The Bangor Daily News
Thursday, October 22, 1998

Bowater sells 1 million acres to Irving

By Mary Anne Lagasse, Of the NEWS Staff-- MILLINOCKET _ Two days after Bowater Inc. said it would not sell all of its Maine holdings as one package, the company announced it is selling nearly 1 million acres of timberland and a sawmill to J.D. Irving Ltd. of Saint John, New Brunswick, for $220 million. The Bowater land sale comes only a few weeks after South African Pulp and Paper Industries Ltd. sold 905,000 acres in Maine to Plum Creek, a Seattle-based timber company, for $180 million.


Bowater, the South Carolina-based parent company of Great Northern Paper Co., is selling about half of the 2 million acres it owns in Maine. Much of the land being sold to Irving is in Aroostook County, along with smaller parcels located in northern portions of Piscataquis and Penobscot counties.


"This transaction is part of the company's continuing effort to optimize its rich asset base through redeployment for greater shareholder value,'' said Arnold M. Nemirow, Bowater's chief executive officer, in a prepared statement issued Wednesday.


For Irving, which already owns about 550,000 acres in northern Maine, the purchase makes it the state's largest private landowner. The sale is expected to be completed in the first quarter of 1999.


The sale does not include about 1 million acres of land Great Northern owns in the West Branch region, said Gordon R. Manuel, Great Northern's manager of public relations. The West Branch region stretches northwest from Millinocket to the Canadian border.


Manuel said the parcels being sold in Aroostook County are located from Oakfield northwest to Ashland and Portage and some around Houlton.


As for the remaining 1 million acres, Manuel said they would be used for Great Northern's operations. "However, I would not preclude the possibility that some of the land could be considered for sale in the future,'' Manuel said.


Funds from asset sales will be used to reduce Bowater's debt, repurchase shares of its stock, and for other strategic purposes. Manuel declined to reveal the per-acre price. "The sale price here was higher than the sale price announced by Sappi,'' Manuel said. Plum Creek paid $200 an acre to Sappi.


Gov. Angus King was hopeful about Wednesday's news, saying that Irving has a good reputation for its forestry practices. King said the Canadian company has shown that it's "in it for the long haul.''


In those senses, King said, the sale was distinct from the Plum Creek deal with Sappi. Environmentalists have criticized Plum Creek for selling off prime parcels for development, raising fears about restricting access to some of Maine's most valuable scenic and recreational land.


Irving, King said, has shown no interest in developing the Maine forest lands it has held for 50 years, and the company stated it will maintain public access to its new property. King noted that the company recently received certification that its New Brunswick lands are managed sustainably, and said foresters he respects consider Irving to have a good reputation.


"My sense is they have a pretty good record in terms of forest stewardship,'' King said. "The proof will be in the woods.''


Irving officials said the company's timberlands in northern New Brunswick recently became the largest forest in Canada to receive approved certification from the Forest Stewardship Council. The company is in the process of having its Maine woodlands certified by the same group.


From Irving's perspective, the purchase will enhance the company's timberland and sawmill operations at Fort Kent, which employs more than 300 people.


"This purchase is a milestone for our forest products company. It will provide many opportunities to expand our forest products business,'' said J.D. Irving, president of J.D. Irving Ltd.


Irving spokeswoman Mary Keith said the company plans to continue operations at Pinkham Lumber Co., which employs about 100 people and is located about eight miles north of Ashland in Aroostook County. The sawmill included in the purchase produces about 80 million board feet of lumber a year and 58,000 cords of spruce chips.


"We have plans to further develop the facility and are hopeful of creating more job opportunities for Mainers as our plans develop,'' said Keith.


As for whether Irving plans to hire Maine logging companies on its newly acquired million acres, Keith said Irving employs Mainers at its current logging operations in Maine. Some Maine loggers have been blockading border crossings to protest the number of Canadians working in the Maine woods.


"We employ 300 Mainers in the woodlands and the sawmill that we operate in Fort Kent,'' Keith said. The spokeswoman said the company's employment plans were no different from what it has done in the past at its Fort Kent operations. "We are interested in creating employment for Mainers,'' she said.


In March 1991, Great Northern _ then under the ownership of Georgia-Pacific Corp. _ closed all of the company-owned logging camps. Since then, wood harvested on company-owned lands has been harvested by contractors hired by the company.


Bowater and Irving will enter into an agreement to have Irving supply wood fiber from the timberlands it is purchasing to Great Northern Paper Co.'s papermaking operations in Millinocket and in East Millinocket. The wood fiber agreement is similar to one between Sappi and Plum Creek.


Irving officials said public access to the lands for which the company recognizes a recreational use will be allowed consistent with the practices of other northern Maine timberland owners.


Several environmental and conservation groups said Wednesday they hoped Irving and Bowater would be open to efforts by Gov. King to protect the public's interest through the purchase of important places.


