Company terminates agreement to buy Pope & Talbot pulp mills

An Asian paper giant has terminated its agreement to buy the three remaining pulp mills from the bankrupt Pope & Talbot Inc.

PT Pindo Deli in February agreed to buy Pope & Talbot pulp mills in Nanaimo and Mackenzie, British Columbia, and Halsey, Ore., for $105.3 million. The deal included the assumption of debt and inventory concessions, bring its value to $225 million. The company is a subsidiary of Asia Pulp and Paper, which is owned by Indonesia's Sinar Mas Group, Asia's largest paper producer.

The deadline to close the deals passed on Wednesday.

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In a news release late Thursday, Pope & Talbot said PT Pindo Deli delivered a written termination of the asset purchase agreement. PT Pindo Deli, along with Columbia Pulp and Paper Inc. and Columbia Pulp and Paper Ltd., the companies assigned the rights of the mills, said it would be willing to to discuss alternative transactions, Pope & Talbot said in a news release.

"Pope & Talbot continues to be willing to seek avenues of understanding with the Columbia Pulp and Paper companies from which the parties can proceed to a sale of the mills," Harold Stanton, Pope & Talbot's president and CEO, said in a news release.

PT Pindo Deli, in a separate deal, had agreed to buy Pope & Talbot's Fort St. James sawmill in British Columbia for $6 million. The company's news release did not address the status of that deal, and spokesman Mark Rossolo did not return calls for comment Friday morning.

Portland-based Pope & Talbot (Pink Sheets: PTBT) had already received assurances from bankruptcy courts in Canada and the U.S. that its protection and temporary financing will be extended through May 5.

Meanwhile, Vancouver, British Columbia-based International Forest Products Ltd. on Wednesday announced it had concluded the $69 million purchase of Pope & Talbot mills in Castlegar and Grand Forks, British Columbia, and Spearfish, S.D., as well related timber tenures in southern British Columbia.

Pope & Talbot, a 160-year-old Portland-based wood products company, filed the third-largest bankruptcy in state history in November after fighting a losing battle with the slumping housing market, a strengthening Canadian dollar, and high debt levels.

In order to secure an emergency $89 million loan, the company subsequently agreed to sell all of its assets by mid-February.