Potlatch says Hatch lawsuit won't help find buyer for Brainerd mill

MINNEAPOLIS (AP) -- Potlatch Corp. said Friday that a lawsuit filed by Minnesota's attorney general isn't likely to help efforts to find a buyer for the paper mill it closed in Brainerd last week.

Sappi Ltd. closed last week on a $480 million purchase of Potlatch's paper mill in Cloquet and assets of the Brainerd mill, though not the plant itself.

Attorney General Mike Hatch sued Potlatch and Sappi on Thursday, saying their agreement was anti-competitive and violated state law.

As part of the deal, Potlatch agreed not to sell the Brainerd plant to any company that would use it to make the same product -- coated paper -- that's made in the Cloquet mill. That prohibition is for seven years.

Hatch said the clause makes it unlikely that anyone would buy the Brainerd mill, which employed 616 people.

Mike Sullivan, a Potlatch spokesman in Spokane, Wash., said Friday that the company wants to find a buyer for the plant and find other kinds of paper it could produce, and has found some interest.

"We certainly have the same objective in mind as the attorney general, and that is to find a buyer for that plant," Sullivan said. "We're ready to do everything we can in finding a buyer, and we're not sure how the lawsuit is going to assist us in that effort."

Sullivan said Potlatch closed the Brainerd mill because its operating costs were too high for it to be competitive. Coated paper is widely used for magazines, advertising inserts, catalogs, packaging and books.

"The opportunities for us to find a buyer interested in producing coated paper there are probably pretty slim," Sullivan said.