LINCOLN, Maine — The effort to restart the former Lincoln Paper and Tissue LLC mill has ended because the equipment needed has been scattered by the mill’s bankruptcy auction, the man leading the revitalization effort says.
“The effort to restart is at a close. Too much critical equipment has been sold. Our only real shot was to come to an agreement prior to auction,” former LPT sales director John McMahon wrote in an email on Tuesday, calling it sadly impossible “to buy a tissue mill at an auction or afterward.”
“There were over 400 lots involved in the various components we needed for the tissue mill,” McMahon continued, saying that one of the tissue machines is headed overseas and another “was bought over the internet.”
“The various components include: boilers, power transformers, fiber lines, pulpers, dye color systems, winders, our patented hi-ply system, online computer control equipment, wrappers, shipping equipment, etc.,” McMahon wrote. “We could spend $1 million and not get the most critical components.”
Town Manager Ron Weatherbee expressed regret Wednesday that the tissue mill will not restart.
“I was very impressed with the effort they put into it, but by the same token, that effort is at an end,” Weatherbee said Wednesday.
Town officials are monitoring the ongoing bankruptcy court process to safeguard town interests. Officials have begun receiving tentative inquiries about the property’s availability for redevelopment, but won’t be able to start redevelopment or revitalization work until the bankruptcy concludes, he said.
The mill filed for Chapter 11 bankruptcy protection in September 2015, eventually laying off 128 workers employed there at the time. LPT sought bankruptcy after a boiler explosion in November 2013 left the mill leaking cash. Lincoln Paper had employed close to 300 workers at one point.
Boston-based Gordon Brothers Commercial & Industrial LLC, PPL Group LLC of Illinois, Rabin Worldwide of California and Capital Recovery Group LLC of Connecticut bought the mill at auction in November for $5.95 million. They auctioned its equipment last week.
Representing a group of about 100 millworkers, McMahon claimed that on April 18, a day before the equipment auction began, he delivered an “official written offer of $2.25 million” to the owners, but they rejected it, and he never filed a bid on the mill during the equipment auction in the days that followed.
Besides the $2.25 million acquisition cost, McMahon’s group had commitments for an additional $7.5 million to pay for $1 million in needed mill repairs, $3 million in acquiring raw materials and the balance to fund working capital as well as long needed mill improvements, he said.
The No. 7 tissue machine and associated components sold for $450,000. A second tissue machine, No. 6, was sold to an online bidder for $270,000. The name of the online bidder was not disclosed. The sale of the mill’s No. 8 tissue machine officially closed last week, completing a deal the mill’s new owners reached earlier this year, officials said.
The prices paid at auction for the hundreds of smaller components of the tissue mill could not be determined.
The future of the mill site will likely not come into view until the bankruptcy process concludes. Proceeds from the auction of the mill assets will be used to pay its liabilities, first satisfying the $6.6 million owed to creditors who hold secured interests in various mill assets. Lincoln Paper has a total of $9.1 million owed to its unsecured creditors.
Lincoln Paper and Tissue LLC attorney D. Sam Anderson filed a motion with the U.S. Bankruptcy Court in Bangor seeking to set a deadline of May 28 for creditor claims against the company’s insurance policy. This is among the steps needed to settle unsecured and secured creditor claims, Anderson said.
Creditors objecting to the May 28 deadline for filing against the mill’s insurers must have their objections mailed to the court by May 9. An expedited hearing on Anderson’s motion to set the May 28 deadline will be held at the bankruptcy court in Portland at 2:30 p.m. on May 12, the filings indicate.
BDN writers Darren Fishell and Nok-Noi Ricker contributed to this report.