Cianbro to wait for payment from GNP Firm’s chief says economy of region outweighs $6.2M

BANGOR – Cianbro Corp., owed more than $6.2 million by Great Northern Paper Inc., will not “take aggressive action” to secure payment out of fear that if it does, the towns of Millinocket and East Millinocket, where the paper company’s mills are located, will collapse.

Peter G. Vigue, president and chief executive officer of one of the state’s biggest businesses, said Sunday that Cianbro is entitled to take legal action to collect the money it is due, but probably will wait for payment as Great Northern proceeds through Chapter 11 bankruptcy.

“Our position is we don’t want to be the organization crippling these two communities up there or this company,” Vigue said from his home in Pittsfield. “We don’t have an appetite for that.”

Late last Thursday, Great Northern filed documents in U.S. Bankruptcy Court in Bangor seeking Chapter 11 protection from creditors. The company also filed an emergency request to halt some of its financial obligations to employees and retirees while it seeks an infusion of cash or a new owner for its two mills.

On Friday, Judge Louis H. Kornreich delayed a ruling on the emergency request until at least next Wednesday, noting that attorneys for creditors and the 16 unions represented at the mills did not have adequate time to respond the request. But Kornreich approved two immediate loans totaling at least $700,000 for Great Northern to meet payroll, and to pay for oil to keep the mills heated through Wednesday.

But no action was taken Friday to get the mills up and running again, and to bring 1,130 workers already shut out of the plants for three weeks back to work.

In Chapter 11 cases, a company, such as Great Northern, proposes a reorganization plan to keep its business alive and pay creditors over time, according to the rules of U.S. Bankruptcy Court. In some cases, but not usually, a trustee is assigned to oversee the company’s operations – both managerial and financial – until it is out of bankruptcy court. Typically, though, a bankruptcy court judge approves any financial transaction a company wants to make, including the payment of attorneys’ fees.

Great Northern, though, is required to meet with a representative from the U.S. Trustee’s Office to discuss in general its reorganization plan, and according to bankruptcy law, the Trustee’s Office tells the judge it has met with the company to talk about it. The representative from the Trustee’s Office also conducts meetings with the company’s creditors to work out re-payment arrangements, if any. Creditors vote on whether to accept the reorganization plan.

Vigue said Sunday that his company, whose gross sales exceeded $300 million last year, is still owed $6.2 million on a $35 million bill it gave Great Northern for construction work on the refurbishing of the No. 11 paper machine in Millinocket. The entire project cost $120 million, and the engineering firm that designed the new machine, BPR Benivel of Quebec, still is owed $684,000 and has taken legal action against Great Northern.

“Since the project began [in 2001], they’ve been unable to meet their financial obligations not only to us but also to other people,” Vigue said. “It’s been a continuous problem.”

He said Cianbro, as a secured creditor, could seek payment by pushing for receipt of the collateral put up on the $35 million bill. Great Northern used its recycled fiber facility as collateral, he said.

But that could force Great Northern to cut jobs, Vigue said, and then the ripple effect would begin. He estimated that for each of the 1,130 jobs at Great Northern, seven more people with links to the mills are employed somewhere in Maine. As an example, Vigue said a woodsman who clears timber on Great Northern’s property purchases his skidder, fuel, truck and tires from other businesses.

“This is big. It’s big,” Vigue said. “This is why we choose not to take an aggressive action. We’re not just talking about 1,100 jobs. We’re talking in excess of 7,000 jobs here. That’s the ratio – 7 to 1.”

Vigue, who has been through the two mills in Millinocket and East Millinocket several times, said he believes that they are “postured to be profitable.”

He said all of the employees – from owners on down the line – need to assess their markets, from the products they produce to how they manufacture them, and “work hard to be more efficient and cost-effective.”

“The entire future success at Great Northern, and East Millinocket and Millinocket, will depend on their ability to work as a team, right from the top to the bottom of the work force,” Vigue said. “And if they create an environment of trust, … it is achievable. It takes a team.”

For Cianbro, the delay in receiving the $6.2 million it is due will affect the company’s bottom line, but it will not mean layoffs, Vigue said.

“We’re a successful company and we plan to continue to be a successful company,” he said. “This certainly doesn’t help, but at the same time this is not a death blow to our company.”

Vigue estimated that for each of the 1,130 jobs at Great Northern, seven more people with links to the mills are employed somewhere in Maine