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Potomac Supply Corp. lines up a buyer
By RUSTY DENNEN
A Westmoreland County lumber mill that had been scheduled to be sold at auction instead has lined up a buyer, according to court papers.
Chesapeake Bay Enterprise Inc. agreed to purchase the Kinsale-based business for $20.3 million, according to a bankruptcy court filing. The motion was heard Friday in Richmond; additional motions in the case are set for Tuesday.
The deal is an unexpected development because Potomac Supply's assets were to be sold at auction on Sept. 29. According to the court documents, that sale was called off because the highest of the six bids received was around $10 million.
The consensus among the company and its creditors was that the pre-auction bids "were woefully inadequate," according to the filing, and the offers were rejected.
After that, Chesapeake came forward with an offer more than double the highest auction bid. A company representative could not be reached Friday for comment.
According to the court papers, Chesapeake directors include Philip J. Haynie III and Merthia I. Haynie. Philip Haynie is a Northern Neck farmer with several-thousand acres whose family was featured in a profile on America's Farmers website.
Potomac Supply filed for Chapter 11 bankruptcy protection in January in the midst of a downturn in the forest products industry and a tight credit environment. Dozens of employees were laid off, a hard hit for a small community.
Prior to the layoffs, Potomac Supply was one of the largest employers in Westmoreland County, providing jobs for more than 200 people. The plant continued to operate during the bankruptcy proceedings and now employs about 100.
Alex Fisch, an investment banker whose firm, Morgan Joseph TriArtisan advised Potomac Supply on the sale, said in August that selling the entire business and all its assets was the best option for the company.
Founded in 1948, Potomac Supply's plant includes 159 acres and 690,000 square feet of buildings, as well as a variety of equipment and inventory.
Rusty Dennen: 540/374-5431