Omak Firm Reorganizes, Cuts Debt

Omak Wood Products Inc. has completed a reorganization that wipes almost $50 million in debt off the books and preserves 475 jobs in hard-pressed Okanogan County.

The plan also perpetuates a cooperative relationship among creditors, workers and management that drew national attention when employees first bought a majority interest in the sawmill and plywood plant in 1988.

“At least this gives the company an opportunity to go forward,” Spokane attorney Shaun Cross said Thursday, the day new incorporation documents were filed.

Cross said Omak Wood Products fell on hard times shortly after the 1988 employee buyout because timber prices plunged. The company wasn’t generating the cash needed to service debt owed U.S. Bank of Washington, the General Electric Pension Trust and Safeco Life Insurance.

Although employees accepted wage and job cuts, debt continued to mount, Cross said.

But with an improvement in operating results last year under Chairman Bob Harris and Chief Financial Officer James Aher, he said, the pension trust and Safeco agreed to swap $32.5 million in debt and equity for $6.5 million in new obligations.

Employees also converted $14.3 million in deferred wages and benefits into preferred stock.

The result, Cross said, was a positive balance sheet that increased the value of employee common stock 50-fold. Also, the company will be better able to bid for badly needed timber.

“It’s been a remarkable turn-around,” he said.

Harris said everyone sacrificed because keeping the company viable was in their best interest.

“I think everybody feels Omak Wood Products has a chance to survive,” he said.

“People felt it was worth saving and that’s a tribute to the employees and the management team,” added Cross.

, DataTimes