RUMFORD — Local officials are expressing concern about the NewPage paper company's announcement this week that it may be forced to file for Chapter 11 protection if it can't refinance its debt or generate sufficient cash flow.
The company is North America's largest manufacturer of coated paper and employs about 750 people at its Rumford mill, and pays 46 percent of the property taxes in town.
Ron Hemingway, recording secretary for Local 900 of the United Steelworkers, said a corporate spokesperson told the union about a month ago that a Chapter 11 filing was a possibility.
“That is no surprise to us. We heard it might happen,” he said Tuesday afternoon from a United Steelworkers convention in Las Vegas.
“We're all very concerned but powerless to do anything about it,” he said.
“They are looking to find cheaper financing. We just hope for the best,” Hemingway said.
Rumford Town Manager Carlo Puiia said Tuesday that he has tried to contact mill management to discuss the financial situation but has so far been unsuccessful.
The mill's impact on the town and area is huge, he said, noting that 46 percent of the town's tax liability is paid by the local mill.
“We have great concern for their financial health, for the county and River Valley citizens,” he said.
Major changes in the mill would affect every storekeeper, waitress, truck driver in the area, Puiia said.
“It's very encompassing how it (the mill) affects everyone. Hopefully, their management will make the best decisions,” he said.
NewPage, which is owned by the private equity investment firm Cerberus, said in its second quarter financial report issued Monday that it has retained advisers to explore restructuring alternatives and is in discussions with various stakeholders to address capital needs.
“If unable to refinance debt or generate cash flow, we will be required to seek to restructure our existing debt or to voluntarily seek, or be forced to seek, protection under Chapter 11 of the U.S. Bankruptcy Code and applicable Canadian laws,” the document reads.
The quarterly report, which was filed with the U.S. Securities and Exchange Commission, noted the company has $2.5 billion in debt because of bonds that come due early next year, according to deadtreeedition.blogspot.com.
Second quarter losses were $132 million, and sales have dropped. Losses in the same quarter last year were $174 million, the report said.
Janet Hall, spokeswoman for the Rumford mill, referred requests for information to the company's headquarters in Miamisburg, Ohio. Repeated calls there for comment were not returned Tuesday.
Hemingway said the company has been looking at other assets that could be sold to raise capital.
One of those assets is the Cogeneration and Consolidated Water Power Co. at the Rumford mill. ReEnergy Holdings LLC of Latham, N.Y., had agreed to pay $61 million for the energy-producing plant; however, closure on the deal has been held up.
Jay Epstein, vice president and chief financial officer, said in the quarterly report that the closure date has stalled and the company is looking into options to address the unspecified conditions required to complete the sale.
NewPage also has mills in Kentucky, Maryland, Michigan, Minnesota and Wisconsin, and Nova Scotia.