumber – Timber company’s historic name will disappear under new owners; deal closes today
By Mike Geniella
Santa Rosa Press Democrat
July 30, 2008
New managers assumed control Tuesday of Pacific Lumber Co. headquarters in Scotia, marking an end to an epic bankruptcy battle over the fate of the North Coast’s oldest timber company.
“We’re excited, and ready to go to work,” said Sandy Dean, chairman of Mendocino Redwood Co.
Ukiah-based Mendocino Redwood assumed control of Pacific Lumber’s 210,000 acres of southern Humboldt County timberlands and its milling complex in Scotia. Partner Marathon Structured Finance, an East Coast hedge fund, now owns the company town of Scotia, a co-generation power plant, and industrial parcels in Fortuna and Carlotta.
Dean said the $530 million deal should be wrapped up today, ending 18 months of uncertainty for a once-proud but bankrupt timber company burdened with more than $700 million in bonded debt.
Holdout lenders finally surrendered Tuesday to Mendocino Redwood and Marathon after a federal court refused for a second time to block the contentious deal. Lenders, led by the Bank of New York Mellon Trust, faced contempt charges in a federal bankruptcy court in Texas if they had refused to sign court-approved documents transferring ownership to the new partnership.
The new partnership is eager to move ahead after an arduous eight-month bankruptcy court struggle, Dean said.
“We will bring forestry practices that have helped make our Mendocino County operations successful,” he said.
The company, owned by San Francisco heirs to The Gap clothing chain fortune, 10 years ago acquired 225,000 acres of Mendocino County timberlands and a Ukiah sawmill. Mendocino Redwood practices have since won praise from local environmental groups, state and federal regulators and lawmakers.
The new owners seek an end to 23 years of political, economic and environmental strife over the logging practices of Texas financier Charles Hurwitz, Pacific Lumber’s former owner.
Hurwitz’s Maxxam Inc. seized Pacific Lumber in a surprise 1980s takeover, and then quickly accelerated the pace of logging in an attempt to meet annual interest-only payments on $850 million in junk bond debt.
The Hurwitz era was marked by widespread environmental protests over accelerated timber cutting, an economic roller coaster ride for Scotia and surrounding communities. The discord tainted the reputation of a once aristocratic company touted for its conservative timber-cutting practices.
Before Hurwitz, Pacific Lumber for decades had worked with Save the Redwoods League and other conservation groups to preserve thousands of acres of ancient groves of redwoods in a string of state and federal parks along the North Coast.
Pacific Lumber’s darkened reputation is behind a planned name change to Humboldt Redwood Co. The move is lamented but seen as necessary by the new owners and longtime company supporters.
“We appreciate and respect the historic importance of Pacific Lumber Co. and its role in theÃcommunity, but the business has experienced some tough years,” Dean said.
Warren Murphy, member of a family that for nearly a century either owned or managed Pacific Lumber before the Hurwitz takeover, said Tuesday he feels like the company is “starting over again.”
Murphy, a Sonoma County resident, said it was painful to watch Pacific Lumber plunge into bankruptcy.
“That was hard to take,” said Murphy, who along with other family members tried to fight the Hurwitz takeover.
Bill Bertain, a Eureka lawyer and Scotia native who aided in those efforts, said he too is saddened the name Pacific Lumber will be no more.
“It caps a tragic saga of immense importance to our region,” Bertain said.Posted in PALCO | Tagged HRC, MRC |