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) PALCO files reorganization plan
The long-anticipated strategy for how Pacific Lumber Co. and its subsidiaries hope to emerge on firm financial footing following their Chapter 11 bankruptcy protection filing in January has been submitted in a federal court in Texas.The several-hundred-page plan, which must be approved in the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, aims to provide for the continued operations of PALCO and Scotia Pacific Co. as a single consolidated company.The plan calls for the full repayment of all creditors, which includes $713.8 million owed to timber noteholders and $36.2 million for SCOPAC's line of credit.A key feature identified in the plan is the consolidation of PALCO, SCOPAC and its subsidiaries under a new business model that will continue sawmill and forest operations, but at harvest levels significantly lower than current or historical rates.To pay off its creditors, PALCO is seeking to generate $400 million through the sale of approximately 6,600 acres of SCOPAC's timberlands, which have stringent logging restrictions placed on them to protect the marbled murrelet seabirds that nest there.The first part of the project, which the company hopes to accomplish within 24 months of the plan's approval, will be to sell each of the old-growth forests it calls "Ancient Redwood Groves" as preserves at a value of $60,000 per acre to buyers who are willing to commit to permanent environmental protection.The second phase aims to raise an additional $780 million through the sale of 22,000 acres of lands the plan identifies as "Redwoods Ranch Development," or individual 160-acre parcels to be marketed as "trophy" properties valued at approximately $5 million on average.That would leave approximately 181,000 acres of timberlands for sustained timber harvesting, under the proposed plan.For its part in aiding its cash-strapped subsidiaries, parent company MAXXAM is pledging to make contributions valued at more than $150 million, including providing real estate expertise, to provide $25 million to allow existing noteholders to cash out a portion of their notes, the forgiveness of $40 million in intercompany debt, and tax benefits valued at approximately $85 million.In a statement released on Business Wire, PALCO President and CEO George O'Brien recognized MAXXAM's leadership in standing alongside the company and its significant economic contributions, which he said underscores the confidence MAXXAM has in the company's future."This plan saves a 140-year-old company and creates a viable forest products enterprise that can provide excellent long-term jobs and it does so by putting some of the company's most unique and valuable property to a higher and better use than commercial forestry," O'Brien stated in the news release.While consultants for SCOPAC's creditors have testified in court recently that the companies' equity doesn't exceed their debt and should be liquidated immediately to maximize its value, the submitted plan indicates PALCO's consultants put a value of the lands and businesses in excess of $1.4 billion.Reached by phone Monday, Mark Lovelace, president of the environmental group Humboldt Watershed Council, which has long been critical of PALCO for its alleged environmental violations and unsustainable timber harvesting, called the plan "laughable."Lovelace said he doesn't believe the company will generate the cash it anticipates because no potential buyers will be willing to pay the $60,000-per-acre price for the lands that are already off-limits to logging for the next 42 years under the arrangement of the Headwaters Agreement.He said the only reason anyone might purchase the lands now is because they could be considered undervalued and a steal for someone looking for a bargain."But for PALCO to ask what they are for them now is ridiculous," Lovelace said.In addition, Lovelace said MAXXAM isn't contributing any real financial support as part of the plan, rather it is only shuffling money around.A hearing is scheduled in Corpus Christi this morning at 9 a.m. More>> - (
) Keeping a Sell on Centennial
Revenue performance has been lackluster, following slow subscriber growth and lower roaming traffic. We remain concerned with net debt in excess of $2 billion and limited cash liquidity, although the company plans to redeem approximately $20 million of debt by November 2007. Moreover, we are not encouraged by management's outlook for 2008.\'We continue to await indications of an improved operating profitability as changes in business strategy are taking longer to push upside trends in earnings. Centennial is trading at a 2008 EV/Sales multiple of 3.0x, which represents a significant premium to the telecom-wireless industry group. On the basis of enterprise value (defined as market cap plus debt minus cash) to EBITDA, the stock is also trading at a premium to the peer group average.
\'Also, we are concerned with competitive factors in Centennial's coverage regions as consolidation among tier-I carriers threatens CYCL's customer base and pricing structure. More>>
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) Lihir Gold denies takeover talks
LIHIR Gold chief executive Arthur Hood has brushed off takeover talk surrounding the company after it was described as an attractive target by Newmont Mining. Newmont, the world's second largest gold producer, said low cost producers like Lihir looked "increasingly attractive'' against the company's rising cash cost profile. Market watchers noted Lihir would become an attractive takeover target after the company raised $1.2 billion in April to close out its hedge book and retire debt. Mr Hood said today he was not fazed about the takeover talk. "My responsibility is to deliver value for shareholders,'' he said. Newmont's comments, which were made last month, also focused on Australia's largest independent gold producer Newcrest Mining. Brokerage Credit Suisse said there was significant potential for further consolidation within the gold industry, both domestically and abroad. More>> - (
) Gold company denies takeover talk
LIHIR Gold chief executive Arthur Hood has brushed off takeover talk surrounding the company after it was described as an attractive target by Newmont Mining. Newmont, the world's second largest gold producer, said low cost producers like Lihir looked "increasingly attractive'' against the company's rising cash cost profile. Market watchers noted Lihir would become an attractive takeover target after the company raised $1.2 billion in April to close out its hedge book and retire debt. Mr Hood said today he was not fazed about the takeover talk. "My responsibility is to deliver value for shareholders,'' he said. Newmont's comments, which were made last month, also focused on Australia's largest independent gold producer Newcrest Mining. Brokerage Credit Suisse said there was significant potential for further consolidation within the gold industry, both domestically and abroad. More>> - (
) T-Mobile to Buy SunCom for $2.4B
T-Mobile USA announced plans to acquire SunCom Wireless Inc. for $2.4 billion in cash and assumed debt. The acquisition is the latest deal in the wave of consolidation rolling through the U.S. mobile market. (See T-Mobile Acquires SunCom.)T-Mobile will pay $1.6 billion in cash and take on $800,000 of SunCom's net debt. SunCom's shareholders will get $27 per share.
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) UPDATE: Deutsche Telekom's T-Mobile To Buy SunCom For $2.4 Billion
LONDON (Dow Jones) -- Deutsche Telekom AG said Monday its T-Mobile unit in the U.S. has agreed to buy SunCom Wireless Holdings for $2.4 billion, including debt, in a deal that will expand its customer base in the southeastern U.S. and Puerto Rico.Terms call for DT (DT) , Europe's largest telecom operator, to purchase all outstanding shares of SunCom (TPC) for $1.6 billion and take over net debt of $ 800 million. The $27-a-share purchase price represents a 23% premium over SunCom shares' closing price on Friday, DT said.
The former German state monopoly said the acquisition will expand T-Mobile USA's coverage and customer base in North Carolina, South Carolina, Tennessee, Georgia, Puerto Rico and the U.S. Virgin Islands, where Berwyn, Pa.-based SunCom has been providing roaming service since 2004. More>>