Pnlco Prunes Back To Redwood

Pacific Lumber Co. shut down its Scotia, Ca., sawmill Aug. 3 and planned to resume operations Sept. 4 focusing exclusively on redwood.

"Like many others in the industry facing depressed housing construction trends and reduced demand for lumber products, we are going to conserve our financial resources by taking this step," said president and c.e.o. George O'Brien. "We realize the hardship this creates for our employees, but hope they understand the need to adjust our operations to the reality of the marketplace."

Reorienting the mill, eliminating Douglas fir production, and restructuring operations "to reflect the ongoing market conditions" will result in the loss of approximately 100 jobs.

At the same time, Puco has secured agreement with Marathon Structured Finance Fund to provide $75 million in debtor-in-protection financing, as approved in U.S. Bankruptcy Court.

"This financing agreement is an important milestone in our progress towards resolving our financial issues and emerging from bankruptcy as a

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viable entity," O'Brien said. "This does not mean an easy road ahead, and the announcements we are making today underscore the challenges we face."

P,qI-co and its subsidiaries filed to reorganize under Chapter I 1 bankruptcy protection on Jan. 18.

HD Supply Sales Price Slips

Home Depot has renegotiated the sale of its HD Supply divison to three private-equity firms, dropping its asking price by lSVo to $8.5 billion and agreeing to buy back a l2.5%o equity investment for $325 million.

The buyers-Carlyle Group, Bain Capital Partners, and Clayton, Dubilier & Rice-reopened talks with Depot after their lenders demanded better terms than the original $10.3billion offer.

Home Depot also guaranteed a $lbillion senior secured loan.

The new deal was expected to close at the end of August.

Home Depot's 250 million-share buyback was also delayed, since the buyback was to be financed by proceeds from the sale of HD Supply or

by bridge financing. C.f.o. Carol

Tome said that the plan to repurchase up to $22.5 billion in company stock might have to be reduced.

"We're seeing the same volatility in the external markets that everybody else is," said Depot's Paula Drake. "The stock market, the debt market, and the housing market are each experiencing difficult conditions."

True Value Replaces H&E

H&E Home Centers' original location in Barstow, Ca., didn't stay closed for long. Local competitor Anderson's True Value is relocating its nearby l8-month-old store to the larger H&E building.

Anderson's began moving from its 5,000-sq. ft. storefront to the 32,000sq. ft. space weeks after H&E closed the 55-year-old location (see July, p. 26). Owner Ken Anderson hoped to reopen Sept. 1. The new Product mix will focus on general hardware, but include small lumber and tool-rental departments. He has already hired at least l0 former H&E employees.

Anderson's family has been in the hardware business since 1970 and runs True Values in Apple Valley, Phelan, Hesperia and Lancaster, Ca.

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