Pope & Talbot files Chapter 11 bankruptcy

By Caroline Salls

Pittsburgh, Nov. 19 - Pope & Talbot, Inc. filed Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the District of Delaware in order to address its financial challenges and to support efforts to be a more efficient organization, according to a company news release.

"We want to assure our customers, employee colleagues and our communities that, although our business environment continues to present difficult challenges, Pope & Talbot is endeavoring to operate business as usual," president and chief executive officer Harold Stanton said in the release.

"We have worked hard to preserve liquidity during this tough situation and this reorganization is a necessary and responsible step to strengthen the company."

The company said persistent record low demand for lumber, high priced pulp chips and sawdust, the appreciation of the Canadian dollar and the high cost of debt service have hurt Pope & Talbot's business.

As previously reported, Pope & Talbot also filed for bankruptcy under the Companies' Creditors Arrangement Act of Canada on Oct. 29.

The company said it will use the protections of Chapter 11 and the CCAA to provide more time to continue its restructuring efforts, which will include the sale of some or all of its assets.

In connection with the Chapter 11 filing, Pope & Talbot's existing senior secured credit facility lenders have agreed to provide up to $90 million in debtor-in-possession financing, which, together with cash generated from daily operations, will fund current operating needs, including wages, benefits and other operating expenses.

The DIP terms had not yet been filed with the court as of late Monday evening.

According to court documents, the company had $297.26 million in assets and $197.26 million in debt as of Aug. 30, including $60 million of 8 3/8% senior notes due 2013 and $75 million of 8 3/8% debentures due 2013.

The company's largest unsecured creditors include indenture trustee the Bank of New York, with $75 million and $60 million bond issuance claims, and Canadian Forest Products Ltd., Vancouver, B.C., with a $1 million trade claim.

Pope & Talbot is a Portland, Ore.-based pulp and wood products company. Its Chapter 11 case number is 07-11738.

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