Pope & Talbot close to completing $300 million credit facility

By Sara Rosenberg

New York, May 10 - Pope & Talbot Inc. has substantially completed the negotiation and documentation of a new $300 million credit facility, according to a 10-Q filed with the Securities and Exchange Commission Wednesday.

The facility consists of a $50 million revolver and three-year term loan totaling $250 million.

Security is substantially all of the company's assets.

Proceeds from the facility will be used to refinance the company's Halsey pulp mill leases, its existing Canadian and U.S. revolving credit facilities and its receivable sales arrangement.

Pope & Talbot is working on this refinancing to address covenant compliance issues. The company did not comply with certain covenants under its Canadian and U.S. revolvers at March 31, and had to obtain waivers of these covenant violations from its lenders. Furthermore, there is uncertainty as to whether it will be in compliance with a covenant under its Canadian revolver at June 30.

The transaction is awaiting a tax ruling from the Canadian Revenue Agency and, subject to receipt of a favorable ruling, is expected to close in the second quarter.

Pope & Talbot is a Portland, Ore.-based pulp and wood products company.

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