IP reports $26 million from settlement

Published 12:00 am Tuesday, May 12, 2009

Costs of a May 3, 2008, boiler explosion at International Paper’s mill in Redwood are reflected on the company’s balance sheets, a regulatory filing indicates.

Terms of IP’s actual settlement with its insurance carrier are not disclosed in reports for the fourth quarter of 2008 and the first quarter of 2009, but the company has reported $26 million of IP’s net earnings for last year’s final quarter resulted from a settlement of its claims.

The explosion of a recovery boiler during a maintenance operation killed one contract worker and injured 17 others. No IP personnel were involved. The accident also shut down the plant, but IP set and met a schedule to repair and reopen the mill, a major local employer.

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Overall, net earnings took a hit in the fourth quarter, with a $1.8 billion loss. The figure rebounded during this year’s first quarter to a $257 million gain, thanks to lower costs for raw material and a $330 million federal tax credit for alternative fuels, such as the blended diesel and the “black liquor” that comes from producing pulp.

Market-related downtime, or temporary shutdowns due to a lack of customer orders, made up 90 percent of the company’s 2.3 million tons of total downtime during the past two quarters.

 The Vicksburg Mill on Mississippi 3 was shuttered for 17 days in December and January as part of the company-wide move.

Paper and forest products firms, which supply the raw materials for boxes and other shipping containers, are seen as an indicator of the national economy as a whole. On Monday, a Goldman Sachs analyst Richard Skidmore upgraded shares of IP to “buy” from “neutral,” as well as upgrading the entire paper and forest sector to “neutral” from “cautious” on prospects the industry could rebound in the second quarter due to several plant closures and well-managed producer inventories.

Litigation continues between the company and some of the contract employees working in and around the boiler at the time of the accident. Five suits have been filed in federal court and one in Warren County Circuit Court. All seek compensatory and punitive damages.

Separate suits involving contract employees Kenneth and Robert T. “Terry” Townsend, Eric Wilhite and Cody Wendt are set for a June 7, 2010 trial before U.S. District Judge David Bramlette.

 Trial dates in two others, which name contract employees Darren and David Clark and James A. Jones as plaintiffs, have been set in Bramlette’s courtroom for June 1, 2010.

The circuit court case involves contract employee Glen Rankin and remains active before Judge Isadore Patrick.


Contact Danny Barrett Jr. at dbarrett@vicksburgpost.com