Owner of Augusta paper mill seeks bankruptcy protection

CONCORD, N.H. – American Tissue Inc. and 27 of its U.S. subsidiaries, including a paper mill in Augusta, Maine, filed for Chapter 11 bankruptcy protection Monday, a court clerk in Delaware said.

The Hauppauge, N.Y.-based company filed papers in U.S. Bankruptcy Court in Wilmington, Del., at about noon, deputy clerk Pat Foss said by telephone.

The subsidiaries stretch from Oregon to New Hampshire, but do not include two holdings in Mexico, company spokesman Kurt Goldschmidt said.

The filing lists the company’s 20 largest creditors, totaling about $70 million. The largest is Boise Cascade in Pittsburgh, $25 million.

American Tissue has holdings from Wisconsin to Tennessee, and also owns Pulp and Paper of America, northern New Hampshire’s largest private employer with mills in Gorham and Berlin.

The company owes millions of dollars in property taxes in New Hampshire. It shut down the Berlin and Gorham mills indefinitely last month and laid off all but a few dozen of the 860 workers as the company struggled to refinance its debt.

Berlin officials have threatened to pursue criminal charges.

The company also owns the American Tissue Mills of Maine paper mill in Augusta. The mill announced last month that it will close for four weeks because of cash flow problems, putting about 80 full-time employees out of work.

The Maine plant had been running continuously since it opened in May of 2000. It has been operating two machines that convert waste paper into tissue paper and had a capacity of about 80 tons of paper a day. The large rolls were sent to other American Tissue plants to be converted into market products.

The mill in Menasha, Wis., which employs about 300, shut down operations last Thursday in what a company official said was a temporary move.

American Tissue also laid off about one-third of its 450-person work force at a Memphis, Tenn., tissue factory and 80 workers last month at a Halfmoon, N.Y., mill in August.

Company officials have cited cyclical downturns in the pulp market and other factors for the actions.

“There have been huge energy cost increases the past year, a glut of inventory and a strong dollar, which means we can’t export,” Goldschmidt said earlier.

The bankruptcy filing followed a New York bond agency’s decision Thursday to lower American Tissue’s credit rating in part because of accounting irregularities that led to the resignation of the company’s chief financial officer.

Moody’s Investors Service also placed the ratings under review for a possible further downgrade.