Tuesday, February 03, 2009

Waterboard held Hostage by Evergreen! Makes difficult choice.

The Humboldt Bay Municipal Water District board had their backs to the wall today at a special water board meeting concerning Evergreen Pulps past due water bill. Evergreen CEO David Tsang was expected to be present and give Evergreen's position. Once again, he did not show up.

Prospective plant purchaser Bob Simpson relayed a message from Tsang that Evergreen was willing to make a partial payment through the prospective buyer of $230,000 for the past due water bill. Mr. Simpson made it perfectly clear that he was not representing Evergreen and was only passing on information. He let all know publicly that Evergreen/David Tsang was making deals with all of their lien holder/creditors for a portion of their debts. Mr. Simpson compared this type of sale as the transaction between Stockton Pacific and Evergreen, when the purchase price was 2 million dollars.

Unfortunately, the public entity of the HBMWD was asked to publicly make a commitment to lower the obligation of the pulp mill. Our local union was scheduled to have a meeting with Tsang and Simpson later the same day to come to a resolution to our financials issues.

(Hey, you naysayers on the ESOP buyout. The board voted to accept partial payment. Evergreen grossed over $500,000,000 in 3 years and paid 40 million in upgrades? Nearly 1/2 Billion dollars of raw resources leaving the US and going to Asia? And we could have bought the mill for 2 million? Shame on you!) This, of course, is my personal, on going reminder this could have been the workers mill.

There are obviously many hoops for the Samoa Acquisition Group to jump through. I am sure I speak for most of the workers hoping for the best for a smooth transition. I see many obstacles in the near future and hope all prospective workers keep involved.

7 comments:

Anonymous said...

The 2.0 million dollar price reflects the fact that you would not have made money over the longterm even if the mill had been free.

Not A Native said...

Richard, I hoped the empolyees would have tried to do a buyout too, but you have to be honest about it. I think all your dollar figures are wrong.

Evergreen paid $22M for the plant, including buying a discounted $30M note from PPM America.

Also, in 2007 Steve Fleischer said the mill did $100M a year in business and wasn't making a profit. Of course they had interest costs that reflected their high risk.

Evergreen ran the plant for less than four years. So their total revenues over all that time was less than $400M. I doubt they made much profit. Certainly they closed the plant because they weren't making a profit and didn't think it would get better.

Steve Fleischer said...

Pulp prices were high in the latter part of 2005, 2006, and 2007, giving far higher profit margins than experienced in the previous 3 years.

Additionally, Evergreen did not have Stockton Pacific's $30 million debt burden or onerous marketing contract (estimated to cost $4-6 million per year). Those two items alone would have resulted in $8-10 million per year of additional profit during 2005 - early 2008.

Evergreen also did not have to pay $4 million to local vendors, which is a debt that I assumed when I took over in early 2004 from previous management.

Bottom line, the mill was very profitable for Lee & Man in the early years of ownership. That money went overseas instead of staying in the community.

There was an opportunity in late 2004 for the community to own a great asset. There is a similar opportunity now.

If the workers, community leaders and regulators come together there is a wonderful opportunity for Humboldt County to own a community asset.

The benefits are: $100 million plus being spent in the local community; an additional 300 high paying jobs; a very positive impact on everybody's water bill; and most importantly in good years $10 million of profit to be used locally rather than being shipped out to foreign owners.

Can you imagine the benefit if that $10 million of profit were distributed to the community by the community?

What is lacking is local leadership. Community leaders wring their hands and make pious statements, but they don't step up and lead the way.

The regulators are happier identifying problems and imposing fines after the fact rather than working to support the community that they serve (who will they regulate when the mill goes away?).

Lastly the mill workers want employment handed to them, but are unwilling to accept any risk or inconvenience.

Guys, if you want the mill, fight for it.

If you don't fight for the mill, then you accept the consequences of other people's actions. We have seen what happens when others decide the fate of the mill.

One last point. If the mill closes, you will have an eyesore on the other side of the bay. Who will pay the more than $25 million needed to remediate the site?

Time for some local leadership.

Anonymous said...

"Time for some local leadership"

Richard: I don't know too much about this but the premise that Steve stated sounds right on.

People can bitch in their home or get out and make a loud voice.

Mike Harvey

Anonymous said...

Samoa Acquisition Group?
Who are they?
Is this something like Stockton Pacific?
Is Evergreen spinning a tail?
Fight for what is right for Humboldt.

samoasoftball said...

NAN: Just reporting what I heard at the Water Board Meeting yesterday about the 2 million.

Steve: I hate to admit it, but you are right. On multiple points. The workers want employment handed to them without buy in or risk. I have stuck my neck out on numerous occasions only to be berated.

Mike: yep.

Anonymous said...

The people that love welfare, single-payer health care, unfettered illegal immigration with all the benefits that come with it bitch about someone wanting a job with no risk? Since when are you ultra-left wingers concerned about personal responsibility?