PORT ANGELES — A group of local investors has signed an agreement to buy the shuttered KPly mill’s equipment in a step toward reopening the mill.
After about seven months of talks, Peninsula Plywood Group announced in a prepared statement Thursday that members have signed a “definitive agreement” with Sterling Savings Bank to purchase the equipment, which has been inoperative at the former plywood mill since it closed in November 2007.
“We’re legally bound,” said Peninsula Plywood President Josh Renshaw of Port Angeles. “We’ve signed off saying we’re going to do it, and they said they’re going to do it.”
Closing of the purchase, which is to occur by July 15, is dependent upon Peninsula Plywood coming to terms with the Port of Port Angeles on a lease of the 19-acre property on Marine Drive, the statement said.
Interest in reopening mill
Renshaw — who along with an unnamed group of Port Angeles investors wants to reopen the mill — would provide no details.
“I wish I could comment,” said Renshaw, who was a sales manager at the KPly mill when it was owned by Klukwan Inc. of Alaska.
“At this point, I can’t say anything else besides what’s in that document,” Renshaw added.
Klukwan permanently laid off 132 employees in April 2008 after closing the mill in November 2007.
The investors’ plans for the mill — which has had several owners since it opened in 1941 — are to reopen it under its original name, Peninsula Plywood, with about 172 employees, and produce 5 million board-feet of plywood a month.
The group’s prepared statement said applications for employment are not being accepted now.
The port, which owns the property the closed mill is on, seized the mill’s buildings after Klukwan failed to pay its outstanding rent.
Sterling Savings seized the mill’s equipment after Klukwan failed to repay its loans with the bank.
Negotiating lease
Port commission President John Calhoun said the port began negotiating a lease with Peninsula Plywood a few weeks ago, but nothing has been settled.
Calhoun said a lease agreement with Peninsula Plywood will not make the group responsible for Klukwan’s debt.
“The absolute end game for us to get that land in productive use,” he said.
“We’re certainly not holding them accountable, and this lease, to the back rent.”
In September, the port began seeking about $212,788 in back rent and other fees from Klukwan through a default judgment filed in Clallam County Superior Court. As a result, the port seized the mill’s buildings but has yet to see the debt settled.
Calhoun said the port may never see those debts paid.
“Klukwan went bankrupt and left unpaid debts,” he said.
“It may be that the port may never get fully satisfied for those debts, but we can certainly try.”
When asked what options the port still has, Calhoun said: “I’m not sure. Our attorneys are handling that. But reports to the commission have been characterized by very little progress.”
Port Commissioner George Schoenfeldt said the port wants to see Peninsula Plywood reopen the mill, but it can’t wait forever.
Employment requirements
That’s why any lease agreement with Peninsula Plywood would come with requirements to employ a certain number of people by certain dates.
“It’s got to be pretty soon. We just can’t let that property sit idle,” he said.
“We’ve really, really bent over backwards for Josh and his investor group and are ready to give him the benefit of the doubt . . . If it’s not going to go, we got to move for getting something else in there that creates jobs.”
Renshaw has said the mill would have a niche market and be less affected by the downward trends in home construction.
Its products would require use of Douglas fir trees with minimal defects and cedar trees that aren’t in abundant supply. Therefore, Renshaw said, the demand for these products would continue to be in line with the available supply.
He has also said that the limited supply of these resources wouldn’t allow the mill to expand beyond its current capacity.
But before the mill can be restarted, its idled machinery needs to be brought up to par.
Renshaw said in December that a walk-through of the mill showed low-level weather damage to the equipment, although pumps were found to be frozen.
He also said then that the mill needed about $500,000 worth of remedial work after it closed.
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Reporter Tom Callis can be reached at 360-417-3532 or at tom.callis@peninsuladailynews.com.
