Future of Pope & Talbot Pulp Mills Remains Uncertain
May 7, 2008 - A Vancouver court in British Columbia, Canada today will try to sort out the future of Pope & Talbot's remaining pulp mills after a deal to sell the facilities in Canada and United States abruptly fell through.
The company is exploring its options and has been approached by parties interested in the three mills, which had been slated for sale to Indonesia's PT Pindo Deli, a unit of Sinar Mas Group, a Pope & Talbot spokesman said yesterday.
"The company is now obviously considering selling off individual mills to individual buyers, and a lot of it is really up in the air right now," said Mark Rossolo. "We don't have a lot of information."
Pope & Talbot was forced to sell all its lumber and pulp operations after seeking court protection from creditors in October -- its finances crushed under the weight of heavy debt, weak lumber prices and a strong Canadian dollar.
The Harmac and Mackenzie pulp mills in British Columbia and the Halsey mill in Oregon have a combined annual capacity of about 830,000 tons and employ more than 700 workers.
A deal to sell the facilities as a group was struck in January, but Pindo Deli pulled the plug on the plan on May 1, just as the deadline for Pope & Talbot's court-approved financing was set to expire.
Pope & Talbot had valued the deal at $225 million, and it would have allowed it to dispose of the last of its major assets to pay off creditors.
According to a Reuters news story, Pindo Deli said it was still interested in talking about an alternative plan, but no discussions have taken place, Pope & Talbot reported in a securities filing on Tuesday.
The mills were expected to begin shutting down operations on Tuesday. Rossolo said the plan now calls for the Canadian mills to process the wood chips already being converted into pulp, but not add any new chips until the court gives the company some direction on what to do.
The Oregon facility will continue to run, but it may follow the Canadian plants in doing a "soft shutdown", depending on what the court decides, he said.
The future also remains cloudy for Pope & Talbot's idled sawmill in St. James, British Columbia, which had been scheduled to be sold to Pindo Deli.