Deal that would launch Millinocket pellet project delayed despite LePage’s urging
AUGUSTA, Maine — A proposal for the state of Maine to guarantee a $25 million loan to create wood products jobs in Millinocket was tabled Monday by the Finance Authority of Maine board of directors, the majority of whom were unwilling to take the risk without stronger financial assurances from the applicants.
Gov. Paul LePage attended Monday’s meeting to urge support for the proposal. While he acknowledged the financial risk involved, LePage said the potential return to one of the state’s most economically depressed areas is worth it.
At issue is a plan by a firm called Thermogen Industries LLC, to build a torrefied wood pellets plant on the former paper mill site on Katahdin Avenue in Millinocket. Thermogen Industries is a subsidiary of Cate Street Capital, which bought the then-closed paper mills in Millinocket and East Millinocket in 2011. The company revived part of the paper mill in East Millinocket, which remains in operation today.
The torrefied wood plant, the first phase of which will cost up to $70 million to build, would employ 36 workers initially.
Company officials told the FAME directors that their guarantee of the $25 million loan was crucial. Cate Street had considered asking FAME for a $30 million loan earlier in the process but reduced their request to $25 million.
“It would not proceed in Millinocket if it’s a ‘no’ vote,” Chris Howard, an attorney representing Cate Street, said of the pellet plant project. “The question would then be: Is there some opportunity to do it somewhere else?”
Howard and others said building the pellet plant, which would be the first of its kind in the United States, would also help the bottom line at the Great Northern paper mill in East Millinocket because it would reduce pulpwood transportation costs and consume the mill’s biomass byproducts. But the paper mill’s future doesn’t necessarily depend on the construction of the Thermogen plant.
Several members of the FAME board said they supported the concept but did not see enough financial guarantees from Thermogen that indicate a high probability of the company being able to repay the loan. If Thermogen defaulted, the money would have to be replenished by tapping the state’s operating budget.
Millinocket Town Councilor Michael Madore told the board that the pellet plant won’t solve all of the area’s problems — he said his town alone currently has 308 tax liens on properties — but it would be a major step toward recovery.
“We are repossessing homes at a rate that I defy any community to match and that’s the sad part,” said Madore. “What I’m asking you folks to do is to support this financial commitment to Cate Street. They are a company that has come into our area and who has made a financial and personal commitment to our area. They have brought us an opportunity with this Thermogen plant.”
LePage agreed and said beyond Millinocket, the FAME guarantee would send a much-needed message to other companies eyeing Maine.
“Business is watching,” he said. “All I hear from businesses is ‘your policies and regulations are so rigid you don’t want us.’ There’s no better way to show a business your appreciation than becoming their partner.”
The board voted 6-5 to take no action on the loan guarantee request until its Oct. 17 board meeting. Between now and then, FAME and Cate Street officials will attempt to negotiate an agreement, although Howard told the board that some of its conditions, including collateral requirements, could scuttle the deal.
Extract form Bangoor Daily News.