Pacific Lumber is offering to hand over ownership of its logging operation Scotia Pacific to creditors in exchange for cancelling the latter’s nearly US$400m worth of debt.
Pacific Lumber, part of Houston-based diversified company Maxxam, made the move because Scotia’s logging activities have been curtailed due to environmental wrangles with regulators in California.
Without a resolution, Scotia expects cash flow will be unable to service debt repayments.
If the plan to give creditors 90% of Scotia fails, Pacific Lumber admits it may have to lay off workers, sell off assets or seek bankruptcy court protection.
Scotia recorded a net loss of US$5.8m during the second quarter, compared to a US$7.6m loss a year ago.
