MacMillan Bloedel announces They May Stop Clearcutting Oldgrowth Forests
4/24/98
*******************************
RELAYED TEXT STARTS HERE:
Title: MacMillan Bloedel announces They May Stop Clearcutting Oldgrowth
Forests
Source: Christopher Hatch
Wood Consumption Program Director
Rainforest Action Network
Status: Distribute freely with proper credit to source
Date: 4/24/98
Dear friends,
Great news: we're winning!
As many of you know, we have been spending a great deal of time working
with our old enemies at MacMillan Bloedel to design a CEO-mandated
"environmental breakout" program. We do not yet know what parts of our
proposals will be adopted by the CEO -- we will find out shortly before it
is publically announced -- but the CEO signalled his intentions at
yesterday's shareholder's meeting (press summaries below). While it is not
likely that the company will go as far as the proposals we designed, any
breaking of the ranks amongst the dinosaurs of the Canadian logging
industry would signal the beginning of the end of the bad old days. We
expect the program to be unveiled within a month.
This is a wonderful testimony to the effectiveness of the work that all of
us have done and to the speed and distance we can move an industry when we
work together in a targetted way. Big bear hugs and congratulations all
round!
Chris Hatch.
***************************************
MB MULLS RADICAL CUT -- Vancouver Province, p. A36, Paul Luke, 24/04/98 --
MacMillian Bloedel president and CEO Tom Stephens shook up the normally
stodgy MB annual meeting by announcing they're selling their paper
divisions and are considering stopping any old-growth clear-cutting. MB
paper division was sold to an investment group for $850 million and include
the Port Alberni and Powell River mills. Stephens, hired as a turnaround
artist, also announced that he's stopped MB five consecutive quarters of
losses. [BCW0424-14]
*******************************************
MACBLO PRESIDENT TALKS OF HALTING CLEAR-CUTS IN OLD-GROWTH FORESTS --
Vancouver Sun, p. A1, David Hogben and Justine Hunter, 24/04/98 --
MacMillan Bloedel president and CEO Tom Stephens said that MB is strongly
considering stopping any clear-cut harvesting of old-growth forests,
because of customer feedback. Greenpeace forest activist Karen Mahon said
she was pleased and called MB a "tend-setter in this industry." B.C.
Forests Minister David Zirnhelt shared the cautionary response of forestry
experts that there are economic and safety concerns of "high-grading" by
selectively logging. [BCW0424-11]
********************************************
MACBLO MAY AXE CLEARCUTS -- Victoria Times Colonist, p. A1, Judith Lavoie,
24/04/98 -- MacMillan Bloedel is considering a halt to the clear-cut
harvesting of old-growth forest following continued pressure from
its international customers. Merran Smith,
Sierra Club forests campaigner said "MacMillan Bloedel is leading us into
the 21st century and I hope this is a signal to other companies to follow
suit." [BCW0424-9]
*******************************************
GLOBE AND MAIL
MacBlo posts profit, sells MB Paper
$850-million paid for subsidiary
Friday, April 24, 1998
By Patricia Lush
VANCOUVER -- MacMillan Bloedel Ltd. reported yesterday its first profitable
quarter in 18 months and a deal to sell its MB Paper Ltd. operations for
$850-million.
The forest products giant also announced at its annual meeting in Vancouver
that it may stop logging old-growth forests, a practice that has made it a
target of environmentalists.
The meeting was the first for president and chief executive officer Tom
Stephens, who had said he was looking forward to it about as much as a root
canal.
But Mr. Stephens, who was hired by MacMillan Bloedel's board of directors
last summer to turn it around from its money-losing ways, was clearly
pleased to tell shareholders of the company's first profitable quarter
since the fall of 1996.
Profit for the first three months of 1998 totalled $16-million or 12 cents
a share, in contrast to the year-earlier loss of $10-million or 9 cents.
Sales dropped to $990-million from $1.1-billion over the same period,
largely because of disastrous lumber sales and prices in Japan.
Analysts were surprised by the extent of the profit turnaround, since many
of them had forecast a sixth consecutive quarterly loss, perhaps 7 cents a
share for 1998's first quarter.
