A company expected to play a key role in reviving a Hampden trash plant that’s been closed more than two years is inextricably linked with a firm that came to Maine more than a decade ago, pledging to reopen the Katahdin region’s two paper mills and start a facility making wood pellets that could serve as a coal substitute.
That firm, Cate Street Capital, instead left behind operations that either failed or never materialized, along with unpaid bills to vendors and the federal government, and two bankruptcies. It restarted the East Millinocket paper mill for about 2½ years, but the Millinocket mill lay dormant. The wood pellets plant slated for Millinocket never came to fruition.
In the process, Cate Street benefited from more than $140 million in state and federal tax breaks and lending in its first two years of owning the mill properties, the Bangor Daily News reported at the time. Both Cate Street and its papermaking subsidiary, Great Northern Paper, have since filed for bankruptcy protection.
Now, the company CS Solutions is expected to take a lead role in reopening the shuttered Hampden waste processing facility that more than 100 Maine towns have been working to acquire. Revere Capital Advisors, the firm the towns expect to partner with as a co-owner, has brought in CS Solutions to “lead” the plant’s restart, Pat Daly, Revere’s senior managing director, said last week.
CS Solutions is closely linked with Cate Street, sharing officers, addresses and some business history with the investment firm that John Halle and Richard Cyr began in Portsmouth, New Hampshire, in 2009 to invest in sustainable development.
CS Solutions’ CEO, Ned Dwyer, served as president of Cate Street’s Great Northern Paper as the East Millinocket mill closed for good and Great Northern later filed for bankruptcy.
The BDN could find no corporate registration filings for CS Solutions, although companies doing business in Maine generally are required to register as corporations with the Maine secretary of state.
But the entity through which CS Solutions appears to conduct business, CS Operations, is registered in Maine, Florida, New Hampshire and Delaware, and lists the same principal address, mailing address and top officers — including Halle — as Cate Street in its corporate filings.
In Florida, CS Operations’ official name is Cate Street Operations, and a New Hampshire judge has described CS Operations as “a mere continuation” of Cate Street Capital.
An email to CS Solutions through its website triggered an automated reply from CS Operations, and calls to the company’s offices in Florida and Portland were answered by receptionists identifying the business as CS Ops. Company officials didn’t respond to those requests for comment.
The Municipal Review Committee, the group that represents the 115 Maine communities that plan to send their trash to the Hampden facility, was aware of CS Solutions’ links with Cate Street Capital, board president Karen Fussell said.
“CS Solutions brings experience in plant restructuring, significant experience in pulp as well as waste operations, and strong Maine ties,” she said.
Fussell noted that CS Solutions will not be a facility owner, just a vendor, and will play no role in its corporate governance.
“MRC has had extensive discussions with Revere regarding their reopening plans and proposed operating structure, and we are confident that it can succeed,” she said.
Revere Capital did not respond to requests for comment on its choice of CS Solutions.
Separate entities, same management
CS Solutions advertises itself on its website as a Florida-based “clean-tech” company and lists six projects that it’s managing, including a South Florida hydroponic greenhouse, an enterprise that converts waste from sugar production into pellets that can be turned into electricity and a biomass electricity plant in Berlin, New Hampshire, that converts wood waste into electricity, albeit at above-market rates, and started as a Cate Street Capital endeavor.
But CS Solutions hardly exists on paper.
Rather, it appears to conduct its business under the name CS — or Cate Street — Operations.
Dammon Frecker, whom CS Solutions lists as its executive vice president on its website, lists his position as executive vice president of CS Operations on his LinkedIn profile. He assumed that position in June 2017 after a six-year stint as managing director of development for Cate Street Capital, according to the profile.
As a CS Operations officer, Frecker has been active in the management of the New Hampshire biomass plant, called Burgess BioPower, which has been a point of debate in state politics because it produces power that’s more expensive than the market rate.
He advocated for successful legislation this past spring that will allow the plant to keep operating while producing above-market-rate power, with the cost shouldered by New Hampshire utility ratepayers.
Burgess BioPower began as a Cate Street Capital venture, and it remained so until March 2018, when the company transferred its contract to sell the plant’s power to CS Operations, the New Hampshire Business Review reported in 2020.
