8-K

                            SECURITIES AND EXCHANGE COMMISSION
                                  WASHINGTON, D.C.  20549

                                         FORM 8-K

                     CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                            THE SECURITIES EXCHANGE ACT OF 1934

                              Date of Report:  March 3, 1999


                                MAXXAM GROUP HOLDINGS INC.
                  (Exact name of Registrant as Specified in its Charter)


                                         DELAWARE
                      (State or other jurisdiction of incorporation)


                                         333-18723
                                 (Commission File Number)


                                        76-0518669
                          (I.R.S. Employer Identification Number)


        5847 SAN FELIPE, SUITE 2600                                77057
              HOUSTON, TEXAS                                    (Zip Code)
           (Address of Principal
            Executive Offices)


Registrant's telephone number, including area code:  (713) 975-7600


ITEM 5.     OTHER EVENTS

            Attached hereto as Exhibit 99.1 is a press release announcing that
The Pacific Lumber Company, an indirect wholly owned subsidiary of the
Registrant, consummated the Headwaters Agreement.  This press release is being
filed with the Securities and Exchange Commission pursuant to Rule 135c under
the Securities Act of 1933.

                                        SIGNATURES

            Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.

                                                  MAXXAM GROUP HOLDINGS INC.
                                                         (Registrant)


Date:  March 3, 1999                By:              /S/ PAUL N. SCHWARTZ
                                                       Paul N. Schwartz
                                                 President and Chief Financial
                                                            Officer

EX-99.1

                   AGREEMENT REACHED ON HEADWATERS FOREST

SCOTIA, California, March 2, 1999  --  The Pacific Lumber Company announced
today that further discussions with federal and state agencies have
produced a workable consensus on the Headwaters Agreement, a landmark pact
that will preserve thousands of acres of old-growth forests.

The agreement was consummated with the exchange of documents and confirming
phone calls late Monday, March 1, 1999.

During the weekend and yesterday, further discussions with state and
federal agencies provided assurances that will allow Pacific Lumber to
remain viable.  Pacific Lumber had decided last Friday not to move ahead
with the agreement because -- without the assurances --  it would have left
the company uncompetitive and uneconomic, forcing hundreds of layoffs.

"The final agreement is truly a compromise," said Pacific Lumber President
and CEO John Campbell.  "Years of work went into this agreement but, in the
end, it was worth it.  We were able to craft an arrangement that saves
valuable forest land for future generations while at the same time
recognizes the economic rights of Pacific Lumber to operate a business we
have been in for 130 years."

"As we have said before, the demands made by the federal and state
governments were very substantial," Campbell said.  "In the end, the
transaction is still in the best interest of our employees, investors and
lenders, the environment, and the people of California."

In approving the agreement, the Pacific Lumber board followed the
recommendations of the independent managers of its wholly owned subsidiary,
Scotia Pacific Company LLC, and will retain the net cash proceeds of the
transaction in an escrow account pending further analysis and discussions
with the rating agencies regarding the Scotia Pacific timber collateralized
notes.  

Campbell cautioned that although the agreement has been finalized, there
are more challenges to come.  "Various environmental groups have mounted a
coordinated campaign to discredit this agreement.  All of us who care about
the future of the North Coast need to realize that this process is still
ongoing."

Campbell praised the efforts of the many federal and state officials who
worked to accomplish this historic transaction.  "Support for the agreement
is bi-partisan and broad-based," he said.  "We sincerely appreciate the
efforts of President Bill Clinton; Vice President Al Gore; Senator Dianne
Feinstein; Governor Gray Davis and former Governor Pete Wilson; Interior
Secretary Bruce Babbitt, former Deputy Interior Secretary John Garamendi
and Counselor to the Interior Secretary David Hayes; Commerce Secretary
William Daley and Assistant Commerce Secretary Terry Garcia; U.S. Rep. Mike
Thompson; California Resources Secretary Mary Nichols and former Resources
Secretary Doug Wheeler and all the other elected and appointed officials
and staff members who assisted these individuals."

Forged during more than 10 years of negotiations, the Headwaters Agreement
will preserve in perpetuity the largest remaining privately owned tract of
old-growth redwoods on Earth. 

On Friday, February 26, 1999, Pacific Lumber celebrated its 130th year in
business.  With more than 1,400 employees, it is Humboldt Country's largest
employer, contributing an estimated $170 million annually to Northern
California's economy.


CONTACTS:      Mary Bullwinkel                    Robert Irelan
               The Pacific Lumber Company         MAXXAM Inc.
               Scotia, California                 Houston, Texas
               (707) 764-4200                     (713) 267-3722