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Murphy Co. buys Panel Products

ROGUE RIVER — Eugene-based wood-products firm Murphy Co. has signed an agreement to purchase the Panel Products plywood plant on the south edge of town.

The $3.6 million deal, made with a court-appointed receiver, was cemented Wednesday morning, but still needs the approval of Jackson County Circuit Judge Mark Schiveley.

The 164,000-square-foot plant and its equipment on 51 acres was set to be auctioned today. Murphy Co., headed by John Murphy, finalized an agreement with receiver Kim Short even as prospective buyers were inspecting the site.

The Rogue River mill was one of two Panel Products plants in Jackson County that went into receivership in May after Umpqua Bank filed for the appointment of a receiver. Umpqua was one of the company's three secured creditors, along with the federal Small Business Administration and Madison Capital of Maryland. Short since has been attempting to sell off the company's assets.

Murphy Co. did not immediately return a telephone call or an e-mail seeking comment.

Last month, Bob Jonas and Daniel Lavenbarg acquired the White City veneer plant on Agate Road for $522,500. Umpqua Bank was the sole secured creditor for that property.

Short, of R.K. Short and Associates in Eugene, has worked on bankruptcy and receivership cases for nearly three decades. He has been a Chapter 11 trustee and state courts receiver for the past five years.

He said Murphy Co. has expressed interest in the mill for some time, but a deal was struck only at the 11th hour. "We've had negotiations for a period of several months, along with other potential buyers," Short said. "We finally came to an agreement and terms this week. Certainly, the auction deadline did have a bearing; it's always an incentive."

He said the quality of the new and refurbished equipment and design of the plant also was attractive to Murphy.

Short said his understanding is that Murphy may restart operations in January after some repairs are completed.

"Once they take legal possession, their goal is to get in there and start refurbishing," Short said. "The boilers will need an overhaul."

Short said the legal process leaves the door open for potential over-bidders.

"They would have to contact me, show financial capacity to perform and post deposits in order to bid," Short said, noting there would be a minimum over-bid price. "The purpose for the process is to return the highest value to creditors."

There is also a provision for a break-up fee, he said. In the rare case someone does overbid, Murphy would pocket a fee to compensate it for its efforts.

News of the pending deal was greeted with enthusiasm by former Panel Products employees.

"To tell you the truth, I'm kind of ecstatic," said Frank Mize, head of maintenance in recent years. "We've had our ups and down this past year, waiting to see what was going to happen. Southern Oregon really needs this. There are no jobs and we haven't seen a lot from the stimulus except for a bit of road construction."

Panel Products, a Milwaukie wholesaler operated by the McLaughlin family, purchased the Rogue River plant from Louisiana-Pacific on the final day of 2003, a year after buying the former Medply Inc. operation on Agate Road in White City. The family poured more than $12 million into the operation, converting the Rogue River veneer drying plant into a full-blow plywood plant. The McLaughlins acquired a 2006 Spartek layup line, a 2008 panel trim line and other state-of-the-art components just as the economy started to turn.

When the housing boom collapsed, demand for plywood fell. Panel Products was shipping 50 truckloads of plywood a week when the McLaughlins abruptly shut down, first the White City plant and then Rogue River.

"I didn't know it was going down until the day they did it," said long-time plant manager Wade Bentley. "There are other mills out there, and under the right hands this one could still be profitable."

Bentley said about 10 percent of the people working at the plant when it closed have found new jobs.

"All the key people — the maintenance, safety and environmental specific ones — are all still looking for work," Bentley said. "All of the other mills have curtailed operations, so there is no opportunity for those skilled workers with Timber Products and Boise closing plants in White City."

Panel Products had a plywood inventory of 50 truckloads on its deck when it was shuttered. Bentley has since whittled it down to three truckloads, selling to in-state suppliers and wholesalers.

Auctioneer Dan Pahl said the quality of equipment at the Rogue River mill had attracted dozens of interested buyers.

"In my 35 years in this business, quite frankly this is the best equipment that's come to auction," he said.

For dozens of laid-off workers who might find employment at their old haunt in a few months, cancelling the auction was something of a reprieve.

"It's kind of like escaping death row," Mize said, "at the last moment."

Reach reporter Greg Stiles at 776-4463 or e-mail business@mailtribune.com.

Frank Archer, left, and Steve Slack of Spalding & Son Inc. in Grants Pass inspect equipment Wednesday at the Panel Products mill in Rogue River. The equipment was scheduled to be auctioned today until Murphy Co. of Eugene agreed to buy the plywood plant. The company likely will restart operations in January, an official familiar with the negotiations said. - Mail Tribune / Jamie Lusch