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Rep. Stark's Bill Would Hurt Pacific Lxunber's Timber Bonds 



Washington, March 18 (Bloomberg) — Pacific Lumber Co.'s 

 cibility to meet payments on its unusual timber-backed bonds could 

 be seriously impaired if a bill introduced today becomes law. 



The legislation was introduced by Rep. Pete stark (D. -Calif.), 

 a senior member of the tax-writing House Ways and Means Committee. 

 A staffer for the Congressman said no other lawmakers are currently 

 sponsoring the bill. 



Under the bill, two categories of redwood timber would be 

 subject to a 75% excise tax. The first category is any redwood tree 

 over 150 years old. These trees make up the old-growth forest. The 

 second group is any tree used as collateral for a bond. 



This second provision is aimed at Pacific Lxunber, the world's 

 largest producer of high-quality redwood lumber. The Scotia, 

 Calif., lumber company owns about 196,000 acres of redwood and 

 Douglas fir in foggy northern California, the only place in the 

 world where redwood can be commercially grown. 



Pacific Luittber was acquired by a unit of MAXXAM Inc. in 1986 

 after a $900 million hostile takeover. The effort was led by Texas 

 investor Charles Hurwitz, chairman of the board and chief executive 

 officer at KAXXAM. 



After the acquisition, Hurwitz became a director of Pacific 

 Lumber and the company increased its annual lumber shipments by "ifi^ 

 fee ^&y l\,o Uttbb. nurwitz nas since become chairman of the board of 

 Pacific Lumber. 



Now Pacific Lumber is trying to pare its interest costs. Last 

 week, Scotia Pacific Holding Co., a unit of Pacific Lumber, sold 

 S385 million of timber-backed notes due in 2015. Investors who buy 

 the bonds would get 179,000 acres of redwood and Douglas fir if 

 Scotia defaults. 



Most of the proceeds from the timber-backed bonds and a 

 separate $215 million issue of lo-year senior notes by Pacific 

 Lumber will be used to pay off Pacific Lumber's $510 million of 

 junk bonds, according to a filing with the Securities and Exchange 

 Commission. 



"Maxxam Corporation has been looting the redwood holdings of 

 Pacific Lumber Company from the day it took over the company in a 

 corporate raid," said Stark. 



"Timber harvesting on a bond repayment schedule could be like 

 killing the goose that laid the golden egg," he said. 



In a related issue, the sierra Club and the National Audubon 

 Society petitioned the SEC on Feb, 1 to examine the financial and 

 environmental repercussions of Hurwitz' takeover of Pacific Lumber. 



The conservation groups said the fate of the Headwaters 

 Forest, the world's largest unprotected redwood forest, is at risk. 



— Simon Walsh (202) 393-1038 



mk ' 



(For more news on MAXXAM Inc. : MXM Equity CN; on the environment: 

 NX ENV; on paper products: Nl PAP; on California; Muni N CA; on 

 construction: NI CST.) 

 -0- (BEN) Mar/18/93 18:23 