Much of the gain came from the packaging side of the business, which
MacMillan Bloedel plans to sell. Gains there helped offset a dramatic drop
in sales of solid wood, to $245-million in the latest quarter from
$349-million a year earlier.
Most of MacMillan Bloedel's lumber is aimed at the housing market in Japan,
where the price of four-by-fours has dropped to about $500 (U.S.) for each
1,000 board feet from about $900 a year ago.
Operating profit from the solid wood business could be down as much as 50
per cent this year, from $108-million (Canadian) in 1997, Mr. Stephens told
analysts in a conference call yesterday morning.
The sale of MB Paper, widely rumoured over the past week, will allow
MacMillan Bloedel to pay down a significant amount of its long-term debt
(which at the end of 1997 was a little more than $1-billion) and retain its
investment-grade debt rating, said Andrew Root, forest industry analyst at
Goldman Sachs & Co. in New York.
MB Paper, with two mills in British Columbia, produces newsprint and
lightweight coated paper. The division employs 575 and generates
$900-million a year in sales, or about 15 per cent of the company's revenue.
About $400-million of the $850-million cash proceeds will go to pay
intercompany debt related to MB Paper, Mr. Stephens said.
On the company's books, the sale will result in a loss of $35-million to
$45-million in the second quarter.
Investment dealer Goepel McDermid Inc. organized the sale, by private
placement, to institutional shareholders, mainly pension funds in Eastern
Canada. Canadian Imperial Bank of Commerce is to provide long-term debt for
the new company, to be called Pacifica Inc., after the name of the
lightweight coated paper that it produces in Port Alberni.
After regulatory approvals are obtained, Goepel McDermid plans a public
issue of about $250-million in qualified limited partnerships, said Donald
Shumka, vice-president and director of public finance in Vancouver. That
would probably come in mid-summer he said.
MacMillan Bloedel has long been the primary target of environmental groups
who oppose clear-cut logging, particularly in old-growth forests. This
year, they have renewed their campaign in Europe to persuade buyers of
coastal B.C. wood -- and the customers of those companies -- to avoid such
purchases.
Now, more and more, MacMillan Bloedel is hearing complaints from customers
as a result of that overseas campaign, Mr. Stephens said.
As well, he said: "We're asking ourselves if clear-cutting old growth is
the best economic harvesting method, given advancements in logging
technology and changes in the values of various elements of the timber
stands." Consequently, he has asked MacMillan Bloedel forestry people to
examine alternatives.
In January Mr. Stephens outlined a dramatic restructuring plan for
MacMillan Bloedel that includes selling its paper business, medium-density
fibre board mills and possibly those that produce oriented strandboard;
cutting about 2,700 jobs from the payroll; and chopping costs throughout
the company.
Much of that is being done and he will report on the progress soon, he said.
Also on his agenda is a search for acquisitions in the lumber business on
the B.C. coast. "We believe the stage is set for there to be a major
consolidation [in that part of the industry] and we plan to be the Bull of
the Woods in that process," he said. "The scale advantages and cost
synergies, along with increasing our absolute volumes, can yield some
compelling economics that we want to take advantage of if the price is right."
Meanwhile, he is urging the B.C. government to change its system of
stumpage -- the fees government charge companies for cutting trees on Crown
lands -- to a market-based system with competitive bidding for a percentage
of the harvest.
Currently, under the Canada-U.S. softwood agreement, Canadian lumber
producers can export a maximum 14.7 billion board feet duty free to the
United States. The U.S. industry lobbied for limits because, it said,
Canadian stumpage systems provides a subsidy to Canadian producers.
"If we can go to a market-based system, then the Americans have no basis
for keeping our wood out," Mr. Stephens said.
Late yesterday, B.C. Forests Minister David Zirnhelt said: "Mr. Stephens
has some interesting ideas on tenure [logging licence] reform and
experience on both sides of the border . . . and I respect his view on that
matter."
Christopher Hatch
Wood Consumption Program Director
Rainforest Action Network
NEW ADDRESS:
221 Pine St, Suite 5
San Francisco, CA 94104
rainwood@ran.org
www.ran.org