The bankrupt Californian timber company Pacific Lumber is being given a new lease of life after a judge granted a takeover plan.
A Texas judge approved a US$580m plan by hedge fund Marathon Asset Management and Mendocino Redwood Co to acquire 140-year-old Pacific, which owns about 200,000 acres of California redwoods.
The plan will re-imburse Pacific debtors to the tune of US$530m, set up a new company called Newco and pump US$7.5m into Pacific’s mills.
Mendocino operates to the south of Pacific’s timberlands in Humboldt County and believes it can use its knowledge of redwood sawmill and lumber distributions operations to maximise the chances of successfully running Pacific’s Scotia sawmill.
It would also seek to preserve the identity of the town of Scotia, which is owned by Pacific. Other plans include raising forest management standards to secure Forest Stewardship Council certification.
Pacific, which has another sawmill in Arcata and employs 550 people, has had a long-running battle with environmentalists who hope to safeguard the Californian redwoods in Humboldt County from harvesting.
