Indonesian forest giant Asia Pulp & Paper failed to close a deal Wednesday for insolvent American forest company Pope & Talbot’s pulp and sawmilling assets, throwing into question the future of mills at Nanaimo, Mackenzie and Fort St. James.
Gordon Hamilton
Vancouver Sun
Thursday, May 01, 2008
Indonesian forest giant Asia Pulp & Paper failed to close a deal Wednesday for insolvent American forest company Pope & Talbot’s pulp and sawmilling assets, throwing into question the future of mills at Nanaimo, Mackenzie and Fort St. James.
But a second deal transferring two Pope & Talbot sawmills in southeastern B.C. to Vancouver-based Interfor closed on schedule.
Both sales had an April 30 deadline to close.
Pope & Talbot spokesman Mark Rossolo said the APP deal was not finalized in time but that the two parties are still talking in New York.
APP had agreed to buy pulp mills at Mackenzie and at Harmac, near Nanaimo, as well a third pulp mill at Halsey, Oregon. for $225 million. APP also agreed to buy a sawmill and related timber tenures at Fort St. James for $6 million.
The second sale to Interfor was for sawmills at Grand Forks and Castlegar as well as the related timber tenures. That deal closed on schedule, Interfor vice-president Rick Slaco said Wednesday. Interfor also picked up a sawmill in Spearfish, South Dakota, in the $69 million US deal but immediately sold it to a local U.S. company for $14 million. The Grand Forks and Castlegar mills are currently closed. Interfor president Duncan Davies said last week there will have to be changes at both mills if they are to be successful when lumber markets turn around.
Hurdles in the larger sale to APP are described in court documents as business-related but exact details are not being disclosed by the two parties, Rossolo said.
Since APP agreed to purchase the mills in early February, U.S. credit markets have tightened considerably as a result of the U.S. banking crisis, which could make it more difficult for a company like APP, which defaulted on $14 billion in loans in 2001, to finance the deal.
Pope & Talbot, a Portland company with most of its assets in B.C., is operating under court-ordered bankruptcy protection. That protection, and the bridge financing that kept the company operating, was to expire April 30. B.C. Supreme Court has extended protection to May 5 to allow the sale process to carry on.
In an April 25 report to the court, monitor PricewaterhouseCoopers expressed concerns that the deal had run into obstacles.
“Although the company and [APP subsidiary] PT Pindo Deli have advised the monitor that they believe that the outstanding issues can be resolved by April 30, the monitor remains concerned that this transaction may not close as scheduled,” PWC reported.
© The Vancouver Sun 2008