This story first appeared in the Oct. 5, 1989, edition of WW.
Timothy Blixseth, Oregon’s newest and least-known timber millionaire, is cruising up West Burnside in the company car, a black 1984 Mercedes 420 SEL. The sunroof is open, and the midday sun skips off his diamond ring as his hands move across the steering wheel. The car phone rings. He chats for a few seconds before he remembers something important.
“About Bob Hope’s manager, the guy I’m supposed to call,” he says. “I lost his number. Could you get that for me? I want to call him back.
“And could you call back Washington, D.C.,” he asks casually, “and tell them that we won’t be able to make that dinner with the Doles?” He hangs up.
“Where were we?” he asks. He remembers and launches into a story that sounds like a reading from People magazine. The party with Bob Hope. Tom Selleck. Don Rickles.
High above downtown Portland, in the city’s exclusive northwest hills, the names continue to drop faster than blouses in a Joan Collins movie. In the billiard room of his ornate $350,000 Mediterranean-style home is a picture of Blixseth’s author wife, Edra, with Oprah Winfrey.
“Oprah’s producers call all the time,” he says. Across the pool table, on the facing wall, is a framed photograph of actor Jimmy Stewart shooting a game on that very table. “We’re thinking of getting Jimmy back up here,” says Blixseth, “to pose for that same shot.”
And against a third wall, next to the fully stocked bar, is a bright pink neon light fashioned into the number 67.5. It represents the amount of money, in millions of dollars, that Blixseth and his timber company spent on its first deal, in which it acquired 255,000 acres of prime timberland in central Oregon from financier Sir James Goldsmith. A year later, in April 1989, the company, Crown Pacific Ltd., paid Scott Paper Co. a whopping $230 million for an additional 194,000 acres of heavily wooded land in Washington.
All in all, not a bad life for a guy who went broke less than three years ago, who earlier unloaded a foundering lumber mill only to have it become the cornerstone of Bruce Engel’s WTD Industries fortune, and whom the Forest Service is considering barring from federal timber sales.
In many respects, Tim Blixseth’s story is simply one of a flamboyant wheeler-dealer who bounced back quickly from his time in bankruptcy court—a remarkably speedy recovery, his critics and creditors note, considering his $32 million in listed debts. Yet it also serves to illustrate some little-acknowledged facts about the state of the timber industry in the Pacific Northwest.
For one, Crown Pacific’s and Blixseth’s—rapid rise to a position of prominence and power in the wood business highlights what has been largely obscured bv the spotted owl controversy. Despite the dramatic headlines being generated by mill closures, the fact is that 1989 has been a banner year for many in the timber industry. That has proved especially true for the companies and individuals that control the currency of the industry: trees.
To some, however, the success of Crown Pacific seems nerve-bendingly similar to the quick gains of entrepreneurs in other industries, where fantastic profits teeter on a tenuous foundation of debt—a foundation that in some cases has begun to crumble. Recently, for example. Robert Campeau’s heavily leveraged clothing store empire, which includes diversified holdings such as Bloomingdale’s and Jordan Marsh, seems to be collapsing under the stress of monstrous debt payments. And Kohlberg Kravis Roberts is having difficulty servicing its RJR Nabisco takeover debt.
Similarly, the concern is that Crown Pacific could fall victim to its financing. When structuring the Scott deal, for example, Crown Pacific borrowed nearly $200 million. Critics worry that, in order to pay off that kind of debt, Crown Pacific will be forced to cut and sell its trees faster than is good for the long-term health of the industry. That could leave future generations of loggers without wood. “Even if [Crown Pacific] really wanted to be on a sustained-yield basis,” says Hal Mayhew, a Portland timber analyst, “it couldn’t be with that kind of debt.”
As a warning, the company’s critics point to Northern California, where the family-owned Pacific Lumber Co. had been harvesting redwoods on a sustained-yield basis since the turn of the century. That is, until the company was purchased in a heavily leveraged corporate raid in 1985. Since that time, Pacific Lumber’s commitment to having a longterm presence in the area has been squashed by the need to service its massive debt. As a result, the company has been forced to cut timber at a pace that is double what it was before the takeover—a practice that will likely leave the area without enough trees to sustain the industry in the coming decades.
Blixseth waves off such complaints. His company, he says, is not heavily leveraged. He stresses that Crown Pacific’s mill in Prineville and its planned facility in Washington are clear signs that the firm is a long-term player in the Northwest timber industry. “We are not a land speculation company,” he says.
Nevertheless, when Crown Pacific’s $400 million in purchases in less than two years is combined with its sudden holdings of close to 2 billion board feet of timber in Oregon and Washington, the company’s debt payments leave many observers nervous. Warns Paul Ehinger, a Eugene timber industry analyst, “It doesn’t tend to stabilize the industry.”
