Pacific Lumber deal may be near – Financier Hurwitz expected to signal support for takeover
By Mike Geniella
The Press Democrat
May 1, 2008
Texas financier Charles Hurwitz today is expected to announce his support for the eventual takeover of Pacific Lumber Co. by Mendocino Redwood Co. and a New York-based asset management company.
The possible breakthrough could mark the beginning of the end to Hurwitz’ troubled two-decade ownership of Pacific Lumber, the 145-year-old aristocrat of the North Coast timber industry. But any agreement has to still satisfy a Texas federal bankruptcy judge’s demands for as many competing parties as possible to concur in a high-profile, billion-dollar bankruptcy case.
“We’re hopeful,” said Sandy Dean, chairman of Mendocino Redwood. The Ukiah-based company was formed a decade ago by members of San Francisco’s Fisher family, founders of Gap Inc., following its acquisition of more than 200,000 acres of Mendocino County timberlands.
Dean, who helped orchestrate that deal, said Wednesday that “very constructive” negotiations have occurred over the past 48 hours among representatives for Mendocino Redwood, Pacific Lumber debtor Marathon Structured Finance Fund, Hurwitz’s Maxxam Inc. and Pacific Lumber executives.
Dean, who was reached by telephone in Corpus Christi, Texas, declined, however, to discuss specifics of the draft agreement.
But a source close to the deal said it generally incorporates the proposed reorganization plan originally submitted to the federal court by Mendocino Redwoods and partner Marathon.
Under that plan, Mendocino and Marathon wanted to put up $500 million for Pacific Lumber’s 210,000 acres of Humboldt County timberlands, a Scotia milling complex and a power co-generation plant.
Mendocino would oversee logging and mill operations, while Marathon would manage the company town of 1,000 until current Pacific Lumber plans to subdivide and sell property to renters and commercial tenants can be completed.
But a consortium of banks holding more than $700 million in bonded indebtedness apparently remain opposed to the Mendocino-Marathon plan, and want to instead liquidate Pacific Lumber’s assets at auction.
Also in opposition is Texas banker Andy Beal, who has said he’s willing to pay up to $603 million for Pacific Lumber assets.
The Mendocino-Marathon plan, however, has won widespread endorsements from unsecured debtors, political figures, and state and federal regulatory agencies.
Gov. Arnold Schwarzenegger and Rep. Mike Thompson, D-St. Helena, have voiced support for Mendocino-Marathon. So have 222 out of 227 unsecured creditors.
Of equal significance, the joint venture has the support of the Humboldt County-based Environmental Protection Information Center, which has waged a 20-year campaign against Hurwitz’s logging practices.Posted in PALCO | Tagged HRC, MRC |