KETCHIKAN (AP) -- The Ketchikan Gateway Borough has given Gateway Forest Products Inc. -- technically in default on two major loans -- an 18-day grace period, shorter than the company had requested.
Gateway had wanted a 30-day grace period. But the assembly unanimously decided Monday to set the date for its next regular meeting date and following the company's June 14 meeting date with the Alaska Industrial Development and Export Authority.
Gateway obtained a $2.5 million borough loan on April 4 to finance its Ward Cove veneer mill operations while developing a bankruptcy reorganization plan, and at that time agreed to show the plan to the assembly by June 1. The veneer plant is at the site of the former Ketchikan Pulp Co. plant.
Gateway President Jim Erickson told the assembly that meetings have been scheduled this week and next with three organizations that the company might rely on to help finance its future.
He said most of the reorganization plan, including business and marketing plans, raw materials supply and other aspects, is complete.
Failure to produce the plan by June 1, however, places the company in default and also triggers a default on a $7 million loan the borough provided in 1999. The company used that money to build its mill, but construction cost overruns and lumber market downturns ravaged the company throughout 2000.
Gateway filed for bankruptcy protection in February. The borough has also agreed to purchase up to $5.5 million worth of Gateway's debts to local contractors.
The borough has so far provided $15 million to help Gateway. The money comes from an economic development fund obtained from the federal government.
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