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<br />SBWMA January 16 Questions <br /> <br />Beyond the email that was sent to Kevin M.cCatthy from Peter Wang in August, we <br />note that Mr. Wang and Mr. McCarthy had discussions at the CRRA conference in <br />August related to ACN's support of our bid. Moreover, ACN has been HBC's partner <br />in pursuing m.unicipal recycling projects for nearly ten years, and has been integral to <br />HBC's ability to grow in the munidpal sector. <br /> <br />Given the changes in the recovered materials market since those discussions~ we <br />appreciate that the Authority is seeking a recommitment from ACN regarding their <br />support of our proposal. To indicate their support, Peter \Vang again met with Hilary <br />Gans last week to fhrther explain the size and scope of ACN!s presence in the <br />recovered materials market, and to clarify how that presence provides benefits to both <br />Hudson Baylor and the SBW.MA. ACN ships approximately 500,000 tons per month <br />of recovered paper, and over 4,000 tons of plastics. lYlost of the fiber products are <br />consumed internally, asACN operates 22 paper machines in China and Viet Nam. <br />\Vhi.le ACN does not operate its own plasti.cs lines, it is a main supplier into plastics <br />mills in China. <br /> <br />Mr. Wang explained that from ACN~s point of view, they analyze their customer <br />relationships as falling into three categories. The top category, where Hudson Baylor <br />falls, consists of those with long tcnn contractual relationships for the purchase of <br />materials. The second category is made up of those customers with long-term <br />relationships, but 110 specific contracts. The third tier are those cllstomers who are spot <br />market sellers depending on specific price differences, and/or customers who have <br />problems meeting ACN's quality specifications. Mr. \Vang explained that during the <br />recent downtU111, those first tier customers with contracts were not impacted~ as these <br />contracts and relationships \-vere critical strategically for ACN's long-term planning. . <br />Hudson Baylor can certainly attest to ACN~s support through this period, as CAN did <br />not miss a single shipment from our facilities fi'om the time of the late October market <br />crash. <br /> <br />\Vith regard to providing a signed contract for the volume related to the SB WNIA <br />project, we discussed this issue again with ACN, and we agreed that '.ve have strategic <br />and competitive concerns related to releasing the details of our arrangement at this <br />time. \Ve recognize that the State of Calif()rnia has certain regulations designed to <br />protect confidential information in a public bidding process, but we also know that <br />when more people have contidcntial data, the higher the likelihood that it does not <br />remain strictly confidential. <br /> <br />However, in order to address the Authority's question regarding ACN's support of <br />HBC in this process, and beyond the discussions among Mr. \Vang and &11'. Gans, we <br /> <br />Hudson Baylor Corporation <br /> <br />Page 2 <br /> <br />3/16/09 <br /> <br />88 <br />Page 141 <br />