Judge to decide Thursday on bid for Mackenzie mill by Alberta developer
Published Wednesday August 20th, 2008
VANCOUVER - An Edmonton property developer is expected to find out Thursday if his bid for the Mackenzie pulp mill, his company's first foray into the forestry sector, will be approved by a B.C. court.
If accepted, not only will Worthington Properties president and CEO Dan White diversify his portfolio of residential, recreational and commercial properties, but save more than 200 jobs and maintaining some economic certainty in the northern B.C. forestry town.
After hearing arguments Wednesday in favour and against the bid, which is worth up to $20 million, B.C. Supreme Court Chief Justice Donald Brenner said he will rule Thursday on Worthington's bid.
John Sandrelli, a lawyer representing Worthington, said his client "sees an opportunity" with Mackenzie, which is struggling along with other mills due to depressed lumber prices.
The former Pope & Talbot mill is currently idled as it waits for a buyer.
Sandrelli told court Worthington plans to run the mill "as a going concern."
Worthington's bid is for $20 million if it includes the ongoing and crucial chip supply agreement with Canfor Corp. (TSX:CFP). The bid drops to as low as $6.5 million without it.
Canfor is trying to have the contract terminated, citing breach of contract when the mill went into receivership in May.
Canfor lawyer Shelley Fitzpatrick told court the Worthington bid implies the company has another chip supply contract lined up if the current agreement with her client is cancelled.
In an interview after the hearing, Sandrelli said there is no other chip agreement.
White, whose company website describes him as one of Edmonton's most successful real estate developers, is the primary shareholder of Worthington Properties.
The company has completed 20 projects in Western Canada and developed roughly 1.25 million square feet of developed residential, commercial and industrial space.
White could not immediately be reached for comment Thursday.
The Mackenzie mill is the last of three former Pope & Talbot mills receiver PricewaterhouseCoopers has been asked to sell.
The company is recommending the Worthington bid, saying it is in the best interest of all stakeholders, "including the former employees of the company at the Mackenzie pulp mill and the district of Mackenzie."
Last month, the B.C. Supreme Court approved the sale of the Harmac mill in Nanaimo to an employee-based group known as Nanaimo Forest Products for $13.2 million.
The group plans to run the mill and has until Aug. 29 to close the deal.
Last week, the court approved a higher back-up bid for Harmac should the employee bid fail to close by the deadline.
The backup offer, worth $20 million, is from Calgary-based Cable Bay Lands, which is already planning a golf course and real estate development on land beside the mill.
Nanaimo Forest Products has said it is planning to complete the bid on time.
In June, Conifex Inc., a new private forestry firm, bought Pope & Talbot's Fort St. James sawmill for $12.8 million.
The mills were originally bought by PT Pindo Deli, a subsidiary of Indonesia-based Asia Pulp and Paper. PT Pindo Deli made two separate deals with Pope & Talbot; one for the Mackenzie and Nanaimo pulp mills in B.C. as well as the Halsey mill in Oregon, and a second for the Fort St. James sawmill.
PT Pindo Deli cancelled the deal for the Nanaimo, Mackenzie and Halsey mills, which eventually threw them into receivership, and later lost a court battle to buy Fort St. James.
Pope & Talbot, a Portland, Ore.-based wood products company with most of its operations in B.C., filed for creditor protection last fall after succumbing to the drop in lumber prices as a result of the U.S. housing slump.
High debt and the strong Canadian dollar, which hurt its exports from B.C. into the United States, were also to blame.
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