NO WHITE KNIGHT

There is much that is disturbing, even maddening, about the bankruptcy of Great Northern Paper Inc. The long history of concessions wrested from workers, of tax breaks and taxpayer-backed loans, the sale of such assets as forest lands and the power system, the flow of money from Maine to corporate headquarters in Southern states or, now, Canada, was written by a succession of owners all promising that just one more deal would revive the Millinocket and East Millinocket mills and conjures an image of a picked-clean carcass.

Add to this maddening list the frequent assertion by the current owner and Chapter 11 filer, Inexcon, that the economic future of the Katahdin region lies in the hands of a “white knight.” Further concessions by workers – the suspension of health care benefits to retirees and of payments to pension plans – the company says, are necessary parts of a financial plan that will make the mills an attractive buy for a savior pure of heart and deep of pockets. Depending upon circumstances – whether the case is being made to workers and the public for just one more deal or to a bankruptcy judge for a break – this white knight is either on the horizon or nowhere in sight.

White knights are the stuff of fairy tales. This, unfortunately, is real life. A white knight won’t save GNP, but a concerted statewide effort can.

An important start on this effort was made this week by Cianbro Corp. One of the state’s biggest construction firms is owed more than $6.2 million by GNP. As a secured creditor, Cianbro could seek payment by demanding the collateral put up by Inexcon, GNP’s recycled fiber facility. Cianbro has the legal right to further its interests by further damaging GNP’s marketability; instead, it will be patient and wait for a Chapter 11 resolution.

“Our position is that we don’t want to be the organization crippling these two communities up there or this company,” said Cianbro CEO Peter G. Vigue. “We don’t have an appetite for that.” This is a diet other creditors interested in preserving 1,100 mill jobs and an estimated 7,000 support jobs would do well to adopt.

The standard Cianbro sets became even more important as of Wednesday, when Inexcon, contradicting its earlier statements, announced in bankruptcy court that it has no intention to restart the mills, only to keep the machinery warm and operable until their white knight gallops along. Judge Louis Kornreich, clearly in no mood for such fiction, was right to rule out the suspension of benefits as part of a refinancing plan, even though, he noted, the reality is that there probably is no money to actually pay the benefits. He also was right to repeatedly question the company as to why it has not yet developed the 13-week preservation budget that will keep the mills in saleable condition and out of liquidation.

It is hard to believe that this economic and social catastrophe comes just three years after Inexcon bought the mills from Bowater, an ugly time when mill was pitted against mill, town against town and workers were told just one more concession would position GNP for a profitable future. It also comes just three years after a competing bid for the purchase of the mills, an employee buyout, was dismissed by Bowater as impractical and calls for substantial assistance in forging a buyout were ignored by the King administration. Better to let the experts handle it. Another fiction, another betrayal.

Gov. Baldacci, his inauguration day marred by the GNP bankruptcy announcement, has indicated a strong interest in saving GNP, not as corporate carrion, but as an economic engine. While the future of Maine’s resource-based economy is in more diverse, value-added products such as composites, the governor made clear in an address on his first full day on the job that the present matters as well. His upcoming Blaine House conference on how the state’s older industrial base can be saved and strengthened will be an important step in re-examining the policies and practices that have failed to make Maine the exception rather than part of the rule of the Northeast’s manufacturing decline. His daily involvement – meetings with creditors and worker – is valuable, a new Finance Authority of Maine loan to keep the mills marketable is a great help, the reported interest by several potential buyers is encouraging. The details of this fast-moving story may change from day to day, but fixing the underlying problems is a long-term process.

The subsequent rebuilding will be hard, but nowhere near as hard as watching a region of this state collapse. Mr. Vigue, who is betting $6.2 million it can be done, says this: “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. And if they create an environment of trust, it is achievable. It takes a team.” Notice he did not say it takes a white knight.