Paper industry struggles have taken toll on Katahdin region

Posted July 19, 2014, at 5:32 a.m.
Last modified July 19, 2014, at 5:47 a.m.

The paper mills of East Millinocket and Millinocket have struggled mightily over the last decade, and many plans made by their owner, Great Northern Paper Co. LLC, and management company Cate Street Capital of Portsmouth, New Hampshire, which formed GNP, haven’t been realized.

Things looked promising to Gov. Paul LePage when Cate Street bought both idled mills for $1 in September 2011. He expressed hope that the mills would employ as many as 250 workers in East Millinocket and as many as 500 between it and the Millinocket site. The employment numbers have fallen considerably short.

Below is a summary of the key events as the company has struggled to survive:

EAST MILLINOCKET

October 2011 — The East Millinocket mill started production with 215 workers after closing in April, idling 415 workers. The mill’s valuation was lowered from $96 million to $30 million. The town laid off several workers or reduced their hours.

December 2011 — Officials said that the operation of the Dolby landfill, which the state agreed to assume ownership of as a condition of the mills’ sale, could cost the state as much as $46.5 million over the next 30 years. The landfill contains waste from the mills.

October 2012 — Cate Street and the company it formed to operate the two mill sites, Great Northern Paper Co. LLC, celebrated the company’s one-year anniversary.

January 2014 — GNP announced it was shutting down the East Millinocket mill for 16 weeks as part of an energy and efficiency reorganization plan.

February 2014 – GNP announced the layoff of 212 of 256 millworkers because of high energy and production costs.

March 2014 — Responding to the mill shutdown, town officials laid off two full-time Police Department employees, a part-time fill-in and a full-time “floater” in the Public Works Department.

April 2014 — The Legislature and LePage passed emergency legislation allowing GNP to partner with Brookfield to help restart the mill. Brookfield said the deal was unfair. The IRS filed two liens totaling $2.49 million against GNP for nonpayment of corporate income taxes. Records showed the GNP companies are at least $6.81 million in debt to the federal government, East Millinocket and Millinocket, and vendors who have sued or filed liens since February 2013.

July 2014 — GNP is overdue on $657,900 in property taxes, plus interest and fees, officials said.

MILLINOCKET

September 2008 — With company officials citing losses of at least $57 million since its 2004 restart, Katahdin Paper Co. LLC closed its paper mill. Katahdin Paper LLC owner Brookfield Asset Management expressed hope of a 2010 restart. The Millinocket mill employed 150 workers.

October 2011 — Cate Street Capital announced plans to hire 220 workers when it starts to make torrefied wood at the Katahdin Avenue paper mill site as early as 2013. Cate Street officials confirmed that its Maine enterprises have received at least $142 million in tax breaks from Maine and the federal government since 2011.

March 2012 — LePage said the state will withhold about $216,000 in aid from Millinocket because town officials broke an agreement to share Dolby landfill operating costs. Millinocket officials angrily denied the claim and said LePage was a bully and had lied. A Superior Court judge rejected Millinocket’s lawsuit nine months later.

June 2013 — New Town Manager Peggy Daigle said that GNP was overdue on its $2.3 million tax bill, causing a cash-flow shortage. The Town Council approved its first lien for the money on the equipment and other personal property on the Katahdin Avenue site. Great Northern Paper paid what it owed to East Millinocket and Millinocket two months later.

March 2014 — Thermogen Industries replaced plans to build a $70 million microwave torrefaction plant with plans for a $140 million steam-thermal pellet-manufacturing facility.

April 2014 — The Finance Authority of Maine reduced to $16 million its bond to the Thermogen project. It previously approved a $25 million bond. An online advertisement revealed that GNP planned to auction the personal property from the mill site in June.

May 2014 — Millinocket filed a lien seeking $2.24 million in overdue property taxes from GNP.

June 2014 — The GNP auction appeared to make enough money to pay Millinocket its taxes. East Millinocket leaders who opted not to press a lien announced that they support GNP and Cate Street in the company’s efforts.

July 2014 — Millinocket officials agreed to a partial payment plan that would allow GNP’s auctioneer to pay its overdue property taxes by July 21.

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