June 6th 2008

Santa Rosa Press Democrat
June 6, 2008

A federal bankruptcy judge Friday ruled that Pacific Lumber Co., the North Coast's premier timber company, will be taken over by a $525 million joint venture of San Francisco's Fisher family and an East Coast hedge fund.

The judge rejected as "unrealistic" plans to liquidate Pacific Lumber's 210,000 acres of redwood timberlands and the historic Humboldt County mill town of Scotia. Such an asset auction was pushed by a group of major lenders left holding about $715 million in bonded debt when Pacific Lumber filed for bankruptcy protection in January, 2007.

Judge Richard Schmidt ruled that liquidation would result "in a loss of jobs for the community, and a way of life in the town of Scotia."

The decision in favor of Mendocino Redwood Co. and Marathon Structured Finance Fund was hailed by Mendocino Redwood representatives and Sierra Club officials.

"Pacific Lumber has a future now," said Sandy Dean, chairman of the Mendocino Redwood. Members of the Fisher family formed the Ukiah-based company a decade ago after acquiring 225,000 acres of Mendocino County timberlands and a Ukiah sawmill from Louisiana-Pacific Corp. The firm has since been touted for its environmentally sound logging practices.

Paul Mason, deputy director of the Sierra Club, said Friday that he believes the takeover will finally end "two decades of acrimony" under the ownership of Pacific Lumber by Texas financier Charles Hurwitz.

Hurwitz' Maxxam Inc. in 1985 pulled off a surprise raid on Pacific Lumber, the aristocrat of West Coast timber companies, and then angered state regulators and environmental groups by sharply accelerating logging to meet interest payments on junk bond debt. From a high of 1,200 workers, company employment has plunged to less than 300 as Pacific Lumber's economic woes grew.