"We urge the governor and his staff to develop a proposal to protect some of Bowater's land surrounding Baxter State Park, the West Branch of the Penobscot River, the Debsconeag Lakes and the headwaters of the St. John River region,'' said Judy Burke, a spokeswoman for the Natural Resources Council of Maine.


Forest activist Jonathan Carter said that while he was concerned about Irving's forest practices _ which he said rely heavily on clear-cutting, herbicide spraying and converting the forest to fast-growing plantations _ the real issue in Wednesday's announcement was the acreage that Bowater decided to keep.


Those lands, he said, include a horseshoe around Baxter State Park and encompass the headwaters of the Allagash and St. John rivers and much of the Penobscot River watershed. He challenged Bowater to put a price tag on its remaining 1 million acres so the public can try to amass the money needed to purchase all of it.


"These lands that are left over ... represent the heart and soul of the Maine woods _ at least the northern heart and soul; Plum Creek now owns much of the southern part,'' Carter said. "This is a core part of what should be viewed as a first step toward the national park proposal.''


Carter said that acquiring public land and restoring wilderness are key to the region's economic future, since the service industry is the fastest-growing sector of Maine's economy.


Jim St. Pierre of RESTORE: The North Woods, a group encouraging the public purchase of the state's forest, said his group hopes to acquire land in the West Branch region to help create a 3.2 million-acre national park. "I hope they give us an opportunity to raise the money to buy the land for the public,'' said St. Pierre.


Unlike Plum Creek, Irving's tradition is in timber harvesting not real estate development, said Burke.


"Irving's timber harvesting practices have received considerable scrutiny and do warrant close attention,'' she said. Burke said there were indications that Irving was making significant changes in its forest practices. She said the NRC was encouraged about Irving's subjecting a sizable portion of its Canadian timberlands to an independent "green certification audit.''


Reaction to the sale in the Millinocket area was similar to reaction in the Greenville area when Plum Creek purchased Sappi lands. Many Millinocket area residents said they are glad the lands would not end up in a national park. Bowater is trying to sell the papermill in Millinocket, which employs 900 people. The company plans to invest $220 million in its East Millinocket facility.


"I'm relieved it wasn't RESTORE,'' said George Tapley of East Millinocket, who works at Great Northern and is a union president. "I would rather see the land remain part of a working forest,'' Tapley said. The East Millinocket man said people hope Irving will continue to allow people to use the lands as did Great Northern.


"It's far superior than being put into a national park,'' said Herbert Clark of Millinocket, a Great Northern worker and chairman of the Town Council. Clark said he has been told by people in Aroostook County that Irving is a good steward of the land. He hopes Irving will continue with the public access policies of Great Northern.


J.D. Irving Ltd. is a 116-year-old family business. The company and its affiliates own 2.5 million acres of timberland in Canada, in addition to its Maine holdings. Irving operates 13 sawmills in Fort Kent, New Brunswick, Quebec and Nova Scotia. The company has six mills that produce pulp, newsprint, tissue, uncoated groundwood specialty papers and corrugated medium, the wavy lining in cardboard. It employs more than 3,000 people in Canada and Maine.


Keith said Irving's interest in acquiring Bowater's land in Maine had nothing to do with the company's losing some of its timber harvesting rights on the 2.5 million acres of public land owned by New Brunswick.


In New Brunswick, land owned by the province is called crown land. About half of New Brunswick's 14.6 million acres of productive forest lands is provincially controlled. Most of the more than 7 million acres of crown land is leased to Canadian forest products companies. These companies, which have long-term leases, manage the land under specific provincial restrictions and guidelines and harvest it to feed their mills. Companies pay stumpage fees to the province for every tree they cut.


Companies that cut on crown lands cannot directly export the raw timber out of New Brunswick until it has been processed or value has been added, according to provincial officials.


A dispute over cutting rights on crown lands surfaced in 1995 when a young Micmac, Thomas Peter Paul, was arrested for harvesting bird's-eye maple on crown lands, which was sold to a Maine lumber mill. During Paul's prosecution, two New Brunswick justices ruled that Canada's aboriginal communities have rights to hunt, fish, trap, and to cut trees on all crown land. The issue has been appealed to the Supreme Court in Canada, where it is expected to be heard sometime in 1999 or 2000.


Earlier this year, former Premier J. Raymond Frenette offered New Brunswick's 15 aboriginal communities 5 percent of the annual allowable timber cut on crown lands, which means the forest products companies collectively will give up 5 percent of their annual timber cuts. Since Oct. 7, nine of the 15 aboriginal communities have signed interim agreements with the province.


Keith said Irving supports the settlement agreement with the native communities. She said there was some impact on the company's wood supply, however, the company planned to make up that loss by purchasing wood from the native communities.


NEWS writer Orna Izakson contributed to this report.

Copyright © 1998, Bangor Daily News Inc.