If the Old Town mill is going to resume operations, it now seems certain it won’t be under the ownership of Patriarch Partners.

Old Town Fuel and Fiber was abruptly shuttered, throwing nearly 200 employees out of work, on Aug. 13, after months of rumors that the mill was in financial trouble. At the mill officials said the closure was indefinite, saying the impact of foreign competition and our competitive position due to high wood and energy costs have made it difficult to sustain operations at this time; ongoing problems with the mill’s biomass boiler were later blamed as well.

Mill officials also furloughed – rather than laid off – all employees not needed for securing the mill, and it was announced that Patriarch Partners, the New York City-based company that bought the mill for $19 million in 2008, would be “pursuing options to secure the long term viability of the facility” – which, according to what city officials were told, means a new buyer is being sought for the mill.

In the weeks since the mill closed, there have a been a handful of inquiries, but no firm offer; at the same time, creditors, including the city, owed millions of dollars by the mill, filed a series of liens and attachments in hopes of securing claims and getting at least some of the money they were owed. In the meantime, Patriarch has offered no comment at any time since the closure; its first contact with the media since the closure came last week, via a legal notice announcing that all Old Town Fuel and Fiber properties, which operate under the name Red Shield Acquisition LLC, are going on the auction block. The public sale will be held at 11 a.m. on Oct. 15 at the mill and includes all buildings and land held by Red Shield; terms of the sale require any person or entity bidding on the mill to make a $50,000 deposit prior to the auction, with the balance due within 30 days of the sale. It further is stipulated that the sale will be on an “as is, where is” basis, without any warranty as to the condition of the property.

What the mill may sell for is anybody’s guess, but despite its current economic distress, some people close to the issue fell it could go go for more than the $19 million Patriarch paid. The mill has invested a few million dollars of a $30 million grant for the ethanol wood pulp to ethanol project in 2008; research and development is ongoing, but the possibility of bringing that process, which was being worked on with UMaine’s Forest Bioproducts Research Institute, may make the mill enticing to prospective buyers. At the same time, the creditors now on hold would need to be dealt with.

This year’s closure was the latest dip in a roller coaster financial ride that was has been going on at the mill, where production began as a sawmill in 1860 before the Penobscot Chemical Fiber Company was formed and started making paper in 1882, for years now, starting in 1997, when former owner James River merged with Fort Howard, leading to the formation of Fort James; Fort James was bought by Georgia-Pacific three years later, which three years later started massive layoffs and shutdowns due to sagging market conditions. Attempts to save the mill by the state buying the Juniper Ridge landfill staved off its closure for two years, when Georgia-Pacific closed down production at the end of 2005; the following year, Red Shield and three partners bought the shuttered mill for $1, but Red Shield filed bankruptcy in 2008, leading to another closure until Patriarch bought the facility and reopened it in 2009.


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