The bankrupt mill that dominates Old Town’s skyline and economy has been sold to a New York investment group for almost $19 million and will soon manufacture pulp once again, officials said Thursday.
A federal bankruptcy judge in Portland on Thursday approved the sale of the idle Red Shield Environmental pulp and paper mill to the private equity firm Patriarch Partners, said Red Shield attorney Bob Keach.
A union official said the company intends to rehire all of the 160-plus laid-off Red Shield millworkers.
“I think they plan to open the mill and begin to manufacture pulp as soon as possible,” Keach said Thursday. “Any time a mill of this size and importance is down, it’s not a good thing. It’ll be great to get it up and running again.”
Keach said there were three bidders vying for the mill at the Wednesday auction, with 29 rounds of open bidding and one round of sealed bids. The winning price was significantly higher than the initial bid of $11.5 million and is fair considering the tumultuous national economy, according to the attorney.
“Obviously, you would love the sale to be more,” Keach said. “In a typical market, it probably undervalues the assets. But we think this sale is a good sale.”
The sale is expected to be completed Oct. 27, according to Gov. John Baldacci.
“This is good news for workers and good news for the community,” Baldacci said in a statement. “I have spoken with Patriarch CEO Lynn Tilton and I am impressed with her vision for the facility and her commitment to get people back to work.”
Old Town and its mill have had a turbulent few years. About 400 workers lost their jobs in May 2006 when Georgia-Pacific Corp. officially shut down the mill, which had operated in Old Town for more than a century.
A group of investors working under the Red Shield name purchased the mill in September 2006 in hopes of reinventing the facility. Red Shield brought in a company to operate the mill and received a $30 million grant from the U.S. Department of Energy to work with the University of Maine on a pilot ethanol production plant.
But due to rising materials and fuel costs, the facility was idled in June, and the companies filed for Chapter 11 bankruptcy soon thereafter. About 160 employees were laid off.
Old Town City Manager Peggy Daigle said city officials are looking forward to meeting with the new mill owners.
“We’re anxious to sit down and talk with them,” she said. “The biggest thing is that it continues to operate with its highest and best use, which is as a pulp mill.”
Daigle said it’s “exciting” that the new owners have independent financial backing.
Patriarch provided no timetable but said it hopes to get the mill running as soon as possible.
“This is what we do. We buy and help rebuild and turn around middle-market companies,” said Bo Williams, one of the Patriarch investors.
Patriarch Partners’ Web site says the company focuses on the “acquisition of undervalued companies where time, capital and sound strategy can rescue a business and restore value, often preserving U.S. jobs while simultaneously providing demonstrated returns to investors.”
The company holds equity in 65 companies in almost a dozen industries, including aerospace, manufacturing and engineering and textiles.
According to a company profile on Manta.com, Patriarch Partners was founded in 2000 and has estimated annual sales of $252.7 million.
Duane Lugdon, Maine’s international representative for the United Steelworkers union, said he’s hopeful that the sale will be a good thing for the laid-off Red Shield workers.
“It’s been a long, dry spell for these folks,” Lugdon said. “We’ve been negotiating with the buyers for the last 36 hours. The dialogue that we’ve had with them has been very cordial. We think they’re going to be a good fit.”
The Associated Press contributed to this report.