Despite bankruptcy filing, town and mill say it's 'business as usual'

RUMFORD — It was business as usual for NewPage Corp. and town officials in the wake of the paper company's announcement Wednesday that it had filed for Chapter 11 bankruptcy protection.

Erin Cox/Sun Journal

NewPage Corp. announced Wednesday that it had filed for Chapter 11 bankruptcy protection. The company owns several mills in the United States and Canada, including one in Rumford that employs about 900 people. 

"I think when you hear 'bankruptcy' it has a negative connotation," Town Manager Carlo Puiia said. "I believe it's to the company's advantage to restructure and come back as a stronger paper mill that can create jobs."

George F. Martin, president and chief executive officer for NewPage, expressed the same hope in a news release and on a NewPage website dedicated to explaining NewPage's filing of Chapter 11.

"I firmly believe we are on the right path to enhance our standing as the leading producer of printing and specialty papers in North America and position us to compete and succeed in a dynamic industry environment," Martin said.

Chapter 11 allows a business to continue operating as usual while working with creditors to develop a plan that explains how they will satisfy their obligations and restructure their debt.

Some of that debt is based in the town of Rumford. NewPage owes $2.7 million to Rumford Falls Hydro LLC, owned by Massachusetts-based Brookfield Renewable Power Inc.

Julie Smith-Galvin, director of communications and stakeholder relations for Brookfield Renewable Power, said the company did not have any comment on the filing by NewPage.

Hartt Transportation of Bangor has been hauling goods for the Rumford mill for years and is listed in court paperwork as one of the top 30 unsecured creditors.

Hartt Chief Financial Officer Joanna Bradeen said, "News like this can be disconcerting, but I think we have all known it was coming. To continue, NewPage needs to deliver their product to market to survive, and I think this is their only way to guarantee they can do that."

Bradeen was confident of the mill's future because J.P. Morgan has committed to secure $600 million in debtor-in-possession financing to help the company continue to operate and compete in today's market. Debtor-in-possession financing will give J.P. Morgan rights similar to those of a trustee of the company.

"For the most part, it's business as usual," Bradeen said.

Janet Hall, director of Human Resources and Mill Communications for the NewPage mill in Rumford, said the mill, which has about 900 employees, is focusing on meeting the demands of its customers and supplying quality products. She said there had been no mention of shutdowns or rolling downtimes for the mill. Such downtimes occurred in 2009.

"The economy was not good in 2009 and we easily matched our customers' demands, which required us to stop production for short periods of time," Hall said. "That isn't the case now and we are even bringing in new hourly employees this week."

State Rep. Matt Peterson, D-Rumford, said he was concerned about keeping jobs at the mill.

"We still need to concentrate on what we can do to keep the facility in Rumford operating and strong," Peterson said. "We don't want to lose these jobs because someone on Wall Street at an equity capital firm made a series of bad decisions."

U.S. Sen. Olympia J. Snowe and Rep. Mike Michaud released statements saying they were ready to assist the mill in Rumford in any way they could.

"It is critical we do whatever it takes at the federal level to foster an environment of economic certainty that reinvigorates our mills and ensures their lasting competitiveness both domestically and around the globe," Snowe said.

Ron Hemingway, recording secretary for the United Paperworkers Union Local 900, said as long as the overall plan filed in court Wednesday is approved, mill employees will be protected.

"The company is trying to honor the benefits and wages of the employees," Hemingway said. "This could be a lot worse, like the East Millinocket mill closure where everyone was laid off. This is the best type of plan we could have expected."

ecox@sunjournal.com

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Comments

Phil Blampied's picture

Not a promising reaction

While I understand the town manager's desire to calm things down and avoid having his phone lines plugged by worried citizens, the fact is that bankruptcy is obviously a negative thing. It would be unfortunate if the town is in fact going to run in a business as usual mode. This is not business as usual. While New Page will continue to owe property taxes, it will probably not pay them until the reorganization is complete. This will deprive the town of half of its cash flow for quite some time. The town will probably have to take out a TAN, tax anticipation note, to cover the gap. How much will the TAN cost? The interest cost on the TAN should be offset by an equal reduction in some of the spending that was otherwise planned this year. That's the least and first step to take. The town manager should outline all possible scenarios and draw up a plan and cost projections for responding to all of them, from the best case situation where everything is resolved quickly to a worst case scenario in which the mill is liquidated in the reorganization. It's time to take the rose colored glasses off, Mr town manager and members of the board. Hugh Chisholm is dead. There's no longer a great benefactor to keep the town going even when the leaders don't do such a hot job. It's time for leadership and competence. Are you up to it?

Yeah Phil

That's right Hugh Chisholm is dead. He made his money and sold out. Each time the millo was sold , jobs were lost. If this mill have good investors it would have diversified. But they are an investment group. Has anyone ever watched PRETTY WOMan, buy something up and sell it off in pieces to make a profit. DAH ! With the present board in power the rose colored glasses will never be taken off. When Mr. Belanger and I served we tried to cut spending because we saw the writing on the wall. I saw when serving on the finance board. He and I exposed the overtime being played with in the fire department and we were chastised. At the time our informant was a fireman and now security in the mill and selectperson what a coincidence. The board has chair works in the mill and said this would never happen, WOW,great insight MR. Chairman. Spending never got better when Mrs. L served before and now she's back serving. The only working department head in the big three is the fire chief. The police force is over crowded, the highway crew has always been allowed to over hire3 during the spring and summer months and its superintendent is under qualified to be in his position. We don't need a full time Code enforcement person. And the welfare office should only be a 12 hour position, the tax office should be operating with only one part timer (non benefit) like it was suppose to be. Is there a need to overhaul. YES there is. Will iot get done no it won't. If the 2 or 3 towns merged would we save? Yes! Would our taxes stablize Yes! If the schools combined in the area at least would we save? Yes! Citizens of the entire River Valley you also have to take off the rose colored glasses. You have been listening to the wrong people. And if you continue doing so then you will continue paying the higher price.

Phil Blampied's picture

Some property taxes to be paid

Dig deep into the bankruptcy documents and you find that New Page is seeking court authorization to pay property taxes that were due before the bankruptcy filing. See: http://www.kccllc.net/documents/1112804/1112804110907000000000004.pdf
The question is whether that means the yearly tax bill prorated only until this week, or the entire tax bill, or none of it since the bills have not yet been sent out. Anyone know?

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