Statement by Former Governor Pete Wilson Regarding Sierra Pacific $75 Million Offer...

Statement by Former Governor Pete Wilson Regarding Sierra Pacific $75 Million Offer to Purchase and Expand Scotia Mill

Lehman Offers $20 Million Financing to Continue Scotia Pacific
Operations During Post-Confirmation Period
LOS ANGELES--(Business Wire)--
Pete Wilson issued the following statement today regarding Sierra
Pacific's $75 million offer to purchase and expand Scotia Mill:

Throughout the PALCO bankruptcy proceedings, local and state
governments, community groups, and employees have been concerned with
protecting jobs and the local economy over the long-term and ensuring
no disruption of jobs during the reorganization period. New filings in
the bankruptcy court by the Indenture Trustee demonstrate its
commitment to these goals and provide assurances for achieving them.

If I am approved as Plan Agent for the Indenture Trustee Plan, it
will be my responsibility to oversee Scotia Pacific during the
reorganization period. The offers by Sierra Pacific and Lehman
Brothers are major steps that can greatly improve my ability to
accomplish the goals of the Indenture Trustee plan.

First, Sierra Pacific has made an offer to purchase the Scotia
Mill, as well as the co-generation plant, that will lead to a major
investment to expand this operation. Second, Lehman Brothers has
offered to provide transition financing to ensure continued operation
of the timberlands and local jobs during the reorganization period.

The Indenture Trustee informed the court that Sierra Pacific made
an offer to PALCO to buy the Scotia Mill, the cogeneration plant, and
related working capital assets, and to make major capital expenditures
to create two mills capable of handling both large and small logs.
Sierra Pacific expects to invest at least $75 million in this project.

This commitment will allow Scotia Mill to draw logs from
throughout the region and, by upgrading its capabilities, assures the
community and the employees that the Scotia Mill will continue to be a
significant part of the local economy. The expanded mills at the
Scotia site are projected to provide 300 jobs.

Sierra Pacific has also committed to improve the operation of the
cogeneration plant, to improve stormwater runoff controls to reduce
silt runoff into the Eel River, and to ensure more efficient recovery
and use of biomass fuel to the cogeneration plant.

The offer by Lehman Brothers to provide $20 million in financing
for the operation of the timberlands in the post-confirmation period
provides yet another layer of assurances to the community that there
will be no economic disruption during implementation of the Indenture
Trustee Plan.

We have previously assured the state, the community, and the
employees that the transition period will be seamless, and the offer
from Lehman Brothers further demonstrates our ability to meet this
commitment.

Sierra Pacific is a third generation family-owned company that has
operated in California for almost sixty years. Red Emmerson, its
President, and Sierra Pacific are committed to this state and the
communities in which they work. As a California-owned company, Sierra
Pacific understands the need to provide jobs while meeting
California's high environmental standards.

I believe that Sierra Pacific will be a tremendous asset to Scotia
and surrounding communities.

Throughout the bankruptcy proceedings, the Indenture Trustee has
worked to produce a reorganization plan that will provide the best
guarantees for sustainable forestry and long term community jobs. The
offers of Sierra Pacific's $75-plus million investment plan for Scotia
Mill and of Lehman's $20 million financing plan underscore the
Indenture Trustee's commitment to do all that it can to implement a
sound plan for reorganizing Scotia Pacific.

The Indenture Trustee's Plan provides the best avenue to protect
and expand the number of local jobs and continue operation of Scotia
Pacific and its successor as an operating timber company. Importantly,
the plan ensures that the mill and the timber company will continue to
have the resources needed to comply fully with the Headwaters
Agreement and other environmental obligations.

Bingham Consulting Group
Sean Walsh, 415-393-2477 or 415-203-8991

Copyright Business Wire 2008