GNP deal protects 241,000 acres Nature Conservancy forges $50M land pact

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MILLINOCKET – An unprecedented partnership between two unlikely allies, Great Northern Paper and The Nature Conservancy, has produced a $50 million deal involving 241,000 acres of forest lands around Mount Katahdin, the groups announced Tuesday.

Great Northern is selling 41,000 acres in the Debsconeag lakes wilderness area to The Nature Conservancy and is giving the national organization a conservation easement on 200,000 acres of land around Mount Katahdin. In exchange, the Arlington, Va.-based Nature Conservancy will reduce and refinance some of the paper company’s debt.

The deal, called the Katahdin Forest Project, guarantees public access, traditional recreational uses and allows sustainable forestry forever, but prohibits any residential or commercial development of the land.

Kent Wommack, executive director of the conservancy in Maine, said the Katahdin Forest Project was more than an innovative agreement between the nation’s largest conservation organization and the region’s major employer. He said the goal of the project is to provide a healthy future for the forests and long-term stability for the paper mills.

“For us it is simply a matter of putting our money where our mouth is,” said Wommack. “The most important natural areas are permanently protected. The forests are sustainably managed. Lands are open for public access and traditional public uses. The economy and the communities of the north woods remain vibrant and healthy. That is what this deal is intended to do.”

Lambert Bedard, GNP’s chief executive officer, described the deal as an opportunity to help ensure future generations of good jobs in the mills and the woods, and continued access to a landscape of forests and ponds that are exceptional in every way.

He said that for years GNP has worked to maintain the viability of the forest. “We are not and have never been land strippers,” said Bedard. “As a paper manufacturer, we need that resource and we need to harvest that resource in an intelligent and durable way. That is precisely what The Nature Conservancy allows us to do.” He described the company’s negotiations with the group as refreshing.

News of the deal quickly sparked concerns from some who viewed it as a step toward creating a new national park proposed by the Boston-based group RESTORE: The North Woods.

Both Great Northern and conservancy officials said such concerns are unfounded. “This has nothing to do with a national park,” said Wommack. “We have a chance to provide public access forever and to help a company save 1,100 jobs.”

Brian Stetson, GNP’s manager of environmental and government affairs, said there was no hidden player. “This is just The Nature Conservancy and Great Northern.”

Great Northern and conservancy officials said the three goals of the project are:

. To maintain the natural resource base economy of the region by providing long-term financing to support GNP’s drive to modernize and be a market leader in uncoated and coated specialty papers.

. To ensure public access, traditional recreational uses and sustainable forest management of the lands surrounding Mount Katahdin, which link together six existing conservation parcels.

. To preserve the 41,000-acre Debsconeag lakes wilderness area, which connects Baxter State Park with the state’s Nahmakanta ecological reserve.

The deal

No cash will change hands in the deal between Great Northern and The Nature Conservancy.

In exchange for purchasing 41,000 acres in the Debsconeag lakes area and obtaining a conservation easement on 200,000 acres of Great Northern’s forest land, The Nature Conservancy has purchased $50 million of the paper company’s existing debt primarily from John Hancock Bond and Corporate Financial Group. In January 2001, John Hancock gave GNP a loan, which was secured with 380,000 acres of the paper company’s forestland as collateral.

The conservancy, which has 1 million members worldwide and 11,000 in Maine, has paid off $14 million of the debt. Wommack said The Nature Conservancy would refinance the $36 million balance for the paper company at an interest rate that is less than half of what they paid. “It will significantly improve the company’s cash flow,” said Wommack. “The deal conserves some very unique special land and will go a long way to help protect 1,100 jobs.”

Poor paper markets in part caused by foreign competition have adversely affected Great Northern like many other paper companies. The company last month announced plans to indefinitely shut down two old paper machines in its Millinocket paper mill, leaving about 200 workers without jobs.

Bedard admitted the $140 million investment to modernize the Millinocket paper mill came with some “pain.” He said the company is still fighting a very difficult market situation, but is determined to succeed. “We are here to stay,” he said.

Stetson said the deal will strengthen the company’s financial position.

Although GNP officials declined to disclose the total amount of the company’s debt, President Eldon Doody said the deal would significantly improve its balance sheet. “The key here is $50 million of our debt just became $36 million at very attractive rates,” he said.

Doody said the deal should give workers some reassurance about their jobs. “It is a partial reassurance,” he said. “The biggest single reassurance will come with a recovery in paper markets and paper prices.”

Wommack said the deal was a first for the worldwide nonprofit organization, which is dedicated to protecting plants, animals and natural communities representing the diversity of life on earth. “The fact that a conservation organization is providing financing for a paper-making company, as far as we know, is totally unprecedented,” he said. “It provides the clearest possible demonstration that industry and conservation can pursue mutual goals to the benefit of the economy, the environment and the communities.”

