JAY – International Paper will sell its two Maine mills.

The buyer: An investment group that kept quiet about the sale on Monday, leaving outsiders to alternately describe the new owners as a stable company and a “vulture capital player.”

What that means for the future, Apollo Management isn’t saying.

In a deal expected to close midsummer, IP will sell coated paper mills in Jay and Bucksport, and one more each in Michigan and Minnesota, to CMP Holdings LLC, an Apollo affiliate, for $1.4 billion, according to International Paper.

The world’s largest paper company announced it would sell or spin off the coated division last summer, leading to months of rumor and speculation. IP has already sold off thousands of acres of Maine timberland.

Jay’s Androscoggin Mill, a fixture on the river for 40 years, employs 1,000 people.

“It’s the only paper mill in the state that’s never changed hands. This is a big deal,” said Jay Town Manager Ruth Marden. “Most people that I talked to are just reserving opinion. We’re a small, conservative Maine town. We’re not sure what they’ve got planned.”

She took a call from the mill manager early Monday morning with the news: “He’s very upbeat about this. It’s a very stable company.”

In press materials, IP described Apollo as a private investment firm that has managed $13 billion in capital since 1990.

At one time or another, it’s had money in General Nutrition Centers, Rent-A-Center and the Zale Corp., according to a December 2005 issue of Real Estate Weekly.

Several messages left at Apollo’s Purchase, N.Y., headquarters were not returned.

“Nobody I’ve talked to seems to know much about” Apollo, said John Williams at the Maine Pulp & Paper Association. He assumes the situation will mirror Rumford’s where a hedge fund bought the mill as an investment and left people in place.

Economic and Community Development Commissioner Jack Cashman said he believed Apollo also owns Samsonite. He said he read that former U.S. Sen. Tom Daschle sits on the board.

Monday’s deal has the “potential to be positive,” he added.

“The company that bought them is certainly well-heeled,” Cashman said. It “certainly has the asset base to maintain investment.”

Jim McNutt doubts it will.

Executive director of Center for Paper Business and Industry Studies, McNutt said Apollo has “dabbled around the edge of the forest product industry” but never made a buy as major as these mills.

He called the company a “vulture capital player.”

“I’d be very surprised if this wasn’t viewed as a very short-term hold on their part,” McNutt said. “They want to get 20 percent or more on their money in 2 to 4 years. They don’t care about the employees, they don’t care about the state of Maine, they don’t care about squat. They care about making a return on their money.”

McNutt predicted the company would do its best to make the mills’ finances look great by cutting costs – employees, supplies – and stifling new investment.

He said it’s been a trend over the past five years for investment companies to buy and turn around mills. When they cash out, it’s often by creating a public company, selling to management or selling to a traditional forest products company.

Former state economist Charles Colgan wasn’t so pessimistic. He’d never heard of Apollo.

“My guess: They want to diversify their portfolio with different kinds of investment. Paper mills are good long-term investments in a mature capital market. They aren’t going to be the next Microsoft,” said Colgan, a University of Southern Maine professor.

He cautioned: “Managers of investment firms are more likely to move on quicker than managers of paper companies” if a mill isn’t performing to standards.

Maine is the nation’s No. 2 paper-making state. The paper industry, whacked with mill closures in recent years, employs 8,900 people, according to the state Department of Labor.

Amy Sawyer, a spokeswoman for IP, said the new owners hadn’t indicated that employee levels would change, but that would ultimately be up to Apollo.

“This is good news for the employees at all four mills,” she said. “They’ve been waiting for the last year” to see what would become of the mills.

And a new name? “There’s details that need to be worked out between now and closing and that’s one of them.”

Comments are no longer available on this story