Well, no one can say they didn't see it coming. The only question now is who gets screwed the hardest. Workers? Subcontractors? Bondholders? Taxpayers? We'll still be debating the matter years from now, no doubt.
But first, note one of the more curious aspects of the omnibus Pacific Lumberbankruptcy, which was finally announced, after years of lead-up, this last Thursday. For some reason known only to the company - even veteran Maxxam Kremlinologists pronounced themselves stumped - was the abrupt U-turn in company rhetoric. Once again, it was all the environmentalists' fault. This despite the fact that only last month, when the company laid off 90 workers, Palco President George O'Brien blamed his company's woes on the weak international market for softwood lumber. For some reason, that wasn't mentioned in this recent round of press releases.
In neither case, of course, was there any mention of the Maxxam Corp.'s seemingly insane (but perfectly sensible, from another point of view) business strategy. In a perfect world, you'd think, there would be some sort of law banning a plutocrat from mortgaging a company up to and beyond the hilt, just so the company could pay for the pleasure of being owned by said plutocrat. Then, too, you'd think that the plutocrat shouldn't be allowed to let that debt ride for 20-plus years, meanwhile selling off big chunks of the company's assets and disappearing the proceeds down a hole. But such is perfectly legal and proper business practice in the good old U.S.A.
And so now a once-great company finds itself in bankruptcy court, with several hundreds of millions of dollars in debt on the books. Company lawyers will be appearing before a judge in Corpus Christi today (Wednesday, Jan. 24) to begin the long, arduous process of attempting to shield assets and stiff creditors, as best they can.
Who are those creditors? First and foremost, there are the holders of Palco subsidiary Scotia Pacific's timber bonds, the direct legacy debt from the Maxxam takeover. Currently, that portion of Maxxam's debt load amounts to $714 million, and it was the upcoming default on that debt that prompted the bankruptcy declaration (a $26 million, interest-only payment to bondholders came due on Jan. 20). Current holders of those bonds are organized and patient, and they've been waiting for the company to sink in order to get their hands on Scotia Pacific's 200,000 acres of Humboldt County forest, which the company put up as collateral when it issued the bonds.
Then there are others, whose return on investment now seems shakier. As part of its bankruptcy filing, Pacific Lumber submitted a partial list of "unsecured" creditors - people to whom the company owes money, and who are now going to have to fight or plead to get paid. The list includes about $1 million workers' compensation claims; $17.8 million for attorney fees stemming from legal cases the company lost; and about another $1 million owed to other businesses - many of them small, many of them local - stemming from day-to-day operations.
We contacted several of the businesses in the latter category, but the people we got hold of were reluctant to talk on the record. They're holding out hope that they can come to some sort of arrangement with the company, and so are trying to keep the waters calm. Some of them, though, are worried -- their businesses are running paycheck-to-paycheck. Among these Palco creditors, and the amount each is owed: SHN Consulting (Eureka), $126,161; Steve Wills Trucking (Fortuna), $126,637; Three Star Logging (Crescent City), $109,441; Northwest Forestry and Marine (Arcata), $108,210; Redcoast Forest Services (Redding), $109,000; Hastings' Smith River Tree Nursery (Brookings), $130,000. Also falling into this category is the $109,858 Pacific Lumber owes the City of Rio Dell, for consultant work relating to the proposed annexation of Scotia.
Then, too, there is the $20 million that the company has diverted from its employee pension plan over the last few years. As John Driscoll reported in the Times-Standard on Tuesday, the taxpayers may well end up picking up that tab, through the federal Pension Benefit Guaranty Corporation. That lost $20 million, which the company used to service its ludicrous debt structure, will end up coming out of your pockets and mine. Yet another parting gift from Maxxam owner Charles Hurwitz, whose place in Humboldt County history is now secure.
Dog fanciers, beware! Have you seen a recent advertisement in the newspaper or on Craigslist offering purebred, pedigreed puppies at bargain-basement prices? Does this ad ask you to contact the seller at a Yahoo! e-mail address, or at a voice mail account? Don't do it, friend. You're being scammed.
An ad-hoc inter-agency investigative team, comprised of representatives from the Journal, the Arcata Eye and the McKinleyville Press, last week discovered that crafty Nigerian scam artists have discovered Humboldt County in a big way, and have extended their fake-puppy wheeze to our home shores.
You haven't heard about that? Neither had we. Apparently, though, it's the coming trend in Nigeria-based confidence schemes. The old ruse, which involved a General Fulano who required your assistance in moving $40 million out of the country, now appears to be blown; instead, your forward-thinking Nigerian con artist - that fellow whose criminal ingenuity has made him the international symbol of his great nation, displacing Wole Soyinka, Chinua Achebe and Fela Kuti -- has been exploring the potential of the common English Bulldog.
And scamming newspapers and their readers in the process. Our recent investigation, which took nearly one whole hour to complete, was prompted when the Eye and the Press received identical e-mail communications requesting classified ads offering purebred English Bulldogs for sale. The purported seller was purportedly located in the state of Washington. The whole thing smelled fishy, so the Eye's Terrence McNally contacted this paper to inquire if we had received anything similar.
It took some digging, but it turned out that we had, and we had published it. It was in our Jan. 4 edition, in the classifieds, and it read, simply: "I have an adorable Yorkie for sale. It cost [sic] $400 if anybody is interested, he/she should email me at firstname.lastname@example.org." The ad had arrived through e-mail, and was paid for by credit card. But something was suspicious about it -- the seller said she was traveling out of state, and she provided what turned out to be a bogus telephone number.
Well, from there it's just a hop, skip and jump over to a computer terminal, to employ the same set of skills that we honed for our investigative award-winning "Web of Lies" series (Sept. 1, 2005). And yes, you guessed it - scrutiny of the e-mail revealed that our class ad purchaser turned out to be peddling her Yorkie from Lagos, Nigeria. McNally pulled the same trick on his English Bulldog contact and lo and behold, that e-mail was sent ... not from Nigeria, but from the island of Mauritius.
So questions answered, but questions remain. Mauritius? Are we looking at expat Nigerians, or are the native Mauritians building on their legacy as a pirate's haven? We respectfully pass this matter off to our brethren on the African desk.