Red Shield financing delayed

Posted Aug. 20, 2008, at 10:45 p.m.
Last modified Jan. 29, 2011, at 7:18 a.m.

OLD TOWN — Employees at Red Shield Environmental will have to wait until September to learn the fate of the mill that they were hoping would be re-started by the end of this month.

A hearing scheduled Wednesday to determine whether a financing agreement that would allow Red Shield to borrow $13.6 million from Woodside Capital Partners of Massachusetts has been post-poned until Sept. 2.

“The continuance is an op-portunity for all the parties to try and resolve some things relating to the financing,” Red Shield attorney Bob Keach of Portland said Wednesday.

After filing for Chapter 11 bankruptcy in June, Red Shield and its affiliate, RSE Pulp & Chemical LLC, received per-mission in late July to operate in idle mode in anticipation of the mill’s potential startup.

In order to bridge the gap be-tween Wednesday’s postpone-ment and the hearing resched-uled to Sept. 2, U.S. Bankruptcy Judge Louis H. Kornreich is slated today to hear a request from the company to borrow another $220,000 to keep the mill idle.

“Everybody has consented to that,” Keach said.

That loan also would come from Woodside Capital, which specializes in providing financ-ing for companies that are struggling.

Keach added that this time-line is typical of complicated bankruptcy cases such as Red Shield’s and said he still thinks the outcome will be positive.

“It’s a relatively complicated deal and a lot of people need to weigh in on it,” Keach said. “We think those issues will be worked out in some way, shape or form by Sept. 2.”

When Red Shield and RSE filed Chapter 11, the companies laid off about 160 employees.

Company officials blamed recent spikes in material and fuel costs for the financial troubles but are hopeful that they can reopen and continue with the plan to build an etha-nol production pilot plant in conjunction with the Univer-sity of Maine.

adolloff@bangordailynews.net

990-8130

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