November 21, 2017
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Lawsuit limits demolition at former Great Northern mill site

By Darren Fishell and Nick Sambides Jr., BDN Staff
Updated:
Nick Sambides Jr. | BDN
Nick Sambides Jr. | BDN
The former Great Northern Paper Co. site in East Millinocket, as seen on Feb. 7, 2017.

EAST MILLINOCKET, Maine — Investors seeking to build a biofuel refinery that they say would employ more than 100 people at the former Great Northern Paper Co. mill site were granted a temporary restraining order on Tuesday preventing the razing of buildings vital to the project.

U.S. District Judge Jon Levy issued the order in response to a 16-page lawsuit EMEP LLC of Lincoln filed in U.S. District Court of Portland the same day. Attorneys for EMEP said they sought only to maintain the status quo. The order allows the company to continue demolition of four buildings for which it already received state permits.

They and attorneys for the site’s owner, Florida-based North American Recovery Management, conferred over a proposed $1.75 million purchase price and terms after the hearing.

The lawsuit alleges that North American repeatedly delayed closing on the purchase and sale agreement of the site and committed breach of contract by violating a Letter of Intent covering the purchase. North American also began demolition of parts of the site in February that EMEP needs to complete its plans, according to the lawsuit.

EMEP claims that it spent about $6 million “toward implementing its plan to construct the [biorefinery] and consummating its purchase of the property in investment.”

“The biorefinery itself will employ over 100 individuals, and EMEP estimates that the 24-month construction of the biorefinery would create over 2,000 jobs in direct and indirect construction services and induced community jobs,” according to the lawsuit.

EMEP sought a court order requiring North American to halt site demolition and sale of the equipment EMEP needs “beyond that which is authorized” under North American’s state permit, and also wanted the court to halt North American from selling or conveying the property to anyone else. The company seeks compensation for losses incurred due to the delays.

The venture is led by three partners, including William Harrington and Fahim Samaha, who own the U.S. arm of the French energy company Capergy, and SAG Realty LLC owner Scott Gardner. Samaha is president of Capergy US, which last year purchased Covanta’s shuttered biomass plants in West Enfield and Jonesboro, and restarted them in January under the corporate name Stored Solar LLC.

Stored Solar has begun securing equity investors to share in 30 percent of the cost of the biorefinery, according to court documents, and has plans for a broader $240 million initiative to “acquire, upgrade and operate biomass plants throughout the state of Maine.”

EMEP describes itself in the lawsuit as a Maine limited liability company with a principal place of business in Lincoln. Court documents indicate that the company hopes to convert forest biomass into a “drop in” ready fuel in the form of bio-crude or diesel, gasoline and jet fuel.

North American Chief Financial Officer Jason Inoff said he hoped to be able to comment in some detail about the lawsuit soon.

“This is the first I’ve seen of it,” Inoff said via email.

Town officials have met with EMEP leaders about a half dozen times over the last six months, town Administrative Assistant Angela Cote said.

“We have been working with them for the past few months and the board [of selectmen] would support any efforts that would lead to them being able to purchase the mill site,” Cote said.

Board chairman Mark Scally expressed town concerns in January about the heavy demolition equipment seen at the former mill site, saying it jeopardized a potentially lucrative deal for the town with a potential investor and employer. He did not identify the developer. Scally later said that the town had no legal means to prevent the demolition.

On Feb. 6, Inoff issued a brief statement saying that town officials were wrong to fear that the demolition would make the site less marketable.

The demolition “will not affect any future development of the site,” Inoff said.

Several structures would remain on the property, including the site’s biomass boiler, after the four buildings are demolished, he said at the time.

“If we wanted to take down the entire site we could have started that last April. We are trying our best to do several things,” Inoff said. “We’re trying to do our best to bring back the most commerce to this site.”

Scally dismissed North American on Tuesday by saying “I haven’t had any dealings with them, and I don’t care if I ever do.”

“I just hope that the damage that has been done [to the mill site] is not irreparable. I think they [EMEP] are good people and they have good backing,” Scally added. “They have been upfront with us the whole way.”

According to the lawsuit, EMEP and North American signed a Letter of Intent on June 30 for EMEP to purchase a power plant, several mill and office buildings, and associated equipment on the mill site, with an option to purchase contiguous property. The letter included a $100,000 deposit refundable if the property failed EMEP’s due diligence examination or if it was unable to purchase the contiguous property. North American accepted the money on July 18.

The letter allowed EMEP 60 days for its research. It specified that the purchase and sale agreement would be signed in the latter half of the 60 days.

But neither party finished a purchase draft within the allowed time. The delays were caused by North American’s delayed removal of “all non-ferrous metals” from the site — equipment that had been used in connection with papermaking that EMEP wouldn’’t need — and EMEP hadn’t yet bought the contiguous land, the lawsuit states.

Conflict between both parties began in November when North American sought permission to raze four buildings on the site. “Each of these buildings was contained in the letter of intent’s description of the assets EMEP contracted to purchase,” the lawsuit states.

EMEP agreed to the additional demolitions if, among other things, a purchase and sale agreement was concluded before the razings started. North American agreed, with its representatives telling EMEP on Nov. 16 “that its attorneys were reviewing the draft [purchase and sale] agreement and would be ‘back to you shortly,’ ” the lawsuit states.

North American dodged requests to finish the sale agreement from then until Feb. 1, when EMEP told North American that state officials had reported to them that they had heard from North American that it no longer considered the letter of intent binding, the lawsuit states.

On Feb. 10, EMEP says it learned the owners plan to listen to other offers on the property starting March 1.

North American’s demolition work and failure to complete the sale jeopardizes the loan agreements made between EMEP and the federal Department of Energy, the lawsuit states.

EMEP hopes to begin production in 2019.


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