by Michael Kelly

“The 160 people whose jobs

depend on the Wedeene River sawmill operation should know by the end-of this week if the mill will continue to run. Wedeene went into. receivership Sept. 21,

‘and representatives of receiver Peat _ Marwick ~ and Company are

keeping the mill in operation until they determine whether it can go on a break-even basis while they try to sell it.

Colin Rodgers, who is managing .

the mill for Peat Marwick while

the operation is being assessed, said last week the analysis will take about 10 days to complete. If

' the mill is not losing money by

__ likelihood

‘ * small were sold as pulp," he said.

continuing to produce lumber — without debt payments figured in.

_. = Rodgers thinks it will keep

going. If it is losing money, in all there will be a shutdown. Rodgers explained that operating losses would have to be financed by the banks, primarily the Canadian Imperial Bank of Commerce, that hold Wedeene’s corporate debts. Any continued operations will require the co- operation of the banks, he said.

Peat Marwick intends to put together an information package for potential buyers and sell both the mill and its associated forest licences as a going concern, Rod- gers said.

"Unfortunately, they didn’t have enough wood," he said in examin-

ing the company’s failure. Rodgers

believes Wedeene could have made a profit if timber supplies would have been adequate to run a second shift, or if the mill could have been refitted to cut the full timber profile available from its licences in the North Coast Timber Supply Area.

"They could only use about 40 percent of what they were cutting. The logs that were too large had to be sold on the Vancouver log market, and the ones that were too

Ata presentation made to Premier Vander Zalm and members of the B.C. Cabinet in Terrace Sept. 25, two corporate officers for Wedecne, Kelly and Clayton Williams, laid blame for the com- pany’s insolvency squarely and entirely on government policy. If Wedeene had been allowed to sell on export markets the 10 percent _

of its cut that was too large for the ~ mill to process, they said, the cash

- flow from the high prices foreign

log buyers pay would have allowed Wedeene to build a large log line at the Prince Rupert saw- mill.

The Wedeene sawmill opened i in May 1988. The company’s export permit was revoked without notice as part of policy changes brought in by the Ministry of Forests in October of that year.

Rodgers-said he expects potential buyers would be companies that already have supplies of timber in the region.

The largest licence holder in the North Coast TSA is Vancouver- based International Forest Pro-

-ducts. Bill Rosenberger, timber

development engineer for the com- pany, told the Terrace Review he

re er)

‘had scquainted upper management

officials in the company with the . Wedeene situation. "We're inter- ested in acquiring the timber. But the quota is tied to the mill; that’s the difficulty.”

Wedeene was. originally granted cutting rights to about 170,000. cubic metres of timber per year on the north coast under the condition that they would establish a sawmill to process the wood. The two 20- year renewable forest licences are

. Still tied. to-the mill.

“We already have more inills’ than we can supply with timber," Rosenberger said. "It [Wedeene] doesn’t appear that attractive right now."

Kelly and Clayton Williams, vice president of woodlands and vice president of manufacturing for Wedeene, stated in an information bulletin Sept. 21: advising their employees of the company’s insol- vency that joint venture negoti- ations with West Fraser Timber, another major licence holder in the region, had broken down Sept. 18.

Wedeene stated, "The lack of.

profitability in the industry as a whole left them [West Fraser] ina position of being unwilling to take on any additional capital require- ments even though long term bene- fits could be realized.”

West Fraser already has a saw- mill in Terrace that produces 205 million board feet of green hem- lock dimension lumber for export: annually, The company also holds

a partnership “with Enso’ Forest”

Products in pulp mill in Kitimat. Both operations use timber and pulp cut on the company’s Tree Farm Licence 41 in the Kalum Timber Supply Area, and West Fraser is presently awailing appro- val from the Minister of Forests for acquisition of another 240,000 cubic meter licence from Tay-M . Logging in the North Kalum. ~

The other mjor licensee in the region is Skeena Cellulose, which

already has a pulp mill in Prince Rupert and a sawmill in Terrace.

The company has tenure on Tree Farm Licence 1 and a 20-year renewable forest licence in the

Kalum ‘TSA that give it a com-

bined cut of more than a million cubic meters of timber and pulp annually.

Orenda Forest Products of Vancouver holds a 360,000 cubic metre licence in the North Kalum,

and most of their cut is shipped

offshore through the port of Stewart under a standing green export permit. In the spring the company unveiled a proposal to build a chemi-pressurized ground- wood pulp mill in either Stewart or some other location in the North Kalum as part of an application for 100,000 cubic metres of additional tenure under Pulpwood Agreement 17. Orenda has since indicated that the project may also include a paper mill.

Acquisition of the Wedeene assets could give Orenda additional pulpwood and add some vertical integration to the company, an aspect that could be particularly attractive if the government cuts off raw log exports from the North Kalum as has been recommended _ by the legislature's Select Standing

Committee on Forests and Lands.

‘A company representative said - -Monday, however, that Orenda has absolutely no interest in picking up Wedeene. .

. Despite. its financial difficulties, there: ‘appears to be nothing wrong - with: Wedeene’s :product. "It’s a - good product,” Colin Rodgers said.

“We're shipping everything the mill can produce,"

The Ministry of Forests. is going

to ‘let the receivership mn its

course, Gary Adolph, manager for -,

Adolph said the North Coast

district is currently. working on a . ‘resource management plan that .

will review the annual ‘allowable cut, timber allocations and the area’s land. base. He expects the

project to take several months and

involve public hearings. ' The Minister of Forests will have to approve any sale agreement of

Wedeene because it will include ©

the transfer of a forest licence.

the North Coast ‘Forest District, A <<

said his office attempted to find & additional wood for Wedeene but @

there were. no allocations left in

the district’s 650,000 cubic meter § ‘annual allowable cut. According to & the Prince Rupert forest Region | licensee list, Wedeene and associ- § ate company Douglas Channel § Resources held a combined cut of 5

169,946 cubic metres, Boyle and Dean Logging holds 22,334,

Thomson Industries holds. 30,696,

and Intemational. Forest Products, which operates a chain of sawmills

- SATURDAY,

in Vancouver and the Fraser Val- I

Iey, has a cut of 226,617.

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