Pnlco Files For Bankruptcy Protection

Unable to pay its debts, Pacific Lumber Co., Scotia, Ca., has filed for Chapter | | bankruptcy protection.

The filing also covers Pelco subsidiaries, including fencing and decking producer Britt Lumber, Arcata, Ca.; timber supplier Scotia Pacific Co. LLC; Scotia Development LLC, Salmon Creek LLC. and Scotia Inn Inc.

Pelco attributes its liquidity crisis and reduced revenues to regulations on timber harvesting.

In Decemb-er, P,qlco filed suit against the state of California for breaching the 1999 Headwaters Forest agreement, which transferred 7,400 acres and two smaller groves to the public for $480 million. In addition, Perco was to receive long-term permits to log its remaining 200,000 acres of timberlands under stringent environmental standards.

"When the Headwaters Agreement was entered into in l996.it was a formal contract between The Pacific Lumber Co., the federal government, and the state of California," said Palco president and c.e.o. George

O'Brien. "The agreement included the most stringent environmental restrictions ever placed on the management of private timberlands. Our companies have lived up to their obligations, but unfortunately the state and its agencies have not. The state has not met its contractual agreement with respect to the management and harvest of our timberlands."

Pnlco stated that over the last seven years it has spent approximately $60 million on science and environmental mitigations to implement the agreement.

A division of Maxxam, Houston, Tx., P,qlco filed in U.S. Bankruptcy Court in Corpus Christi, Tx.

Suitors Increase Bids For Elk

In a bidding war with private equity firm Carlyle Group, Building Materials Corp. of America has raised its offer for ElkCorp, Dallas, Tx., to $43.50 per share-or $948.3 million.

The day before, Carlyle Group had matched Building Materials' $42-ashare bid, which had topped an earlier offer by Carlyle of $40.50 per share.

In November, Building Materials began the bidding at $35 a share, after Elk announced that it was considering selling and had begun a strategic review of the firm (see Jan., p. 6I ).

lP Sells Last Wood Mills To G-P

International Paper Co., Memphis, Tn., has agreed to sell five lumber and plywood mills-the last major pieces of its wood products division-to Georgia-Pacific Corp., Atlanta, Ga., for approximately $231 million.

The sale includes plywood and lumber mills in Camden, Tx.l Springhill, La., and Gurdon, Ar.; a plywood mill in Corrigan, Tx., and an engineered wood products facility in Thorsby, Al.

The transaction is expected to take several months to close, but should be completed during the first half of 2007.

John Faraci, chairman and c.e.o., said IP now has deals in place for each business it planned to divest "as part of the transformation plan." The sales will bring IP a total of roughly $11 billion as it focuses on uncoated paper and packaging.