Pope & Talbot In Chapter 11

Lumber producer Pope & Talbot filed for bankruptcy protection in a Canadian court on Oct. 29, saying it needed more time to pursue strategic alternatives, including selling some of its assets.

The company blamed the low demand for lumber, high cost of raw materials, the appreciation of the Canadian dollar and high debt service as factors contributing to its financial woes.

Although it is headquartered in Portland, Ore., the bulk of Pope & Talbot’s operations are in British Columbia, qualifying it for a Chapter 11 filing in the Ontario Superior Court of Justice. As of Oct. 29, the company owes $276 million in outstanding debts. According to its latest filing with the Securities & Exchange Commission, Pope & Talbot has total assets of $682 million and approximately $355 million in long-term debt.

In a prepared statement, the 150-year-old company said it is “taking all available steps to allow its business to continue operating as a going concern.” But the statement also said its restructuring efforts may include the sale of “certain or all of the company’s assets.”

These assets include a pulp mill in Halsey, Ore., and a sawmill in Spearfish, S.D. The company is also trying to sell thousands of acres of forestland in British Columbia, which is subject to the approval of the Canadian government. These transactions have already generated some controversy in the Canadian press.

In its second quarter, Pope & Talbot reported a loss of US$42.9 million compared with losses of US$21.8 million in the same period last year. Sales were US$236.6 million, up from sales of US$213.6 million last year.

Based in Portland, Ore., Pope & Talbot produces market pulp and softwood lumber at mills in the United States and Canada.

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