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UPDATE 1-Pope & Talbot pulp mills to be idled for now
(Updates with court ready to appoint receiver)
By Allan Dowd
VANCOUVER, British Columbia May 7 (Reuters) - Pope & Talbot Inc PTBT.PK was told on Wednesday to complete an orderly shutdown of its U.S. and Canadian pulp mills as a new search is launched for buyers.
Judges in a joint Canada-U.S. bankruptcy court hearing said they were ready to appoint a Canadian interim receiver and U.S. trustee to dispose of what remains of the once-venerable, but now insolvent, North American forestry firm.
The company had tried to keep the three mills running and sell them as a package, but the plan fell apart last week when a deal it had reached with a unit of Sinar Mas Group's (SMMA.JK) Asia Pulp & Paper Co fell through.
Lenders agreed on Wednesday to let it spend enough money to keep workers on the job until Saturday, allowing an orderly shutdown of the mills in Nanaimo and Mackenzie, in British Columbia, and Halsey, Oregon.
The lenders, including Wells Fargo Financial (WFC.N) and Cerberus Capital Management's [CBS.UL] Ableco Finance, had initially balked at letting the company spend any more money, leaving the plants on the verge of a mid-production shutdown.
Pope & Talbot and its Canadian court-appointed monitor said new buyers have expressed interest in the facilities, but it was unclear how quickly their sales could be completed and the plants would have to remain idled.
"(Appointing a receiver) is disappointing, but not unexpected," said Bob Smiley of the Pulp, Paper and Woodworkers of Canada, which represents workers at the Harmac mill in Nanaimo.
Hearings on appointing a receiver and trustee were expected to be held on Friday in the U.S. Bankruptcy Court in Delaware and on Saturday in the British Columbia Supreme Court in Vancouver, which have been handling the case jointly.
The mills' fate is being closely watched on global pulp markets. They have a combined annual production capacity of about 830,000 tonnes and employ more than 900 workers when at full operation.
Lawyers involved in the hearings said a bid may already be in the works for the Halsey mill. The Mackenzie mill was also expected to be relatively easy to sell, but finding a buyer for Harmac might be more difficult.
Pope & Talbot, which traces its roots to 1849, was forced to seek creditor protection last year after its finances collapsed under the weight of high debt, weak lumber prices and a strong Canadian dollar.
The Portland, Oregon-headquartered firm was able to sell its sawmill operations in Canada and the United States to several buyers, including International Forest Products Ltd (IFPa.TO).
Asia Pulp and Paper had also been expected to buy Pope & Talbot's idled sawmill in Fort St. James, British Columbia, but lawyers said on Wednesday another buyer has expressed interest in the facility. (Editing by Braden Reddall)
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