Pope and Talbot Gets Some Time

Wednesday, September 19, 2007 03:58 AM

Forest products company Pope and Talbot has been given some breathing room. The struggling company has worked out a deal with its creditors to give it another four weeks of access to its revolving credit. The company says it will use the extra time to " explore options for improving its balance sheet, including the sale of certain or all of its assets."

Pope and Talbot owns the Mackenzie Pulpmill and the Fort St. James Sawmill. The Oregon based company recorded a loss of $42.9 million dollars in the second quarter of 2007. That was nearly twice the amount lost in the same quarter last year, ($21.8 million ) and is on top of the $18.6 million lost in the first quarter of 2007.

The company has been looking for ways to restructure its debt, "including, if necessary, bankruptcy proceedings." The agreement with its creditors says Pope and Talbot would look for offers to buy some, if not all, of Pope and Talbot's assets.

In addition to a shortage of affordable fiber, the company points a finger at the high Canadian dollar, low housing starts, low lumber prices.

The New York Stock exchange stopped trading on Pope and Talbot stock recently and will remove the company from the stock list because of poor performance. The stock was trading at 42 cents a share, down from $8.44 high in the past year.

The company has made efforts to raise cash and save cash through: increasing prices as it recently sent out notice of higher prices (a $20 price increase for its customers in North America and a $30 price increase for its customers in Europe.) and the temporary shut down two of its mills (Castlegar and Grand Forks) for two weeks.

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