RAPID CITY - Pope & Talbot has agreed to sell its Spearfish sawmill and two others to International Forest Products, known as Interfor, for about $69 million.

The announcement was made Monday, the same day that Pope & Talbot filed for reorganization under Chapter 11 of the U.S. Bankruptcy code. The U.S. bankruptcy filing comes less than a month after Pope & Talbot filed for similar protection from creditors in a Canadian court. The sale is subject to approvals by the U.S. Bankruptcy Court and the Canadian court.

The other two mills involved in the sale are in the British Columbia cities of Castlegar and Grand Forks. All three produce high-quality softwood lumber products, Pope & Talbot officials said in a news release.

"We think it's good news," Jim Rarick, the longtime general manager of the Spearfish sawmill, said.

The mill employs 280 people directly and another 150 contract loggers. Crews bring in logs from as far away as Chadron, Neb., and Broadus, Mont. Through the parent company's financial troubles, the Spearfish sawmill has remained in full production.

Rarick said officials from Interfor have been in Spearfish several times in recent weeks looking at the operation and evaluating a potential purchase.

"They seem to be a very strong forest-products company, and we're happy that they are willing to buy (the Spearfish mill)," Rarick said. "We've enjoyed our share of success over the years, and we consider ourselves a good, competitive sawmill."

Interfor has four sawmills in British Columbia, one in Washington and two in Oregon. It also operates value-added remanufacturing and specialty products facilities in British Columbia and Washington.

Interfor said its acquisition of the three sawmills, if completed, will increase Interfor's total lumber capacity by 580 million board feet per year to about 1.9 billion board feet.

The Castlegar and Grand Forks mills are large producers of lumber products for U.S. and Canadian markets.

"The Spearfish mill is a small but profitable operation serving specialty markets in the United States," Interfor officials said.

Between 2002 and 2006, the three mills earned about $16 million, with peak earnings of $36 million in 2004. The company did not release a mill-by-mill earnings breakdown.

"We view the acquisition of these mills as an attractive opportunity to add critical mass in one of our core operating regions and to expand our presence in the U.S.," Duncan Davies, Interfor's president and chief executive officer, said.

Pope & Talbot has operated the Spearfish sawmill since 1981, when the company bought the fire-damaged plant from a division of Homestake Mining Co. Pope & Talbot rebuilt the mill and modernized it.

Pope & Talbot was founded in 1849 and produces market pulp and softwood lumber at mills in the U.S. and Canada. Markets for the company's products include the U.S., Europe, Canada, South America and the Pacific Rim.

But in recent years, the Portland, Ore.,-based parent company has struggled financially.

"Persistent record low demand for lumber, high-priced pulp chips and sawdust, the appreciation of the Canadian dollar and the high cost of debt service have combined for an untenable business environment," the company said.

Pope & Talbot said it will use the protections of U.S. and Canadian bankruptcy courts to buy more time as it continues its restructuring. Those efforts include the sale of some or all of the company's assets.

The parent company has been in turmoil for months. Several times, Pope & Talbot has won forbearance agreements with its creditors, who granted temporary access to the company's credit lines.

Its financial problems drove stock prices so low that the New York Stock Exchange delisted the company's stock late this summer. Shares now trade as a Pink Sheet stock, an over-the-counter market for securities that do not meet the listing standards required by larger exchanges such as the NYSE and the Nasdaq.

Pink Sheet stocks are thinly-traded due to limited market capitalization or few shares outstanding.

Contact Dan Daly at 394-8421 or dan.daly@rapidcityjournal.com