March 27th 2008

By John Driscoll
The Times-Standard
March 27, 2008

Former Gov. Pete Wilson has signed on to guide the reorganization of the Pacific Lumber Co.'s timber-holding subsidiary if a creditors' plan is approved in April by the U.S. Bankruptcy Judge presiding over the case. A principal of the Bingham Consulting Group, Wilson said in a statement that he believes the plan submitted by the creditors of Scotia Pacific best protects jobs and the environment.

"We will manage the company in accordance with all its existing environmental obligations and economic commitments to the region, and we have built in conditions that enable the company to continue to be operated in this manner in the years to come," Wilson said in a statement.

Wilson was involved in the late 1990s negotiations over the 7,500-acre Headwaters Forest. That deal cost taxpayers $480 million for the forest and two smaller groves, and put in place a long-term logging and habitat conservation plan, which have been fraught with controversy and litigation.

Wilson served as governor from 1991 to 1998. The noteholders' plan deals only with Scotia Pacific, and contemplates an auction of the timberlands as a whole unit. Any buyer would have to keep employees other than top management for at least a year and agree to sell logs to the Scotia sawmill operation.

It doesn't deal with Palco, which holds the sawmill, the town of Scotia, other assets, and the lion's share of the employees working for the current company. If the noteholders' plan is approved, a plan that deals solely with Palco would also have to be confirmed, or the judge could convert it to a Chapter 7 liquidation case.

The plan is competing with three plans submitted by Palco, which consider in various forms splitting off some land for real estate development and selling protected redwood groves, as well as continuing timber and lumber operations. It is also competing with a plan by Mendocino Redwood Co. which looks to consolidate the timber and lumber operations, seek Forest Stewardship Council certification, and preserve many of the employees currently employed by Palco and Scotia Pacific.