Millinocket lien ‘interferes with’ Cate Street revitalization efforts, company says

The Katahdin Avenue industrial park in Millinocket is a shell of what it was in this picture taken May 4, 2014.
Jon Campbell photo
The Katahdin Avenue industrial park in Millinocket is a shell of what it was in this picture taken May 4, 2014.
Posted May 28, 2014, at 12:45 p.m.
Last modified May 28, 2014, at 10:29 p.m.

MILLINOCKET, Maine — The town’s lien seeking $2.24 million in delinquent property taxes from a local paper company managed by a New Hampshire investor “interferes with” but won’t stop the investor’s efforts to revitalize the Katahdin region, according to a company spokeswoman.

Cate Street Capital officials will continue working to restart an East Millinocket paper mill and launch a $140 million specialized wood pellet mill in Millinocket, Cate Street Capital spokeswoman Alexandra Ritchie said in a statement Wednesday.

“The filing of the lien by the Town of Millinocket, combined with the inaccurate and misleading press release, interferes with Great Northern Paper’s efforts to make creditors whole and get people working,” Ritchie said.

“While Cate Street will continue to persevere in our efforts to revitalize the region, the town of Millinocket’s actions against GNP West continue to make these efforts more difficult,” Ritchie added.

“It is another challenge to manage but not one that is expected to cause greater delays,” Ritchie said in a second email sent later Wednesday.

Town officials decided to file the lien despite assisting Cate Street in redeveloping the former paper mill site upon which the specialized pellet mill would be located due to “conflicting information [from Cate Street leaders] that has caused concern from the Town Council,” Millinocket Town Manager Peggy Daigle said in a statement released Tuesday.

Simple fairness was another motivator, Daigle said.

“The overriding issue that remains to be addressed is the municipal officials’ concern for the taxpayers who live in Millinocket and expect the town to function and provide necessary services to all citizens. Once the taxes are paid, all liens will be released by the town, without prejudice,” Daigle added. “The Town Council recognizes that taxes paid by the residents, businesses and industries is the price one pays to live in an organized and civil society.”

The Uniform Commercial Code lien, filed with the Maine and Delaware secretaries of state May 21, includes $2,171,333 in unpaid property taxes and $76,428 in interest and filing costs Great Northern Paper West owes, Daigle said. The GNP West property includes the No. 11 paper machine and other equipment on the paper mill site.

GNP West and Cate Street are also registered as Delaware corporations.

The lien gives the town first priority position to collect its taxes. It states the relocation, removal or any effort to “otherwise adversely impact or sell the property” must comply with the commercial code, according to Daigle’s release.

“Basically removal of personal property, contrary to the notice filed and posted by the town, is theft,” the release states.

Daigle’s release incorrectly describes GNP as a wholly owned subsidiary of Cate Street, according to the investment firm.

“Cate Street Capital is the management company of GNP, but maintains no ownership in these entities. Furthermore, Cate Street Capital is also one of the largest creditors of GNP,” Ritchie said in the statement.

Cate Street is the investor that bought the East Millinocket and Millinocket paper mills for $1 in September 2011 and established GNP and Thermogen Industries. Thermogen has proposed replacing the paper mill with a $140 million pellet mill in the Katahdin Avenue industrial park. GNP East and West are the corporate entities representing the East Millinocket mill and the industrial park.

Daigle apologized for the error in an email she sent to councilors and media Wednesday.

“It is difficult to know whether we are dealing with Cate Street Capital, GNP West, GNP East, Thermogen, or any other iteration of the company and it is easy to be confused,” Daigle said in the email. “I apologize for the error on this, but stand totally by the body of the press release.”

The UCC lien will not prevent the auction of the No. 11 machine and related equipment scheduled at the East Millinocket GNP mill site on June 19, said Ritchie and Lee Bragg, a town-hired attorney who helped file the lien.

“The object is simply to preserve the town’s tax claim,” Bragg said. “It is not intended nor should it negatively impact the auction.”

In addition to GNP West and Cate Street, lien notices went to the auction company, Koster Industries of Farmingdale, New York, and Andover, Massachusetts, conducting the sale of the personal property at the GNP West operations, as well as Jackson Demolition of Schenectady, New York. Jackson Demolition is razing the mill property.

The Millinocket mill never reopened after being purchased by Cate Street.

GNP companies owe at least $6.8 million in unpaid taxes and other debts to the Internal Revenue Service, East Millinocket and Millinocket, and several vendors, according to liens filed at the Penobscot County Registry of Deeds since mid-April.

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