46 



Thank you, Mr. Chairman. 



The Chairman. Thank you, David. If you have any connections, 

 I have a gentleman from Arkansas that'll help us out. I will tell 

 you that right now, because he is the one that is always saying he 

 is going to veto things. It makes it very, very — an unlevel playing 

 field. 



Scott, in your testimony now your investment — ^you have been 

 asked to be — you were hired by Ketchikan Pulp. How many years 

 do you think — 15 years, is that unusual for an amortization of a 

 loan such as $200 million? Is that short, long or in between? 



Mr. ESTEY. Again, it depends on where and how the funds have 

 been invested, but it is not atypical at all. As I mentioned, I think, 

 15 to 25 years, given the general description that I have of this 

 project, is more than reasonable in terms of expectations of time re- 

 quired to not only repay, pay back, recoup investment, but also to 

 earn an adequate return on that investment. 



The Chairman. That is — does that gear in the rates of borrowed 

 money or is it usually borrowed at a fixed rate? 



Mr. ESTEY. Excuse me? 



The Chairman. Do they borrow at a fixed rate for that $200 mil- 

 lion so that's geared into it so they have to pay the interest? 



Mr. ESTEY. Correct, yes, including your total cost of capital 

 whether it is debt or equity. 



The Chairman. Is it usual for a pulp company to seek long-term 

 contracts for investments? 



Mr. ESTEY. I would say it is usual — from the standpoint of fiber 

 supplies, this is a particularly, you know, fairly unusual case from 

 the standpoint that it is government lands that all or most of the 

 timber would be coming off of. Fiber supply is a critical issue when 

 companies are attempting to finance large projects, and it is typical 

 that they need to show or prove security of that resource. 



The Chairman. How many new pulp mills are you aware that 

 have been built in the last ten years? 



Mr. EsTEY. Pulp mills built? If we are talking about wood-based 

 Kraft pulp mills, none in the United States. 



The Chairman. Most of our fiber — if these pulp mills continue to 

 shut down it goes to David's company, they continue to shut down, 

 most of our paper and fiber products will be coming from overseas 

 such as our aut 



Mr. ESTEY. I missed the first part of the question. 



The Chairman. I am saying if there is no new plants being built. 



Mr. ESTEY. Correct. 



The Chairman. There are plants being shut down, according to 

 David, is that correct? 



Mr. ROETS. That is correct. 



The Chairman. If we continue to shut those plants down, it 

 means we become more dependent on our overseas fiber. 



Mr. EsTEY. That is correct. And I think what you are seeing is 

 large pulp mills being built in places like Indonesia. Asia Pacific 

 in general is a huge growth region, and they are beginning to be- 

 come a dominant player in the world industry. 



The Chairman. Are they meeting the same standards required of 

 Ketchikan Pulp? 