Crown Pacific Ltd. is an Oregon partnership composed of three people: Blixseth, Peter Stott and lawyer Roger Krage. Stott, who is chairman and chief executive officer, and Blixseth, the company’s president, are the majority shareholders. Krage controls only 4 percent of the firm.
By most accounts. Stott is the financial engine driving the company—as well as the reason that Crown Pacific was able to borrow so much cash. The company ha> borrowed millions of dollars from First Interstate Bank and U.S. Bank, as well as from Capital Consultants, a private Portland investment firm. It also has depended heavily on loans from Bankers Trust of New York City, the Bank of Tokyo and the Bank of Finland. Says one financier close to the company: “People are investing in Stott, not in Blixseth.”
Peter Stott is not, strictly speaking, a big man. He seems it, though. The thunder voice, the Chuck Connors jaw, the sirloin hands and an attack-style chewing gum habit give Stott, 45, the look of a truck driver.
Which he was. And, after years of driving, he was able to parlay that experience into his own trucking company, Market Transport, which earned Stott his first million dollars. In 1984 he sold 80 percent of it to a San Francisco subsidiary of a British transport company. He won’t disclose how much he received from the buyout, though he will say that Market Transport is expected to do more than $25 million in business this year.
Yet among those in the timber industry, from private-contracting gyppo loggers to the U.S. Forest Service, the real interest in Crown Pacific—as well as the company’s potential weakness—is Timothy Lee Blixseth.
Today, at the age of 40, Blixseth lives the good life. Sources familiar with Crown Pacific estimate that, even with its substantial debt, the company is worth $100 million—nearly $40 million more than it was worth two years ago.
A slight man, Blixseth’s sharp features and black, owl-rim glasses call to mind a cross between actors Peter Lorre and Rick Moranis. At a recent interview he appeared in Ralph Lauren Polo brand khakis. He drives expensive cars. He owns two houses in Portland. as well as one in Palm Springs. Calif., and a condo in Sunriver.
He says he attends Washington. D.C.. fund-raising bashes for the Doles and the Quayles and is a personal friend of Dick Bogle. As a hobby he runs his own entertainment company, and he claims he is on the verge of signing local bluesman Curtis Salgado to a recording contract.
Things weren’t always this good. The last time Blixseth drove the fast lane, in the late 1970s, he crashed hard. In his wake he left dozens of enemies. Furious creditors claim he used bankruptcy as a slick dodge. Others charge that he is a mercenary con man who talked them out of their money. Says Roseburg landowner Edyth Landis, who lost money when Blixseth defaulted on a deal to buy property from her, “I don’t know what he’s doing now. but I hope somebody catches up with him.” Even Stott is careful to distance himself from Blixseth’s scuffed reputation, stressing several limes during a recent interview that “anything that has to do with Tim and the bankruptcy has nothing to do with Crown Pacific.”
Blixseth’s supporters, as well as those who do deals with him, wave away the complaints as pure jealousy. Blixseth dismisses the charges as the last gasps of an aging industry scared of youth and change. “There are a lot of good ol’ boys in the timber business, and things worked for them when they did it in the old cycle,” he says. “But this is a new cycle.”
Not everyone buys that explanation. Says William Junkers, an executive of Roseburg’s Conifer Logging Co.. of Blixseth’s allegedly widespread reputation as a con artist: “It’s a wonder that somebody hasn’t put a contract out on him.”
The son of a Lutheran minister who immigrated to the United Slates Irom Norway, Blixseth claims he closed his first deal when he was in high school, buying a house and selling it for a profit to one of his teachers. By the time he was in his early 20s, Blixseth was beginning to buy and sell land and, say those who knew him then, he was showing an uncanny aptitude for convincing investors to put up money.
Though he eventually would become involved in such diverse projects as restaurants and recording companies, Blixseth clearly had an affinity for dealing lumber. He says he began working in Roseburg ‘s mills al the age of 16 and looked toward community wood barons, such as Roseburg Lumber Co. founder Kenneth Ford, as role models. By the beginning of the 1980s, Blixseth had built a prodigious portfolio of timber-related properties and investments. He had accumulated, among other assets, a half ownership of two wood products companies with a combined estimated worth of $550,000; ownership of a company called Revestco. Inc., worth $250,000; and partnerships in two timber companies, Capital Veneer and Capital Log Sales. In addition, according to court documents, Blixseth controlled at least 11 pieces of land and rental properties in southern and western Oregon.
