Red Shield auction set for October

Posted Sept. 18, 2008, at 7:11 p.m.

The attorney for Red Shield Environmental LLC said Thursday the company would be up for auction at the end of October with a starting bid of $11.5 million.

Attorney Bob Keach filed the motions Thursday afternoon for the company and its subsidiary, RSE Pulp and Chemical LLC, which laid off about 160 workers when its Old Town facility closed. Red Shield filed for Chapter 11 bankruptcy protection in June.

In addition to paying the minimum of $11.5 million, a successful bidder would be responsible for assuming various obligations, including the collective bargaining agreement.

Several bidders are expected to vie for the pulp manufacturing plant, which should drive the auction price higher, Keach said. If there is more than one bidder, the next price jump would have to be at least $750,000 more than the initial minimum.

“We expect that it will go higher,” Keach said. “We ex-pect the value is significantly above [$11.5 million].”

Opening bids will be accepted until Oct. 20. Once all the bids are in, Keach, said, they will be examined to make sure the interested bidders are qualified. Assuming there is more than one bidder, the auction will be held Oct. 22 in Keach’s office at the Portland firm Bernstein Shur.

The court would have to approve the winning bidder on Oct. 23.

Keach said the U.S Bankruptcy Court would consider on Sept. 23 approving a loan for $1 million, which would keep the Red Shield facility in idle mode until the time of the auction. Red Shield has been approved for three other cash infusions to maintain the building and keep it ready until the facility would be up and running.

Keach said he would with-draw a request for approval of a $13.6 million loan to restart the facility. The court hearing for approval of that loan had been postponed three times, most recently Sept. 15.

Should things remain on track, the auction and possible restart would occur almost two years after Red Shield’s investors took over the former Georgia-Pacific Corp. mill. That sale occurred Nov. 3, 2006.

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