March 21, 2019
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Maine college cancels deal with failed paper mill redeveloper

U.S. Economic Development Administration | BDN
U.S. Economic Development Administration | BDN
The site plan for the Institute for Local Food Systems Innovation at St. Joseph’s College in Standish shows three major components: at left, a hydroponic greenhouse; at center, the Hannaford Food Venture Center; and, at right, a livestock barn.

St. Joseph’s College and a company backed by private equity firm Cate Street Capital have called off a partnership to develop a greenhouse on the college’s Standish campus, which was tied to a $750,000 donation to the college.

The greenhouse is a major feature of St. Joseph’s plans for its new Institute for Local Food Systems Innovation, a college effort to help New England food producers grow crops locally that the region typically has to import.

The partnership was with Organic Nutrition Inc., which would have given $750,000 to the private college and gotten its name on a hydroponic greenhouse as part of the new institute. Organic Nutrition also would have helped develop curriculum for St. Joseph’s new certificate program in hydroponics, according to a federal grant application. Hydroponics is a method of growing produce without soil, often in nutrient-rich water.

Peter Nielsen, an entrepreneur-in-residence at St. Joseph’s who is leading development of the Institute for Local Food Systems Innovation, said college President Jim Dlugos informed Organic Nutrition on Jan. 6 that the college had decided to end the relationship.

“All parties agreed that it was not a good fit,” Nielsen said.

Sarah Boone, a vice president at Cate Street and spokeswoman for Organic Nutrition, wrote in an email that “while we had common interests and enjoyed a positive working relationship, ultimately our goals did not align to the degree we originally believed.”

Boone said Organic Nutrition “does not have other plans in Maine at this time.” In an August press release, the company stated it was working on securing $50 million in foreign investment for five site plans in four states, but didn’t provide further details on those plans.

Nielsen declined to comment further on the reasons for the end of its relationship with Organic Nutrition, or whether he or college officials had concerns about the company’s backing and management by Cate Street Capital.

The private equity firm’s failed 2011 restart of the Great Northern Paper mill in East Millinocket left behind a trail of debt that the attorney overseeing the mill’s bankruptcy attributed in part to mismanagement.

An investigation by the Maine Sunday Telegram into Cate Street’s deal also prompted state and federal regulators to close loopholes in incentive programs that Cate Street used to deliver roughly $16 million in Maine tax dollars to out-of-state financiers, for investments that didn’t improve any part of the East Millinocket mill.

The Bangor Daily News on Dec. 29 reported on Organic Nutrition’s history and Cate Street’s financial backing of the company.

St. Joseph’s and Organic Nutrition announced their partnership Sept. 20, when there were apparently also leadership changes underway at Organic Nutrition.

Organic Nutrition identified Ernie Papadoyianis as its CEO in an Aug. 28 company press release. But the former executive’s LinkedIn profile states he ended his tenure at Organic Nutrition in September. Boone wrote Friday that the “relationship was terminated” with Papadoyianis and ONI director Xavier “Sal” Cherch “some time ago.”

Papadoyianis and Cherch did not respond to multiple requests for comment on the initial Dec. 29 report by the Bangor Daily News.

On Jan. 10, Nielsen informed the Bangor Daily News of the college and Organic Nutrition’s decision to call off the partnership, which he said won’t hinder the institute’s broader plans or funding. He said the college had already committed itself to matching a nearly $2 million award from the U.S. Economic Development Administration.

Separately, it had received commitments of $500,000 from Hannaford and $750,000 from Organic Nutrition. Nielsen provided a new document laying out the vision for a quarter-acre greenhouse that it will expand with future rounds of funding.

“The mission of the ILFSI Hydroponic Farm is to advance New England’s capacity to sustainably produce fresh, local food year-round through the development of hydroponic farming techniques and the education and training of the hydroponics workforce,” the document states.

Nielsen said that the college is still evaluating what crops it will grow at the facility, which may vary based on local demand and research it’s now conducting with distributors who supply food for campus dining halls.

“We are working with all of those distributors now to see what they would be most likely to buy from us for their customers,” Nielsen said.

At Organic Nutrition, the company’s plans have also changed after the separation with Papadoyianis and Cherch. As of August, the company planned to use the duo’s patented Aqua-Sphere system for growing fish and collecting fish waste to reuse in hydroponic growing operations.

Boone wrote the company has no plans now to use the Aqua-Sphere and that its business model “centers on hydroponics.” She said widespread damage from Hurricane Irma around Organic Nutrition’s Boynton Beach, Florida, headquarters had “prompted some re-evaluation of the project’s focus.”

The company broke ground on those headquarters in November, according to property records.

Boone did not identify who has replaced Papadoyianis as Organic Nutrition’s CEO.



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