With the timber industry riding a wave of prosperity, Blixseth and his second wife, Desiree, lived it up. Newspaper society articles from 1980 gushingly describe the couple’s Roseburg home, with its round windows, electric outdoor gates and imported Italian kitchen tiles. Desiree recalls flying on a whim to restaurants in Blixseth’s helicopter and landing in the parking lot. Blixseth would occasionally charter a Lear jet to Reno for the night, she says, or fly off to Palm Springs, where the couple owned property. “It was quite a lifestyle,” she recalls today. “Very fast living. And it was a lot of fun.”
By the end of 1981, however, Blixseth was beginning to run into trouble. The timber industry was being battered by slow housing starts and ballooning interest rates. According to court affidavits, the Little River Lumber Products Co., one of Blixseth’s holdings, was losing $500,000 per month.
While Blixseth was getting hammered by the economy, he also was paying a price for his overeager purchase of federal timber contracts. From 1979 to 1985, Blixseth had been buying harvesting rights to federal timber stands, bidding on a total of two dozen federal sales. As with other small mill owners who own little or none of their own timber, Blixseth’s mills turned to the government to buy wood. Timber lots are auctioned off to the bidder who offers the highest price and promises to cut at a certain time. Most of the contracts are for future cutting; a sale completed in 1980, for example, frequently was not logged until 1983.
As a result, the industry bust of the mid-1980s crushed many small mills, which had purchased timber at the height of a boom and suddenly found themselves forced to pay for it in a depressed market. Forest Service records show that Blixseth. largely through his companies Capital Veneer and Capital Log Sales, defaulted on 22 timber sales worth $8 million.
Though government records confirm that many other companies defaulted on federal sales, Forest Service employees say that Blixseth was unique in that his companies defaulted on all their sales. Says one bitter Forest Service employee, “I wonder if he ever went into Forest Service contracts intending to fulfill them.”
Moreover, Blixseth gained a reputation as a manipulator among those in the Forest Service. “He stretched the limit of all the rules,” says one employee. “He would make late payments or no payments at all. In one contract he went in and logged all the good wood and left the crud, which was contrary to the term of the contract.” Government employees also recall big parties that Blixseth threw for Forest Service workers. Says one worker, “He could charm your socks off.”
Today Blixseth is humble but not apologetic. “My mills needed the wood,” he says. “And I did get caught up in the bidding fever of federal timber.”
At about the same time, the Blixseths were going through a messy divorce. Representing Tim Blixseth was a little known Roseburg lawyer named Bruce Engel. In November 1981, Engel quit as Blixseth’s attorney and, soon after that, apparently decided to switch careers. He acquired the ailing Little River mill by agreeing to assume its $2 million in accumulated debts.
Eight years later the mill once owned bv Blixseth stands as the foundation of WTD Industries, which this summer passed Boise Cascade and International Paper to become the country’s fourth largest wood products company. Its president, Bruce Engel, is one of Oregon’s richest men.
There is reputedly no love lost between the two. Blixseth will say of Engel only that “I wish him all the success he deserves,” though he adds that the WTD boss “got started at a time in the business when anyone should’ve done well.” Engel did not return WW’s phone calls.
By May 1982 court documents show that Blixseth was reporting his monthly income as $0, although around that time he reportedly was investing in a series of restaurants and real estate deals. Despite all the financial problems that hit him in the mid 1980s, Blixseth apparently still managed a comfortable lifestyle. In divorce court papers filed in March 1985, for instance, ex-wife Desiree claimed that Blixseth told her that he couldn’t manage his child support payments. Yet somehow, she wrote, he was able to take trips to Disneyland and Hawaii, and he “routinely” used a helicopter to pick up their children for visits.
Nevertheless, on Nov 16, 1986, Blixseth and his third wife, Edra, filed for voluntary bankruptcy. Court papers filed in Eugene showed personal debts of $16 million. In a separate suit, two of Blixseth’s businesses listed $16 million in debts. Today, Blixseth insists that his bankruptcy was anything but voluntary, claiming that the numerous bonding companies to whom he and his wile owed money forced the court action.
Soon after the bankruptcy—suspiciously soon, creditors claim—Blixseth began scaring up new deals State records show that he filed incorporation papers for Portland Entertainment, naming himself and his wile as officers on Dec. 2—just 16 days alter he filed for bankruptcy. Six weeks later, on Jan. 13, 1987, Blixseth, his wife and his attorney filed to form Western Pacific Timber, Inc. And on Feb. 2, according county deed filings, Blixseth signed an agreement to purchase his northwest Portland home.
Indeed, Blixseth’s rise to the top has been remarkably speedy. Twenty one months after its founding, Crown Pacific has handled transactions totaling about 475,000 acres of Oregon and Washington timberland. Though it has sold some land to pay its debts, by its own accounting the company still owns about 330,000 acres containing 1.87 billion board feet of timber, making it one of the largest private forest land holders in the Northwest.
