Bidders for the shuttered Great Northern Paper mill in East Millinocket are set to put forward their best offers Monday morning before a Tuesday hearing to determine a buyer for the bankrupt mill.
In early November, the court set out an 11 a.m. Monday deadline for bids.
On the day a bankruptcy court judge set out the bidding process, a subsidiary of the Montreal-based AIM Development and the South Carolina-based packaging company Sonoco both emerged as potential buyers.
AIM last year purchased and demolished a former Verso mill in Sartell, Wis., to redevelop the site. Sonoco produces uncoated recycled paperboard among its other packaging products.
Conversion to paperboard production was just one of many possibilities, according to the bankruptcy trustee in the case, who last week told the Bangor Daily News that of 12 potential buyers, four are interested in restarting the mill.
Mark Scally, who is chairman of East Millinocket’s Board of Selectmen, said that townspeople hope that the trustee selects as the winning bidder someone interested in restarting the mill who is in the papermaking business, and not just an investment group. East Millinocket lost about 250 jobs, its wastewater treatment plant operator and its largest single business and top taxpayer when the mill closed in late January, devastating the Katahdin region economy and leaving the region without a paper mill for the first time in its history.
“The biggest misconception here is that it is a newsprint mill. It is not. It is a groundwood specialty mill. It makes everything from telephone directory paper to heavy book paper,” Scally said Friday. “The machines can make a wide variety of papers up to an 85 percent brightness. I hope that by the word getting out there, somebody would come forward who would be interested in making that kind of paper.”
The sale is assured to move ahead for about $2.9 million to the firm GNP Acquisition, formed by the president of the auction and appraisal firm Capital Recovery Group. If a higher bidder does not come along for the mill, it’s not clear whether GNP Acquisition plans to operate it, resell it or scrap it.
The value of the sale holds a lot at stake for the creditors in the case, which include the town of East Millinocket and more than 500 unsecured creditors, about 100 of whom have filed claims. Through the sale agreement approved by the court, the unsecured creditors would get about 30 percent of the proceeds and East Millinocket would collect at least 90 percent of the $886,691 in property taxes it is owed.
The agreement that would allow East Millinocket to collect at least 90 percent of delinquent property taxes, leaving unsecured creditors with a smaller percentage of the proceeds, came after a compromise the court approved to absolve the estate of certain liabilities that trustee Pasquale “Pat” Perrino wrote would be costly to litigate and likely would yield little more for creditors of the bankrupt venture by Portsmouth, New Hampshire-based private equity firm Cate Street Capital.
It is in the best interests of state officials, who have been primarily responsible for the marketing of the mill, and the town to find an operator looking to sustain the mill, Scally said.
“You are talking (alleviating) unemployment and handling leachate from the (Dolby) landfill as part of operating the mill,” Scally said. “Without an operator, that means the town and state would have to pay those (leachate) costs, so I imagine that the state’s best interest is in having an operator handle that.”
The bids due Monday will be for the real estate and the equipment at the mill, which are owned by different corporate entities. GNP East owns the real estate. GNP Maine Holdings the papermaking machines and other personal property.
In court filings, GNP East estimated the value of its mill holdings at $16.5 million and its liabilities to secured creditors at about $2.1 million. GNP Maine Holdings owes $65 million to its creditors and claimed $28.15 million in assets, according to documents filed Oct. 3.
After bids due by 11 a.m. Monday, parties may file objections to the bidding by 4 p.m. A hearing to consider court approval of the sale is scheduled for 10 a.m. Tuesday, Dec. 2, in Penobscot County Probate Court in Bangor.