Cate Street Capital

AUGUSTA, Maine - A New Hampshire-based investor ended months of speculation Tuesday by agreeing to buy the two Katahdin region paper mills, Maine Gov. Paul LePage's office said.

A tractor-trailer truck leaves Katahdin Paper Co., LLC in East Millinocket, Maine in this file photo. A New Hampshire firm has signed an agreement to pruchase the mill.

Portsmouth, N.H.-based Cate Street Capital, which describes itself as a national leader in developing green energy companies, signed an asset purchase agreement for the Millinocket and East Millinocket, Maine mills. Terms of the deal were not immediately available.

"This is a significant milestone in our efforts to not only restore papermaking in the Katahdin region, but to create job opportunities for Mainers," LePage said in a statement. "I want to commend the hard work and commitment of Brookfield and Cate Street. We look forward to continuing to work toward a closing."

LePage's press secretary, Adrienne Bennett, characterized the potential mill restart as one of the most significant economic achievements of the LePage administration. She cautioned that much work is needed before the estimated 450 to 500 people who lost their jobs when the East Millinocket paper mill closed on April 1 could get back to work.

"This is significant step in the right direction. There is more work to do. We don't want to say this is a done deal yet," Bennett said. "Clearly Cate Street has shown a commitment to these mills. We are very excited about moving forward."

Many important details, including the number of people who would be employed, Cate Street's specific plans for the mills, deadlines by which the sale agreement must be completed, what tax breaks Cate Street might seek from local and state governments, mill restart dates and the total amount of fiscal investment required by Cate Street for a mills restart, were not yet available.

Cate Street Capital is a private equity firm that has raised over $6 billion to finance more than 40 projects in the last 15 years. The firm specializes in renewable energy and green technology projects.

Through its Katahdin Paper Co. subsidiary, Brookfield Asset Management of Toronto owns the two Katahdin region mills and the company that operated the East Millinocket mill, Twin Rivers Paper Co. It also owns Brookfield Renewable Power, which owns 186 megawatts of electricity-producing dams on the Penobscot River and other bodies of water in Maine, according to Brookfield's website.

East Millinocket's mill was an integrated pulp and paper facility and a leading North American supplier with the capability to offer products with high recycled fiber content. It operated two paper machines that can produce 250,000 tons a year of uncoated groundwood papers for directory, catalog, book, insert and newsprint applications.

The Millinocket mill has a 180,000-ton-per-year supercalendered paper machine capable of producing paper for catalogs, magazines and retail industry fliers. It closed in September 2008, eliminating as many as 208 jobs, because of the mill's reliance on foreign oil to generate steam as part of the papermaking process. Brookfield Asset officials said that rising oil costs forced the closure.
In recent months, senior staff from the governor's office and the commissioner of the Maine Department of Economic and Community Development met with several potential buyers before finalizing the signed purchase agreement on Aug. 30.

Richard Cyr, Cate Street Capital's senior vice-president, promised to "work diligently to resolve all outstanding issues over the next few weeks."

"There are several parties to this agreement, and numerous conditions which must be met before the deal can be closed," Cyr said.

A home to papermaking for more than 100 years, the Katahdin region has endured a nearly 22 per cent unemployment rate since the East Millinocket mill's closure.

http://nbbusinessjournal.canadaeast.com/front/article/1435846

Photo: Courtesy Bangor Daily News Archive