AIDEA considering purchase of Gateway to avert foreclosure

Posted: Thursday, July 11, 2002

KETCHIKAN (AP) -- A financially troubled veneer plant here may find new life under new and very different management.

The Alaska Industrial Development and Export Authority is considering purchasing the mill operated by Gateway Forest Products to head off an auction next Tuesday.

AIDEA has been in talks with a veneer company in Oregon and the Sealaska Corp., which logs timber in Southeast Alaska, to stop the foreclosure.

AIDEA is considering purchasing Gateway's assets and leasing them to Timber Products Co., of Medford Ore., and Sealaska, said AIDEA board member Deborah Sedwick.

Timber Products would operate the plant and sell the veneer products and Sealaska would provide the timber, Sedwick said.

''It's really exciting when a company that really understands timber and understands the good, the bad and the ugly (of the timber industry) is considering this as a viable operation,'' Sedwick said.

The five-member AIDEA board still has to approve the proposal and it has to be accepted by Foothill Capital Corp., a major Gateway creditor, Sedwick said.

Foothill plans to hold an auction July 16 to sell equipment at the Ward Cove facility and recoup some of the debt owed to it.

Gateway, founded after the Ketchikan pulp mill closed, ran into financial difficulty early in 2000. The company attributed them to declining veneer prices, construction delays and cost overruns.

Gateway owes creditors about $39 million and filed for Chapter 11 bankruptcy protection in February. Among its creditors is the Ketchikan Gateway Borough, which is owed about $14 million.

Last year, the company requested $10 million in financing from AIDEA along with $4 million from Foothill. That deal was not approved.

AIDEA held a meeting with officials from Timber Products and Sealaska to discuss details of the plan Tuesday. The three sides are considering a memorandum of understanding and plan to meet again Friday.

The three sides have been in talks for the past two months and held a meeting in Seattle in June, said Jim McMillan, deputy director of AIDEA.

Foothill wants an acceptable offer along with a nonrefundable deposit to stop the auction, McMillan said. Timber Products has agreed to post a deposit, McMillan said.

But specifics of the deal have not been worked out, McMillan said.

The plant could provide 40 to 50 full-time jobs, McMillan said.

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