North Pacific reaches deal to sell $25 million in assets

North Pacific Group, once Oregon’s third-largest private company, is seeking court approval to sell portions of its assets in an estimated $25 million deal that could save 100 jobs.

It’s likely to be the first of several deals as the the beleaguered Tigard-based wood products company struggles to repay lenders.

On Wednesday the company reached an asset purchase agreement with a subsidiary of Atlas Holdings LLC, a Greenwich, Conn.-based private equity firm.

Under the deal, Atlas Trading Acquisition LLC would acquire North Pacific’s food and agriculture and utility and construction units, the Portland-based portions of its hardwood and industrial products unit, and the company’s Portland Trading Platform.

In court documents, the company estimates the deal would be between $20 million and $25 million while saving an estimated 100 jobs if the sale closes by March 1.

The deal is valued at $2 million plus 80 percent of the book value of their accounts receivable and 50 percent of the value of their inventories on the day before the deal would close.

North Pacific, which in 2008 had nearly $1 billion in annual revenue, was forced into receivership on Jan. 20 after a consortium of lenders led by Wells Fargo Capital Management filed a lawsuit claiming the company and its subsidiaries defaulted on its loans.

U.S. District Court Judge Anna J. Brown signed a court order putting Lake Oswego-based crisis management firm Edward Hostmann Inc. in charge of employee-owned North Pacific.

At the time of the filing, North Pacific owed the lender group about $42 million. In court filings Wednesday, Hostmann said that figure has since been pared down to $30 million.

Upon taking control of the company, Hostmann stepped up the efforts to sell the company, setting a Jan. 29 deadline to accept bids.

Hostmann, in court documents, said he is aware of 41 parties interested in parts of North Pacific. He received 24 letters of intent to purchase the company’s assets.

A hearing to seek an order approving the sale is scheduled for 11 a.m., Feb. 25 , before U.S. District Court Judge Garr M. King in Portland.

The proposed Atlas acquisition doesn’t include the company’s building products division, its Southern Trading Unit, or portions of its hardwood lumber and flooring manufacturing operations in Arkansas and Missouri.

In court documents Wednesday, Hostmann said he is completing the negotiations on a final agreement to sell another North Pacific division and “plan(s) to move for its approval as soon as possible.”

That deal, combined with the Atlas acquisition, “would substantially reduce the debt” to the lenders.

Meanwhile, Hostmann said he is working to reach deals on other letters of intent from prospective buyers. Hostmann told the court he hopes to not only satisfy the balance owed to lenders but also begin eventual distribution to other North Pacific creditors.

North Pacific CFO Christopher Cassard in court documents Wednesday said the company began marketing its assets in July 2008 at the direction of the company’s board, which urged management to seek additional capital.

The company began working with Atlas in October on a deal to sell the whole company and by November had presented the proposal to its lenders.

But Cassard said Atlas backed out in early December out of fear that North Pacific faced litigation connected to selling contaminated drywall products imported form China.

In the court documents, Cassard said North Pacific’s allegedly distributed about 1 percent of Chinese drywall that was said to be contaminated.

The imports came through North Pacific’s Southern trading unit, which aren’t apart of the current sale proposal.

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