Canadian firm wants N.H. paper mills

CONCORD, N.H. – A Canadian paper company wants to buy the idle pulp and paper mills in Berlin and Gorham, the mills’ parent company says.

While it negotiates a possible purchase, Quebec-based Cascades Inc. proposes to keep the boilers running and maintain the mills to prevent winter damage, according to court papers filed in Delaware by American Tissue Inc.

Cascades is not committed to making a purchase offer.

The mills closed on Aug. 12, putting about 860 employees out of work. On Sept. 10, American Tissue, of Hauppauge, N.Y., and 27 of its U.S. subsidiaries filed for protection from their creditors in U.S. Bankruptcy Court in Delaware. The subsidiaries include Pulp and Paper of America, which owns the North Country mills.

“Cascades has expressed an interest in purchasing the facilities,” Wednesday’s filing says.

A hearing on whether Cascades should take over maintenance of the mills is set for Friday in Delaware. The arrangement and any subsequent purchase offer would require the court’s approval.

“Due to the harsh New Hampshire winters, the mills must be winterized, a process whereby the boilers are operated at a minimum level to ensure that pipes and machinery do not become damaged due to the cold,” the filing says.

That costs about $250,000 a week. It is not clear how many people, if any, would be hired back to perform minimum maintenance.

The agreement is essential because Pulp and Paper of America is “in imminent danger of losing its funding for the ongoing operations of the facilities,” the filing says.

Cascades would establish a separate account for revenues generated by the mills and related facilities, which include trash tipping fees and electricity sales.

The agreement would not prevent creditors from negotiating with another buyer, though officials in Berlin say they believe Cascades would have a leg up.

“It’s the best news since sliced bread,” said Ed DeBlois, president of the mills’ union. “I think it’s a step in the right direction. I would say they are the front-runner at this point. But also I would say that doesn’t mean it’s a done deal.”

Gov. Jeanne Shaheen’s staff lawyer, Judy Reardon, would not discuss the names of other potential buyers.

“Cascades is very seriously interested in purchasing the mills and has been meeting not only with creditors of American Tissue, but also with the governor and other state officials and federal officials,” Reardon said. “The purchase of the mills by a responsible owner would be the absolute best news for the communities.”

Assistant Attorney General Peter Roth said environmental issues at the site are part of the discussions with Cascades. They include 1 million gallons of improperly stored hazardous waste, including pulping liquors and processing chemicals, Roth said.

If Cascades decides not to buy the mills, it would be able to recoup its losses involving the cost of maintaining the facilities through a lien on the mills’ electricity generation facilities and landfill. The lien would enable the company to get its money back ahead of many other creditors.

There are currently several liens against the complex, including $5.25 million involving unpaid property taxes and $323 million involving lenders and bondholders.

Pulp and Paper of America accounted for 28 percent of Berlin’s tax base before the mills shut down. The city has had to cut its budget by as much as 8 percent in some departments.

Unemployment benefits for some of the laid off workers end in February. About 100 have gotten other jobs, another 100 will have their benefits extended because they are in a training program and another 90 have been kept on to maintain the mills for the winter, DeBlois said.

The state is calling the remaining 570 workers to notify them about the training programs.