A CS Operations spokesperson told the Business Review at the time that Cate Street Capital and CS Operations were “wholly separate entities” and that Cate Street Capital had conducted no business in more than two years.
As a result, the biomass plant wasn’t affected by Cate Street’s 2020 bankruptcy filing, though the earlier transfer of the biomass contract to CS Operations complicated efforts by Cate Street Capital’s biggest creditor in its bankruptcy — Xpress Natural Gas, a supplier to the East Millinocket paper mill — to collect on the money Cate Street said it owed the company, Xpress said in court filings.
In that case, in which Xpress sued Cate Street Capital, Rockingham County Superior Court Judge Marguerite Wageling ruled that CS Operations was “a mere continuation” of Cate Street Capital despite company officials saying otherwise and ruled that CS Operations should be brought into the case.
Today, CS Operations is located at the same Portsmouth, New Hampshire, office where Cate Street Capital began, at One Cate Street.
In Florida, both Cate Street Capital and CS Operations list both Halle and Robert Desrosiers as officers in their corporate filings with the state. Desrosiers was also the Cate Street Capital officer who signed the company’s 2020 bankruptcy filing.
Similarly, in Maine, both Halle and Desrosiers are listed as CS Operations officers in the company’s 2022 annual corporate report.
Maine arrival
In August 2011, Cate Street Capital announced its plans to restart the Katahdin region’s two paper mills and build a plant there making torrefied wood pellets that could replace coal at European electrical plants.
Gov. Paul LePage’s office had approached the firm about purchasing the defunct mills from Brookfield Asset Management, MaineBiz reported, and his office celebrated the deal’s September 2011 completion and its promise of returning hundreds of people to work.
Two months later, Great Northern began making newsprint in East Millinocket with more than 200 workers on the payroll.
Cate Street was busy that year, as 2011 was also when it broke ground on the New Hampshire biomass facility.
Then, after a year of business in the Katahdin region, Cate Street received its first state permit to produce torrefied wood pellets, with 36 jobs predicted at the planned Millinocket facility.
But in 2013, the first of many creditors called on Cate Street to pay what it was owed, and the town of Millinocket said the company owed it $450,000 in taxes. But Cate Street hung on and was able to secure a $25 million bond for its subsidiary Thermogen Industries — the wood pellet manufacturing venture — from the Finance Authority of Maine.
By the end of 2013, the BDN reported that Cate Street had benefited from more than $142 million in tax breaks and state lending.
Among that figure is $16 million in Maine taxpayer dollars destined for out-of-state Cate Street investors under the state’s New Markets tax credit program. The refundable credits were for investments that didn’t improve any part of the East Millinocket mill, an investigation by the Portland Press Herald found.
That use of the tax-credit program prompted Maine policymakers to tighten the program’s rules, but Cate Street’s use of the tax credit program had a prominent defender in the LePage administration. Department of Economic and Community Development Commissioner George Gervais argued in a Central Maine Newspapers column that the tax credits sustained the East Millinocket mill for longer than it would have survived otherwise.
Today, Gervais is CS Solutions’ chief operating officer.
Cate Street Capital laid off most of its East Millinocket mill workforce in early 2014. Two months later, in April 2014, the IRS filed two liens totaling $2.49 million for nonpayment of taxes against two Katahdin-region companies owned by Cate Street. Additionally, an independent appraisal showed that the mill lacked assets to justify the $25 million bond FAME had approved for Cate Street subsidiary Thermogen. FAME instead agreed to a $16 million bond.
Cate Street’s Great Northern Paper filed for bankruptcy protection in Delaware in September 2014, claiming it owed more than 1,000 creditors at least $50 million. Two other Cate Street companies at the time also owed Millinocket $1.49 million in real estate and personal property taxes.
Cate Street sold the Millinocket mill site to the nonprofit Our Katahdin in 2017, and it took the organization more than two years to resolve the IRS lien on the property. The lien had complicated the group’s efforts to redevelop the site.
In 2020, Cate Street filed for bankruptcy in New Hampshire, claiming it owed $3.6 million, most of it to Xpress Natural Gas LLC.
Cate Street’s bankruptcy case is still ongoing, according to court records.
In Maine, the sale of the Hampden trash facility is also still wrapped up in court. However, the facility’s receiver on Tuesday filed a proposed order granting the property’s sale that awaits a judge’s signature.