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FAME to Review Great Northern Owner's $25M Loan Guarantee
04/15/2014   Reported By: Jay Field

The Finance Authority of Maine is considering actions taken by the Internal Revenue Service against Cate Street Capital, as it prepares to review a $25 million loan guarantee it offered the company. Cate Street, which owns Great Northern Paper, needs the loan to open a new wood pellet plant at the site of the former paper mill in Millinocket. But over the weekend, the IRS filed liens against two Cate Steet subsidiaries for nearly $2.5 million. As Jay Field reports, the company says it's working to pay its debts and is confident it will be able to secure the FAME loan.

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FAME to Review Great Northern Owner's $25M Loan Gu
Originally Aired: 4/15/2014 5:30 PM
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 Duration:
3:06

At a minimum, the Finance Authority of Maine has said that Great Northern Paper must pay its property tax bills for the Cate Street loan to go forward. Great Northern owes the town of Millinocket $2.3 million, and it also owes East Millinocket $657,900. Cate Street says Great Northern plans to pay these debts.

But FAME has since learned that the company is facing some additonal tax liabilities.

"And we fully expect having to answer questions around the IRS liens," says Alexandra Ritchie, managing director at Cate Street Capital. Over the weekend, the Internal Revenue Service filed nearly $2.5 million in tax liens against Great Northern Paper. On Thursday, officials with FAME are due to review the authority's loan guarantee to Cate Street Capital.

FAME's top lawyer did not return a call or e-mail seeking comment by air time, but did tell the Bangor Daily News Monday that staff is reviewing the IRS liens. Ritchie says she's confident that Great Northern's latest tax woes will not prevent Cate Street from getting financing from FAME to start up its wood pellet business, Thermogen Industries.

"The Thermogen Project itself is an excellent project. It's an excellent opportunity for the state of Maine," Ritchie says. "So we feel very comfortable and confident in going into the FAME meeting and talking through the enhancements tghat we've made over the last several months. And we're optimistic for a positive outcome."

Thermogen Industries plans to sell the pellets produced at the Millinocket plant to electricity generators in Europe. The business would create 55 jobs in the area. But if Thermogen hopes to wrap up its financing by late May, it will have to move ahead with its plan to pay off its property tax debt.

"I haven't gotten any recent communication," says Shirley Tapley, an assistant to the board of selectmen in East Millinocket.
"I hope to make contact with someone at Cate Street this week."

Cate Street's Alexandra Ritchie says officials at Great Northern Paper have been working on a plan to pay both towns. There's also the issue of the mill in East Millinocket, which shut down temporarily over the winter and laid off nearly all of its 256 workers.

Last week, Gov. Paul LePage signed a law, allowing Cate Steet Capital to enter into a profit-sharing agreement with Brookfield Asset Management, which sells power generated by the dams it owns on the Penobscot River. Ritchie says Cate Street continues to negotiate with Brookfield.

"They haven't gone as expeditiously as we would have hoped," Ritchie says. "But Great Northern Paper will continue to have the discussions and hope that Brookfield becomes part of the resolution and the restart."

Cate Street had hoped to see the mill restart by May 1. But the delay in negotiations between the two sides has pushed the target date back a month, to June 1.

Local officials are hoping for the impasse to get resoved as quickly as possible. The longer it goes on, they say, the more they worry that those 256 mill jobs will go away for good.



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