Friday, January 28, 2005

Pacific Lumber Tries to Cut It Both Ways [LTE]

Letters to the Editor - L.A. Times
Pacific Lumber Tries to Cut It Both Ways
January 29, 2005

Re "Bankruptcy Threat With an Edge," Jan. 25: Perhaps Pacific Lumber Co. is "running out of logs" because timber companies such as Pacific Lumber have already deforested the vast majority of virgin forest in the United States.

Permits to cut protected stands should not be issued. Do we want to silt more streams, create more flooding and lose the last of our first-generation forests? To halt financial losses, Pacific Lumber should implement more sustainable business practices (i.e. don't clear-cut everything in sight).
Bjorn Fredrickson

The story about Pacific Lumber gets more bizarre every year. Thanks to the junk bond king, Michael Milken, and corporate raider Charles Hurwitz, Pacific Lumber Co. is now threatening people's livelihoods and the state's hard-won purchase of old-growth timber in the Headwaters Forest.

Citing restrictive regulations, Pacific Lumber claims it must file for bankruptcy if we don't allow it to further foul rivers and cause more damage to private homes. Pacific Lumber agreed to these restrictions in exchange for $480 million. Now, if we don't give in to its demand, it will keep the money and take back the Headwaters Forest through bankruptcy court.


Paul Mudge
La Jolla

The logging controversy in which Pacific Lumber claims it is running out of trees to log has me baffled. For 50 years, I've been hearing logging company claims that dozens of trees are planted for each tree cut down. We should have more trees than we know what to do with. Something smells here.
Stan Brothers

Wednesday, January 12, 2005

Palco's bad deal is everyone's bad deal [Times-Standard]

Sunday, February 13, 2005 --The Times-Standard

The Pacific Lumber Co. has on many occasions warned courts, critics and boards that it rests on the verge of bankruptcy if things don't go its way. In this latest round, it offers what seems to be its most desperate cry.

Everyone is taking the company seriously this time. Employees are worried. Businesses are worried. Contractors are worried. Bondholders are worried. Standard and Poors is worried enough to put Palco's $750 million worth of timber notes on watch for another decline in rating.

And lots of people are worried that Palco's intonations that it might slip out from under the provisions of the Headwaters Forest agreement might be for real. Indeed, it already has skirted these requirements in some ways. When the Environmental Protection Information Center finally won its case against Palco's 100-year plan to cut timber, the logging didn't come to a grinding halt. Palco submitted plans under little-known state rules, and has been cutting in some areas without such a plan since.

Federal provisions, however, remain in place.

The key problem the company faces is its massive debt. Like any company with a finite resource to make its products from, there is a level of debt it just can't sustain. The money Maxxam Inc.'s Charles Hurwitz made from the 1999 deal to purchase 7,400 acres of Headwaters Forest is awfully difficult to track. But it does not appear that the near half-billion went to pay down a significant portion of the debt he incurred when he bought the operation in 1985, when it was poorly protected and undervalued.

The argument Palco made to Gov. Arnold Schwarzenegger seems to have been "We need to log and we need to log now." That's to pay the $28 million payment due on its timber notes in July.

But should a company's financial position dictate the regulatory process? Should the North Coast Regional Water Quality Control Board rubber stamp harvest plans because the company is about to go broke? Public agencies should be most accountable to the people, even if they should consider the interests of industry.

Jobs are at stake, maybe several hundred. So, too, are the contributions the company makes to the county and numerous charitable efforts, contributions often overshadowed by the Palco controversy.

Our county needs those jobs. But those who believe that all would be fine if environmentalists and regulators just got out of the way are ignoring the larger truth that centers on money, particularly the huge, ongoing debt the company is coping with.

A bad business deal made by Hurwitz should not lead to bad regulatory oversight. The water board is putting all its resources into solving both the needs of the people and the needs of the company, and it should consider to do so -- in that order.

Headwaters Headache [San Francisco Chronicle]

ONE OF CALIFORNIA'S biggest environmental deals is near a breaking point. A giant redwood lumber company wants speeded-up timber-cutting approvals -- or it may go out of business.

In 1999, the Pacific Lumber Co. sold 6,000 acres of primeval redwoods to the government in a landmark transaction that averted logging and saved cathedral-like stands of the world's largest trees. Now the company claims that restrictions on timber cutting are putting it in jeopardy of bankruptcy.
The firm is pressing state and regional regulators for logging permits, claiming better science and logging practices allow for more cutting on its 210,000 acres along the foggy North Coast. If the firm doesn't get its way, layoffs and possible bankruptcy are possible, its executives hint.

Coming from a company known for bare-knuckled bargaining, it's an offer that Sacramento should resist. Pacific Lumber must learn to live with logging rules that it crafted and signed barely six years ago. The public expects careful regulation in exchange for $480 million paid by federal and state government for the Headwaters groves.

The firm argues that after a string of money-losing years, it is running out of options. If it closes down, a new owner taking over the same redwood stands may not be beholden to wildlife protections and logging limits that Pacific Lumber agreed to. Cut us some slack or face an uncertain future, Pacific Lumber representatives are warning.

The company has taken its demands to Sacramento, where executives have met with Gov. Arnold Schwarzenegger's advisers. The governor runs state agencies that regulate logging, and he also appoints members of a local regional water board that can veto expanded logging.

The governor built a creditable record on the environment in his first year. His stance on Pacific Lumber's demands will be his next test. Will he bend regulations to fast-track logging or make the company follow the rules?

The firm says it has spent $60 million in studies on its land, the largest redwood operation in the state. It uses helicopters to extract logs to minimize impacts and built a super-efficient $30 million mill.

What's missing from this picture of modern-day logging is more trees. Pacific Lumber claims it needs more logs to stay open. It wants 16 tree- cutting permits within the next several months but has won only four.

These proposed cuts along small streams are where wildlife habitat, mud flows and landslides need careful study. Pacific Lumber is pressing for industry-friendly appointments to a key water board. But the governor should insist future decisions be treated objectively.

Why is this dispute so important? Because Pacific Lumber's stewardship is anything but exemplary. In 1986, corporate raider Charles Hurwitz acquired the company and quickly boosted logging to pay off his financing costs. When he moved on the Headwaters Forest, filled with trees dating back hundreds of years, state and federal leaders devised the costly buyout.

Now his company is pushing again, demanding more logging and threatening bankruptcy.

The governor shouldn't cave in to these tactics.

Loggers' Sneak Play [L.A. Times]









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