This past January, the new Hampden plant that processed household trash from more than 100 Maine communities was contending with a series of setbacks when the visionary behind the operation announced that it was finally turning a corner.
The plant, Coastal Resources of Maine, was just a few months away from receiving state environmental permits that would allow it to start selling two types of boiler fuel that it made from old plastics and fibers, Craig Stuart-Paul, the founder and CEO of its parent company, Fiberight, said during a Jan. 22 meeting in Bangor. After facing a number of challenges that included new import restrictions from China, it was also preparing to hire more workers and was close to lining up an international buyer for the paper pulp that it produced as well.
“It is a pivotal moment for the plant, going from these multiple disasters — which have been the permitting challenges and the China issues — to something which is far more stable and long term,” Stuart-Paul said during the meeting of the Municipal Review Committee, a group that handles the waste disposal for 115 Maine communities.
It is now clear that the $90 million Hampden plant never made that pivot. Instead, it closed its doors at the end of May after running out of money to pay its bills and to fund a series of other performance upgrades. Backers say the closure is probably temporary, but they are still not certain whether it will reopen.
The facility incurred a number of unexpected costs during its construction and opening, which took more than a year longer than planned, according to Karen Fussell, president of the Municipal Review Committee’s board of directors. They included changing builders midway through the project and a legal challenge to the plant’s license.
It lost money because of the delay in receiving the state permits it needed to sell its fuel products and because, without those permits, it needed to pay to landfill those products. A representative from the Maine Department of Environmental Protection said processing the applications required extensive work because the plant’s approach was so new and there weren’t any similar models state officials could look to.
Even more recent setbacks include the coronavirus pandemic, which rocked global markets and caused a deal with a Canadian paper company to fall through, Fussell said. The bondholders with a majority financial stake in the Hampden plant also recently decided against extending a critical $14.7 million loan.
Now, officials from the MRC are scrambling to line up new funding, management and staff for the plant so it can reopen. They are trying to arrange a more environmentally friendly interim arrangement for the 115 member communities that, while the plant is closed, are contractually required to send their waste to a backup landfill. The interim arrangement could involve sending waste to the Orrington waste-to-energy plant where those communities previously sent trash for many years.
In the meantime, Coastal Resources still has the fees MRC towns paid to send their trash to the Hampden plant.
The closure has highlighted just how dire financial problems have become at the Hampden facility, which allegedly owes $1.2 million to one contractor, NAES, which staffed and managed its operations, according to a new lawsuit from the company. It also owes back taxes to the town of Hampden, according to the MRC.
The fallout has revealed a new split between Fiberight and the MRC, which spent years working closely to open the first-of-its-kind plant that was meant to offer a sustainable, long-term solution to Maine communities that wanted to keep their waste out of landfills.
Right now, the MRC owns the land on which the Hampden plant sits. Fiberight, which is based in Maryland, and the investment firm Ultra Capital are co-owners of the plant.
Ultra Capital has a roughly $28 million stake in the operation, while Fiberight has invested around $10 million, although their exact financial arrangement has not been publicly shared, according to the MRC. The other major backing comes from a small group of bondholders that has loaned it about $50 million, but declined to extend another $14.7 million before its recent closure.
In an interview, Fussell said that the MRC never expected the plant’s startup to be smooth, given its large size and complicated technology, but the organization did hope the plant’s two owners would have been able to come up with the funding to get it past those hurdles until it could start turning a profit.
The MRC also was surprised by how long the construction of the plant took, and has been unsuccessfully pushing the owners over the last six months to appoint a local representative to oversee the facility, according to Fussell, who works for the city of Brewer.
“It was really this higher-level management structure that was not efficient and not effective,” Fussell said. “It was frustrating for the MRC to be able to see the issues there and not be in a position to address them other than in our kind of tangential role as the group that was feeding the plant with tonnage and as landlords. It’s a limited role that we had at that point.”
She added that the group is now in “a better position” because it is working directly with the facility’s bondholders.
Both Coastal Resources of Maine and the MRC have said the technology of the plant has been demonstrated to work and that the operation would have succeeded with additional funding. In late May, it finally received the state permits it needs to sell off the fuel products it makes from waste, which would open up a much-needed new revenue stream.
Now, the MRC is looking for new companies that would be willing to come in as owners and operators of the plant, although it expects to keep working in some technical capacity with Fiberight since the Hampden plant relies on its technology.
It’s not currently clear how such a transfer of ownership would work. Stuart-Paul, the founder and CEO of Fiberight, was not available for an interview on Friday.
In an email, he said that the company “remains actively involved with the MRC in supporting the project. There have indeed been several companies with the requisite capital and waste experience who are working with us to re-open the facility and complete the upgrades required to position it as a long-term, sustainable solution for the region’s waste.”
He added, “We expect to report more on this in the coming days/weeks.”
If the current owners of Coastal Resources are not able to restart the plant after a 30-day period that started in early June, the MRC has said it has the legal ability to terminate its contracts with the plant, but that it would not make sense to do that right away because it would make it harder to find new investors. The group also has an outstanding $1.5 million loan to the plant. Jonathan Pottle, MRC’s attorney, has said it could try to collect financial damages from the plant for its member towns.
George Aronson, a technical advisor to the MRC, said the group is reaching out to a range of different potential investors. Without identifying them, he said some of them may specialize in areas such as waste management or paper making, while others have experience turning around financially distressed businesses. One possible outcome for the plant would be to enter bankruptcy to help renegotiate its debts, he said.
The MRC expects to know within the next two months whether there is a realistic chance of someone stepping in to restart the plant, Fussell said.