Pope & Talbot terminates wood pulp business sale agreement, cites alleged buyer breach

By Caroline Salls

Pittsburgh, May 6 - Pope & Talbot, Inc. terminated the asset purchase agreement related to the proposed sale of its pulp products business because of buyer PT Pindo Deli Pulp and Paper Mills' alleged breach of the agreement, according to an 8-K filed with the Securities and Exchange Commission.

As previously reported, PT Pindo delivered a notice of termination of the purchase agreement to the company last week, but both sides said they were willing to discuss an alternative transaction.

However, Pope & Talbot said no discussions have taken place since PT Pindo sent the notice.

As a result, Pope & Talbot said it terminated the purchase agreement because of the buyers' alleged material breach of a representation that prompted a failure to satisfy a closing condition.

Pope & Talbot also cited the passing of the April 30 sale termination date.

The pulp business assets include three pulp mills located in Halsey, Ore., Nanaimo, B.C., and Mackenzie, B.C.

PT Pindo assignees Columbia Pulp and Paper Inc. and Columbia Pulp and Paper Ltd. were also parties to the purchase agreement. The buyers agreed on Jan. 8 to pay $105.29 million for the pulp business and to assume liabilities, including $15 million of employee vacation pay.

Since Pope & Talbot estimated that it would also realize a net $100 million from working capital items that were excluded from the pulp business sale, the company said it had estimated that the total value of the transaction would be $225 million.

In addition, Pope & Talbot said it has completed the $750,000 sale of substantially all of the assets related to its Midway, B.C., operating facility to Fox Lumber Sales Inc.

Pope & Talbot, a Portland, Ore.-based pulp and wood products company, filed for bankruptcy on Nov. 19 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 07-11738.

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