Temple-Inland estimates downtime at Bogalusa, Louisiana, paper mill cost US$20M, resulting in loss of 50,000 tons of production, according to SEC filing; filing also discusses US$1B lawsuit alleging Temple-Inland caused Guaranty Bank failure
August 30, 2011
– Temple-Inland Inc. estimated that the downtime at its paper mill in Bogalusa, Louisiana, cost about US$20 million and resulted in the loss of about 50,000 tons of production, according to a Securities and Exchange Commission filing made by the company on Aug. 29.
The company also reported in the SEC filing that it received approval from the state Department of Environmental Quality to restart the 600-employee Bogalusa mill, located north of New Orleans.
In a press release issued on Aug. 17, Temple-Inland said that testing showed that the “Bogalusa mill would exceed its maximum daily permit levels for discharge to the Pearl River from the mill's waste-water treatment facility. The Company believes that this exceedance may have depleted the oxygen level in part of the river below that necessary to sustain a healthy fish population and resulted in a fish kill.”
The SEC filing also discussed a lawsuit alleging that Temple-Inland, along with certain affiliates, officers and directors, caused the failure of its spun-off Guaranty Financial Group (GFG). The US$1 billion federal lawsuit was filed Aug. 22 in the U.S. District Court for the Northern District of Texas.
The filing stated that Temple-Inland “believes that the huge amounts of alleged damages sought by the complaint … are not factually supportable and include substantial alleged damages for ordinary course dividends paid and internal corporate realignments made in years when GFG and the financial services industry were achieving record profits.”
In 2007, Temple-Inland spun off GFG and its real estate group, now called Forestar Group Inc., saying the move would help the units focus more effectively on business development. It also sold 1.55 million acres of timberlands, the company stated in the SEC filing.
The company said in the filing that it consulted extensively regarding the spinoff with its regulatory agency and financial advisors. The new subsidiary was “well-capitalized” with an equity market capitalization of more than $550 million, according to the filing.
Before and after GFG's spin-off, it held a portfolio of triple-A rated mortgage-backed securities, which declined in value amid the financial crisis at the end of 2008, the filing stated.
The primary source of this article is an SEC filing from Temple-Inland Inc., Austin, Texas, on Aug. 29, 2011.