PRODUCTION BEGINS AT NEW WOOD TREATMENT PLANT

Sheridan, OR - June 3, 2002 - Pacific Wood Preserving of Oregon (“PWPO”) announced that it will begin production at one of the West Coast’s largest wood treating plants as early as June 15, 2002, after closing on the real estate portion of the transaction today. PWPO purchased the wood treating assets of the Taylor Lumber and Treating plant in Sheridan, Ore. out bankruptcy liquidation, in cooperation with creditors and the Environmental Protection Agency.

“This acquisition is an example of how private enterprise and the government can work together to save the taxpayers money,” said Dick Jackson, president of Pacific Wood Preserving of Bakersfield, Inc., which owns PWPO. Jackson said his company would convert the facility from treating utility poles into a production facility specializing in environmentally progressive treated wood products, including transmission and distribution poles, lumber and timbers. Pole production is expected to begin as early as June 15,2002, and lumber and production as early as July 1, 2002. PWPO has purchased and will install a new lumber incisor, lumber handling equipment, two large steel buildings for lumber storage, and will complete a variety of other modifications to the plant to convert it from a pole operation to a combination pole and lumber treating facility.

As part of the deal structure and in addition to monies that went to pay creditors, the EPA received $500,000 and PWPO has agreed to operate a storm water cleaning system and extraction well monitoring and cleaning system, two costly operations which would have otherwise been the responsibility of the EPA, funded by taxpayers. It has been estimated that PWPO’s assumption of these duties will save taxpayers $4 to $6 million on a net present value basis over the next 20 years. Additionally, PWPO has agreed not to treat with traditional wood preservatives at the site, including CCA (Chromated Copper Arsenate), Pentachlorophenol, Creosote and ACZA (Ammoniacal Copper Zinc Arsenate). In exchange these things, the EPA has granted Pacific a Covenant Not to Sue for existing environmental contamination at the site.

Bob Halderman of McMinnville, Ore. will serve as the new facility’s plant manager. Halderman worked previously for Sierra Pacific Lumber at its Lincoln, Camino and Hayfork sawmills. “I am just looking forward to getting this plant up and running,” Halderman said.

Recently, the most popular wood preservative used in the United States, CCA, has come under attack from environmental groups who believe that CCA treated wood poses unacceptable risks to humans. While the wood preserving industry disputes these claims, in a reaction to these pressures, the CCA chemical manufacturers entered into a voluntary agreement with the Environmental Protection Agency to modify the use labels of their products. This agreement effectively limits CCA to industrial uses only effective December 31, 2003. Since approximately 70% of CCA treated wood was used in residential settings, there is a large void for low-environmental impact wood treaters to fill.

“Pacific is currently the largest treater of low-environmental impact wood preservatives in the United States,” according to Jackson. Pacific’s products include Pac Bor® lumber and plywood for indoor use, CuNap-8™ for utility poles, ACQ Preserve® lumber and plywood for ground contact uses, Dri-con® fire retardant and Advance Guard® for interior framing of residential construction. Most of these products will be produced at PWPO’s Sheridan plant.

Jackson said the Sheridan plant would provide freight advantages to his company and its customers, as it is located close to sawmills that produce the lumber that will be treated and then shipped into large construction markets. He also said that low-environmental impact products are not widely sold into the Pacific Northwest marketplace, and that this plant would give Pacific the opportunity to do so. Pacific acquired the remaining equipment and inventory located at Sheridan facility on December 13, 2001, and purchased the real estate portion of the acquisition today.

The Sheridan plant, when fully operational, will employ between 25 to 40 people.

With the acquisition of the Oregon treating plant, Pacific will have four wood treating facilities in the western United States. Pacific’s other plants are located in Eloy, Ariz., Bakersfield, Calif., and Silver Springs, Nev.

Pacific is a privately held company that was founded in 1972. For more information regarding Pacific’s products, go to their web site at www.pacificwood.com.
 

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