Mackenzie Waits to See Who Will Buy Pope and Talbot Pulp Mill

Wednesday, November 07, 2007 03:58 AM

Prince George, B.C. - Rumours are flying about potential buyers for Pope and Talbot. There have been suggestions Interfor is taking a look at the mills in the southern interior, but the pulp mill in Mackenzie would also be a steal.

Mackenzie has gone through a rough year with Canfor first announcing it would close the saw mill there “indefinitely” meaning more than 400 direct jobs would be lost. That decision has since been reversed and the job loss has been peeled back to about 130. Now, with Pope and Talbot’s future up in the air, there is still a sense of uneasiness in the community. “I know there have been lots of rumours about who will buy Pope and Talbot” says Mackenzie Mayor Stephanie Killam, “I just wish someone would come forward and make the deal”.

Pope and Talbot applied for protection from its creditors earlier this month, a move Killam says the company discussed with the District of Mackenzie. “I think buyers are just holding off waiting to make sure they get the very best buy they can” says the Mayor.

Purchasing the pulp mill in Mackenzie just got a little sweeter as the Mackenzie green energy project has been approved. That project will use sawdust to create power for BC Hydro and steam for the pulp mill reducing the reliance on natural gas.

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Posted on Wednesday, November 07, 2007 03:58 AM in News by 250 News

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Comments

Posted by: Andyfreeze on November 7 2007 7:34 AM

Purchasing the mill in Mckenzie will be a lot cheaper for someone AFTER P&T goes under completely.
And the way the lumber market is going right now,that shouldn't take too long.
When canadian lumber brokers start buying out of the states,your toast!
Fort St.James is in almost the same situation unfortunately, but the only ones who seem to notice that fact are the people who work there!
So much for leadership.

Posted by: Parrothead on November 7 2007 7:55 AM

Hell, at this point all of us in the forest game in the north are pretty close to dead meat. I think the issue around buying the mill is going to be "who will supply chips?" In the coming months many mills will be taking Christmas downtime. Some will not open up again afterwards.

Posted by: realitysetsin on November 7 2007 9:37 AM

Why would anyone step up to buy P&T currently?

There is no money in the saw milling business right now. So if you bought now you would need to be prepared to lose money for anywhere from a year to two years. So in essence the purchase price would be X + Losses.

The value of P&T is dropping daily, the time to a market turnaround is getting shorter every day.

Having said that, my bet is on Tolko, with Interfor also in mix.

Posted by: Andyfreeze on November 7 2007 10:51 AM

I agree Tolko may be a strong contender for P&T in the Fort and in MacKenzie.
The value is not actually in the sawmills themselves, but more in the timber rights.
Good time to buy but not a good time to actually be trying to make a buck with any sawmill!!!

Posted by: realitysetsin on November 7 2007 11:10 AM

Hey andyfreeze, google your username. It's not pretty.

Posted by: pulpworker on November 7 2007 12:12 PM

The P&T mill in Mackenzie is not a sawmill, its a pulp mill and from what I hear, a pretty good one. Pulp is very profitable right now. Someone will scoop it up for a song.

How bout' a good conspiracy theory. P&T also owns the troubled harmac mill in Nanaimo. Right next door to this oceanfront mill a large development (a few thousand homes, high rise condos, and a golf course) is going in. This development is being done by calgary developers and the property owner, JIMMY PATTISON!!. Harmac's days are numbered at the end of the high pulp price cycle. I wonder if the canfor sawmill shut in Mackenzie was a move to put a hurt on P&T, as this is a big part of their chip supply. Beat em when they're down and get rid of that stinky pulp mill next to your new golf development
The rumour mill also says that since the development is not on city sewer, they will use Harmacs effluent treatment system for waste water treatment

Posted by: realitysetsin on November 7 2007 12:53 PM

Jimmy has a stake in Canfor too. Not sure how much but thinking around 15%?

Interesting.

Pulp production will be moving to Central America. Labor is too expensive here.

Posted by: realitysetsin on November 7 2007 1:58 PM

No relevance at all. Just entertainment provided free of charge.

Posted by: leoleo on November 7 2007 2:04 PM

Jimmy continues to up his anti....

Great Pacific Industries Inc. - Press Release
VANCOUVER, Nov. 6 /CNW/ - Jim Pattison announced today that Great Pacific
Industries Inc. ("Great Pacific"), a wholly-owned company, has acquired an
additional 276,000 Common shares of Canfor Corporation ("Canfor"),
representing less than 1% of the outstanding shares, through purchases on The
Toronto Stock Exchange. This brings the total holdings of Great Pacific to
11,429,350 Common Shares of Canfor, representing 8.02% of the outstanding
shares. Great Pacific together with Great Pacific Capital Corp. and 4123221
Canada Inc., two other companies owned by Jim Pattison, own in the aggregate
36,974,305 Common shares of Canfor, representing 25.93% of the outstanding
shares.
The shares of Canfor have been purchased and are presently being held for
investment purposes. In the future, Jim Pattison through one or more of his
companies may acquire additional shares of Canfor or dispose of such shares
subject to a number of factors, including general market and economic
conditions and other investment and business opportunities available to it.

Posted by: lmorg on November 7 2007 7:45 PM

Why should anyone buy the mill? Let it go under. Then at auction a buyer can get it for what the market dictates. A buyer doesnt care about the workers it may be displacing, only the best bang for the buck.

Posted by: realitysetsin on November 7 2007 11:39 PM

Thanks qwaszxter.

Posted by: leoleo on November 8 2007 11:21 AM

"When canadian lumber brokers start buying out of the states,your toast!"

Name one Canadian broker that doesn't.

Posted by: realitysetsin on November 8 2007 3:20 PM

Sept lumber price was about $210. Just with the difference in exchange it would now be about $190 or so. (never mind any other market drops!)

Interior log prices are about $50 or so. That converts into $175 per thousand just for the cost of the log.

That leaves just $15 per thousand or so to convert the log into lumber (ie Labor, Lights, Heat, Gas etc)

PG/Quesnel mills probably more like $85-$100 to do this conversion, consuming 80,000M3 each per month so probably losing about $1.93 million each per month.

That my friends, is not pretty.

Posted by: louel on November 9 2007 7:55 PM

I'm not sure Interfor will invest as they just backed out of the purchase of the Weyco mill in Kamloops, basically stateing that it would not be good bussiness to stretch ones resources when sawmills are loosing makeing money.
As for TOLKO I don'T think they have recovered from the purchase of Riverside Forest Products as the market turned down shortly after they bought it. They have litterly told their Logging contractors at some of the mills things are on a day to day basis.
How about West Fraser taking Ft. St. James mill, their in pretty good shape yet and would fit nicely into their area of operations. And Domtar on the McKenzie pulp mill they are owned by Weyerheuser lots of money there.