Today Blixseth explains that “I didn’t sit around and feel sorry for myself.” Those who despise him. as well as those who make money from him, concede that he is not without talent. Blixseth. they say, is the consummate middleman able to discover deals in waiting and bring parties together. Says Jim Smejkal, part-owner of Bald Knob Land and Timber Co., “I don’t know of anybody who is as good at finding and pulling together deals.”
And, whatever his past failures in the timber business, those who have worked with Blixseth nearly always note that he knows his timber. One financier close to Blixseth’s timber deals claims, “He is able to tell within 2 or 3 percent from an airplane what the timber is worth.”
Blixseth explains his business formula as a combination of moxie, contacts and an almost religious devotion to the Deal: “What’s more important, the money or the deal?” he asks. “The deal is always more important. If you find the right deal, the money will always follow.”
Though Blixseth says he completed a series of successful deals in the beginning of 1987, acting usually as a middleman, it wasn’t until the end of 1987 that he got his big break. Three years before, he says, he’d attempted to put together an agreement with Crown Zellerbach to buy 100,000 acres of timberland. Though he claims the deal fell through because of Sir James Goldsmith’s 1985 takeover of the company, Blixseth had gained something important: contacts. In mid-1987, he says, he received a call from an old CZ friend informing him that Goldsmith was looking to unload some of his half-million acres of Oregon timberland.
In January 1488, Blixseth and lumberman Peter Murphy, president of the Murphy Co., revealed that they had bought 8,800 acres of Goldsmith’s land near the Oregon coast. Murphy says he put up nearly all the money for the transaction. Both men today say the deal was a tremendous success.
The purchase served an additional purpose, however. According to sources close to Crown Pacific, Blixseth’s performance impressed Stott, whom he met at a dinner party, enough to convince him that Blixseth knew timber. In January 1988, Stott and Blixseth, along with Krage, formed Crown Pacific. Three months later the company announced its purchase of 257,000 acres of Goldsmith’s land, 46,000 acres of which it immediately sold to Willamette Industries for $22.5 million.
Although Blixseth declines to say just how much he made, an affidavit sworn by ex-wile Desiree claims that “about April 1988 he told me he had just completed a business deal which made him a multimillionaire and that he now has more money than he can possibly spend.”
Between then and the time Crown Pacific added the 144,000 acres from Scott last April, it is estimated that the company purchased an additional 18,000 acres of wooded land, mostly in Oregon. In addition, in August of 1988 Crown Pacific bid for its first federal timber sale, in the Ochoco National Forest. Since then it has successfully bid on two other federal sales, and the company says that it plans lo be a major player in future sales.
Still, Blixseth’s history with the Forest Service may turn out to be Crown Pacific’s biggest headache. Because of his track record, the government conducted an exhaustive background check on the company alter its first bid, waiting nearly a year before awarding the contract to the company. Today, however, Forest Service officials pronounce the firm clean. Chuck Downen, the Ochoco District timber officer who conducted the background check, says that he “looked at Tim carefully...and everything came out acceptable.”
But other government sources contend that the agency remains unsatisfied. They say that the Northwest regional office will recommend barring the company from future federal sales. Says one employee. “We don’t feel that it’s in the government’s best interest to do business with Tim Blixseth.”
Blixseth lists among his corporate icons the Georgia-Pacific Corp., which grew by snapping up vast tracts of timberland. It is a pattern Blixseth and Crown Pacific are conspicuously copying. And, whether out of spite or not, it is a strategy that stands in marked contrast with that of Engel’s WTD, a company built on a foundation of buying mills, under the assumption that timber will always be available.
Yet, given the concerns about Crown Pacific accelerating its timber cuts to pay its debts, it is ironic that Georgia-Pacific Corp. has gained a reputation as a cut and-run operation that has shown little interest in longterm, sustained-yield harvests.
Still, sources say that Crown Pacific’s debt is being paid off remarkably fast. Moreover, says Stott, noting the company’s ownership of the Prineville mill, “You don’t buy a mill and you don’t put 4 million into renovating it unless you’re in for the long haul or you’ve got shit for brains.” And, despite his tarnished history and trail of critics, there is little question that Blixseth today is sitting atop a gold-lined stack of timber. “We just sold $600,000 worth of timber to a company that told us it wouldn’t have taken it as a gift two years ago,” boasts Stott.
Later, lounging comfortably underneath a huge brass elephant head that protrudes over his massive living room fireplace, Blixseth ruminates on how such economic threats as high interest rates might affect Crown Pacific’s empire. “The only negative effect we could possibly experience,” he says, smiling, “is that we won’t make as much money.”