Wall Street Filings

The source for the following is the Amendment No. 2 to From S-3 filed by Maxxam Inc on April 12, 1996.

The notes to be issued incumber only the cash or equivalent, some stock in Kaiser Aluminum and MGI and other securities but explicitly barred the assets of any subsidiary from being available to settle with the note holders in
the event of a default. The race track stock was included. Other real estate subsidiaries were included.

The funds will be used to retire debt and any other thing they want to do.

Maxxam expects that for at least the next two or three years the real estate subsidiaries will constitute the primary source of dividends to the company. Maxxam is barred by other agreements from forcing Kaiser or MGI to pay any 'substantial' dividend ($5 million in 1995). Pacific Lumber is also somewhat restricted from paying dividends to MGI.

The real estate subs have a net worth of about $140 million with assets of about $200 million.

Kaiser is "highly leveraged" with $758 million in debt and Stockholders equity of $57 million.

Kaiser was unconditionally indebted for $90 million from a "foreign joint venture" in China--Kaiser Yellow River Investment Limited. (Kyril) which is still in the discussion stages and may not get off the ground.

Maxxam is shown to be about $1.8 Billion in debt considering all its operations and subsidiaries. PL is at $765 million. Maxxam taken alone without its subsidiaries is $41 million in debt and has a stockholders deficit of $84 million.
 

Net sale for Maxxam have  been $2-2.5 billion with a gross profit from $250- 574 million in 1995. Net profit is shown as $458 million in 1991 and 1995 with a $600 million loss in 1993 which is described to be largely the result of changes
in accounting principles ($340 million), and a low gross profit $243 million.

PL has had decreasing sales of upper grade redwood and a high level of sales of lower grades. In 1995, Carlotta produced 67 million board feet, Sawmill A (Doug Fir) produced 79 million, B produced 51 million from large diameter
redwood.

PL entered into an Environmental Indemnification Agreement with Scotia Pacific covering liabilities with respect to hazardous materials, contamination or disposal sites.

Substantially all of Scotia Pacific's cash is distributed to MGI with Scotia Pacific paying MGI $58 million, $89 million, and $59 million in 93, 94 and 95 respectively. PL itself  had operating cash flows in excess of interest accrued
on indebtedness by $17 million, $39 million and $35 million in 93, 94, 95.

Maxxam lost $21 million from the settlement of litigation last year.

Maxxam has six classes of litigation:

1. pending actions by and on behalf of the Federal Government with respect to the insolvency of USAT. The OTS suit seeks damages in excess of $138 million from Maxxam.
2. Rancho Mirage- actions with respect to certain transactions between certain real estate subsidiaries and FDC.
3. environmental and asbestos litigation involving Kaiser. These are under Cercla and other related laws involving waste disposal. Kaiser expects to pay about $10 million a year to settle these claims. The estimate may rise. The negotiations are still on-going. There are also 60,000 injured workers are suing for asbestos exposure. The total cost will be between $13 and $20 million at least through 2008.
• These suits include the Aberdeen pesticide Dumps in Aberdeen, North Carolina (it is a Superfund site); Trentwood facility (Clean Air Act); Richmond, California (a WW II ship building site); and Waste Inc in Michigan City and Wanatah, Indiana (a landfill operated until 82).
4. a pending action involving the proposed recapitalization of Kaiser filed in a Delaware Court involving breach of fiduciary duties.
5. PL Pension Fund
6. state and federal antitrust court actions and investigations including price fixing with the other major aluminum producers.

Maxxam is also being sue regarding a note issued in 1982 called the Zero Coupon Note Litigation.

Kaiser has a rolling mill at Trentwood Washington.

Kaiser operates smelters at Mead and Tacoma Washington.

Kaiser operates a bauxite mine and a refinery called Alumina. Partners of Jamaica (Alpart). Its partner is Hydro Aluminum.

In 1995, Kaiser workers at five major domestic locations, and the Kaiser Jamaica Bauxite facility in Alpart, staged a five day walkout under the United Steelworkers of America. Maxxam says it caused them a $17 million loss.

Kaiser owns a 90% interest in an alumina smelter in Ghana called Volta Aluminum Company (Valco).

Kaiser has a minority interest in Queensland Alumina Limited and its alumina refinery.

Kaiser owns a 49% interest in the Anglesey Aluminum Limited with its aluminum smelter and port facility.

Kaiser has an agreement i the works at the Krasnoyarsk smelter in Russia.

Kaiser's Kyril project is located in Lanzhou, the capital of Ganzu Province and in nearby Lianhai operating smelters

Kaiser has a 'business unit' at Pleasanton, Ca and others in Dallas, Netherlands and Japan.

Kaiser has mills in Los Angeles; Sante Fe Springs; Sherman, Texas; London, Ontario; Newark, Ohio; Jackson, Tennessee; Richland, Washington; Erie, Pennsylvania; Oxnard, Ca; Greenwood, South Carolina; Canton, Ohio; Detroit, Michigan; Gramercy, Louisiana.

Kaiser has 9,550 employees world wide including 5,950 domestic wage earners.  4,010 working at an hourly rate. 74% are covered by a master labor contract with the USWA. Alparts employees are covered by the National Workers Union.

The Real estate operations include

•  sales of developed lots, bulk acreage and real property associated with its real estate operations, including 16 apartment complexes in 1994 from the RTC purchase
• resort and other commercial operations
• rental revenues from properties purchased from the RTC. These are located in San Antonio, Houston, Austin and Dallas.
• revenues in the last quarter of 1995 from the race track of which Maxxam owns 79%.

Maxxam owns and operates the Palmas del Mar resort near Humacao, Puerto Rico. Its other ventures include Rancho Mirage, California; Lake Havasu city, Arizona; and Fountain Hills, Arizona.