Bruce Kidman, director of communications for The Nature Conservancy’s Maine chapter, said the group has seen big deals where conservation and forestry interests worked together, but this was the first time they actually became partners.

The Nature Conservancy’s initial funding for the deal came in the form of a loan from its national office, which will be paid back. Wommack said the group will be working to raise both public and private money to repay the loan.

The land

The 41,000 acres in the Debsconeag lakes area includes Rainbow Lake and lies virtually in the shadow of Mount Katahdin. It is primarily located in Township 2 Range 10 and T2 R11 between Baxter State Park and the state’s Nahmakanta reserve.

Conservation officials say the Debsconeag lakes area is one of the last remaining truly wild places in the north woods.

“The Debsconeag lakes are widely considered to be one of the real crown jewels of the north woods,” said Wommack. “It is unlike virtually any other tract of land in today’s industrial forest and it is that way because of GNP’s decision to manage it for decades in that way.” The company has managed the land as a remote backcountry recreation area. “There are thousands and thousands of acres where timber harvesting has not occurred for a half century or more,” he said.

“There are almost two dozen remote ponds in that tract, which is easily the highest concentration of remote ponds in New England; a number are rated outstanding,” said Wommack. He said a 15-mile stretch of the Appalachian Trail’s “Hundred Mile Wilderness” runs through the property.

The 200,000-acre conservation easement area starts at the western shore of the North Twin Lake impoundment and runs west to Chesuncook Lake and north across Chamberlain Lake.

The impact

Conservation and company officials said the agreement will guarantee public recreational access to the lands forever and said that all existing leases in both areas would not be affected.

There are 17 leases in the parcel of land being sold and there are several hundred leases in the conservation easement area. Officials said the leases in the easement area are not part of the easement, but have been carved out of it and will continue to be managed by Great Northern. The Nature Conservancy now will hold leases in the Debsconeag area. People with questions should call Kyle Stockwell or Bruce Kidman at 729-5181.

Wommack said in both areas traditional recreational uses – such as hunting, fishing, trapping, hiking, camping and snowmobiling – will continue on established trails. Officials said free noncommercial public access will continue on the lands with the exception of a small area in the northern portion of the easement, which is in the North Woods gate system.

In the easement area, Great Northern will continue to maintain its rental log cabins and will have the right to build up to 10 additional cabins in the easement area at no more than five locations mutually agreed upon by the company and The Nature Conservancy.

All residential and commercial development not related to forestry will be prohibited in both areas.

Officials said the easement includes a provision under which the land will remain as a working sustainable forest for the forest products industry forever, but logging will be phased out in the Debsconeag area. Officials said harvesting contracts already in place will continue for up to three years.

The reaction

The deal drew mixed reactions.

Several members of Maine’s congressional delegation, Gov. Angus King, the Maine Chamber of Commerce, the Sportsman’s Alliance of Maine, the Maine Woods Coalition and the Wilderness Society all praised the deal, but some local groups are taking a guarded view of it.

Millinocket Town Manager Gene Conlogue said it was a regrettable day for Millinocket and for Great Northern.

“I believe it is a short-term solution to a longer-term problem because the company continues to experience severe cash flow problems and other economic challenges, problems the sale will not fully correct,” said Conlogue. “The major effect of this land deal is to deplete further the company’s assets that a prospective buyer with deeper financial pockets may find of great value. Any attempt to pick the pockets of taxpayers to support this unwise purchase will be met with my strongest possible opposition.”

“It’s terrible,” said Ray Campbell of Millinocket, a member of the local Fin and Feather Club. “They [GNP] have given The Nature Conservancy a mortgage on their land. If this company fails, the Nature Conservancy will own the land. The TNC is betting they won’t be able to pay them off and it will become a national park.”

Wommack said the conservancy would not enter into an agreement with the company if it felt GNP could not honor the terms of the loan.

Campbell and others said they did not understand why GNP did not sell its leases to camp owners, which he says are worth about $28 million.

Doody said the company was selling some camp lots this year, located on the Brownville Road area where there is public access. As for its other leases, he said the company would evaluate them from year to year.

Stuart Kallgren, president of the Maine Leaseholders Association, said he does not like conservation easements. “I’m very cautious about the wording in the easement,” he said. Kallgren said he has seen situations where some leases were terminated because of conservation easements.

Kallgren also expressed concern about the easement area potentially affecting development in areas bordering the easement. “We desperately need development in the Katahdin Region,” he said.

Jym St. Pierre, Maine’s director of RESTORE, said he has not seen information about the deal but thinks it will aid in the eventual creation of a national park.

“In five to 10 years, if people want these lands to become part of a national park, there shouldn’t be any barriers in the conservation easement to that,” said St. Pierre. “It seems we are right on track. It looks like the pieces are falling into place for large-scale conservation in the Katahdin Region.”