unsecured creditors will likely end up empty-handed.
Pope & Talbot's unsecured creditors will likely end up empty-handed.
The bankrupt company announced deals Tuesday for its last two lumber mills. The deals will leave the company millions of dollars short of repaying its debts.
The nearly 160-year-old Portland-based wood products company filed the third-largest bankruptcy in state history in November after fighting a losing battle with the slumping housing market, a strengthening Canadian dollar, and high debt levels.
In order to secure an emergency $89 million loan, the company subsequently agreed to sell all of its assets by mid-February.
Pope & Talbot already reached deals to sell six mills throughout the region for a total of $174.3 million. The remaining lumber mills, in the British Columbia cities of Fort St. James and Midway, proved to be the least attractive to investors.
A subsidiary of Sinar Mas, Asia's largest paper producer, will buy the Fort St. James mill for roughly $6 million. Hamilton, Mont.-based Fox Lumber Sales Inc. will buy the Midway mill for $750,000. The deals are subject to court and regulatory approval.
Together with $20 million in real estate sales and the previously announced mill sales, that means Pope & Talbot will raise around $200 million to repay creditors.
That's not nearly enough.
The company's secured debts, which are the first to be repaid during a bankruptcy, include the emergency $89 million loan and a $247 million credit facility.
Pope & Talbot's unsecured creditors include the Bank of New York Trust Co., which holds $135 million in unsecured Pope & Talbot bonds.
The company's shares (Pink Sheets: PTBT), which traded for around $6 at this time last year, trade for 3 cents today.