Palco, Mendocino Redwood strike arrangement
May 1, 2008
The Pacific Lumber Co. and its parent company Maxxam have struck an agreement with the Mendocino Redwood Co. and a key creditor and sweetened the pot by making an all cash offer for the Scotia company’s timberlands.
The deal was announced in U.S. Bankruptcy Court in Corpus Christi, Texas today. Palco and Maxxam will now support the Mendocino Redwood and Marathon Structured Finance Fund plan of reorganization, which calls for the timberlands and the Scotia mill to be operated as a single entity.
“We have put out entire support behind the MRC and Marathon plan,” said Palco attorney Shelby Jordan.
Palco subsidiary Scotia Pacific has held out, and is presenting witnesses to back its plan, which banks on a value of $900 million for the land. The timber noteholders, another creditor owed $714 million, is also not party to the Palco-Mendocino pact, and it suggested the court allow a representative from Harvard to outline a bid it may make for the land and the mill if an auction goes forward.
The representative said he would be prepared to outline the proposal and said it has a qualified mill operator on board — Red Emerson’s Sierra Pacific Industries, one of the largest private landowners in the country.
The Palco-Mendocino pact now offers $530 million in cash to the noteholders, up from a package of $175 million in cash and $325 million in notes.
“We believed we have enhanced the valuation to the full extent we can,” said Mendocino Redwood attorney Allan Brilliant.Posted in PALCO | Tagged HRC, MRC |