BAILEYVILLE, Maine — The Finance Authority of Maine closed a $7.5 million bond deal Wednesday that is one piece of the financing package for a $120 million tissue mill that will be constructed at Woodland Pulp.
FAME will issue the taxable bond through its Major Business Expansion Program for St. Croix Tissue, an affiliate of Woodland Pulp.
The proceeds will be used to partially finance St. Croix’s purchase and installation of two tissue-making machines at Woodland Pulp’s Baileyville mill complex adjacent to the St. Croix River.
Construction work on the new facility is underway. One machine is expected to be in operation by the end of 2015 and the second in the first quarter of 2016.
The FAME bond, approved by the board of directors in March, leverages additional project financing including debt and equity totaling over $120 million.
“We very much appreciate FAME’s support for the project and the company’s plans for growth and success in the worldwide tissue market,” Bert Martin, director of Woodland Pulp and St. Croix Tissue, said in an announcement issued by FAME.
“We know how important it is for the company to invest in value-added products and remain competitive in the global market,” said FAME CEO Bruce Wagner. “FAME’s financing should also help provide a boost for the Washington County economy.”
Woodland Pulp is the first company to obtain financing through the Major Business Expansion program of FAME, a quasi-independent state agency that, among other things, provides financing for businesses. The program was established by the Maine Legislature in 1999.
FAME has received a few applications for the program, and a “couple” of commitments were issued, according to spokesman Bill Norbert, although none had closed previously.
Largely because the applicants are required by law to have strong credit, those that were approved were able to find financing elsewhere, saving the fees associated with the FAME program, Norbert explained.
The Major Business Expansion Program provides long-term, credit-enhanced financing up to $25 million at taxable bond rates for businesses creating or retaining 50 jobs and long-term, tax-exempt bond rates on bonds of up to $10 million that are used to finance manufacturing expansions. Bond proceeds may be used to purchase real estate, machinery, equipment or fixtures, or to expand or rehabilitate a facility.
Company officials announced the tissue plant expansion by parent company International Grand Investment Corp. in March. Woodland Pulp operates a mill at the site that manufactures pulp.
An existing building will be enlarged to house the two tissue machines. The tissue operations will employ about 80 people and produce 60,000 tons of tissue annually from pulp supplied by Woodland Pulp.
The sprawling pulp mill now employs about 320 people and is the largest employer and taxpayer in Washington County.