MILLINOCKET – Belgravia Paper Co. Inc. has bid $91 million for bankrupt Great Northern Paper Inc.

The offer, submitted to federal bankruptcy court Tuesday evening, actually was completed late Monday night, just in time for Great Northern to meet a court-ordered midnight deadline or face a piecemeal sale of its two mills in Millinocket and East Millinocket.

Great Northern was given three days to file the offer with U.S. Bankruptcy Court in Bangor, but instead electronically transmitted it to the court within 24 hours of it being completed.

Belgravia Paper, a privately held company in Vancouver, British Columbia, is owned by Ronald M. Stern, who also has ownership in four other paper companies, two in Canada and two in the United States. Together, the four mills employ more than 1,250 people and produce grades of paper similar to what Great Northern manufactures, including supercalendered paper that is used for catalogs and magazine inserts.

Although Belgravia submitted a detailed “letter of intent” to buy Great Northern, it may not end up as the actual new owner. Belgravia’s offer is considered to be the “stalking horse bid,” or the price that other interested buyers will have to meet or beat during a court-held auction in March.

As the “stalking horse bidder,” Belgravia is allowed to set up terms that other companies must meet before their offer is considered. One of Belgravia’s conditions is that each new bid be at least $2 million higher than any previous bid.

According to federal law, a bankrupt company that decides to sell its assets must receive a “stalking horse bid” and proceed to be sold during an auction.

Bankruptcy Judge Louis Kornreich will review Belgravia’s “stalking horse bid” on Feb. 18, then set rules for an auction, which is tentatively scheduled for March 21.

“The actual offer appears to be worth $91 million,” said Jim Giffune, who was named Great Northern’s chief executive officer last week. “We are glad to have this sincere indication of willingness to participate. It is a good place to start.”

Kornreich appointed Giffune to be Great Northern’s chief executive officer last week, replacing Lambert Bedard, who remains as owner of the mills.

Robert Keach, a Portland attorney who is representing Belgravia, said the Canadian company will be contacting everyone from Great Northern’s power company to its unions to negotiate new contracts as if it will become the successful buyer after the auction.

“We hope to start those negotiations soon and reach a successful conclusion,” Keach said. “We are proceeding on the assumption that our bid is the winning bid.”

He said that if other companies decide to top Belgravia’s bid, “we will react to that when it happens.”

Great Northern filed for Chapter 11 bankruptcy protection Jan. 9, and at the time said it had more than 1,000 creditors and more than $100 million in debt. Since then, Great Northern has assumed at least another $22 million in loans.

Belgravia’s bid generally outlines how much of Great Northern’s debt will be paid for by the $91 million.

According to court documents filed Tuesday evening, Belgravia will assume $71 million in debt and pay $20 million in cash that should be divided among other creditors.

The debt will be paid as follows:

. $50 million to the equipment leasing division of Boeing Capital Credit Corp., a subsidiary of aerospace manufacturer Boeing Corp., Great Northern’s top creditor.

. $5 million to Cianbro Corp., which is only part of the $6.2 million Great Northern owes the Maine construction company. Cianbro will not receive the $5 million in one payment, but will be paid over a five-year period.

. $16 million to Brascan Energy Marketing Inc. and Carrier LLC for unpaid power bills. Great Northern has pledged 100 percent of its stock in Maine Timberlands Co., which owns and manages more than 300,000 acres of timberlands, to Brascan Energy Marketing Inc. and Carrier LLC as collateral for its unpaid power bills, according to court documents.

At least $12.6 million of the $20 million in cash will be given to Boeing for temporary funding it provided to keep the mills warm since Great Northern filed for bankruptcy. That money runs out on April 21, when Boeing expects a new owner to take over Great Northern.

The other $7.3 million won’t cover all of Great Northern’s unsecured debts, which the company estimated to be between $45 million and $55 million.

According to bankruptcy law, administrative claims such as expenses to maintain the assets, tax liens and other priority expenses should be paid first before unsecured creditors. The $12.6 million loan given by Boeing last week covers the maintenance expenses, and includes $2 million to cover fees by attorneys and financial consultants.

Before it gave Great Northern the $12.6 million loan last week, Boeing told the papermaker it must have a “stalking horse bid” by 11:59 p.m. Monday.

Belgravia and Great Northern successfully met Boeing’s loan condition with the $91 million offer, Keach said. If it hadn’t, Boeing could have gone to court and, according to terms of the loan, asked that the paper company be sold piecemeal.

“We believe it is a fair offer,” Keach said.

Alex Terras, an attorney for Boeing, said the offer “met the condition that was required.”

“The terms of the offer are what they are,” he said.

According to Belgravia’s offer, Great Northern “reserves the right to select an alternative ‘stalking horse bidder.'”

“I know there are other potential serious bidders out there and I want to encourage them to come forward,” Giffune said.

He told town officials that the owners of Madison Paper visited the paper mills Tuesday, and Kreuger Inc. and Fraser Papers Ltd. planned to visit the mills later this week.

If Belgravia does not become the eventual buyer of Great Northern, the Canadian company will be paid a “break up fee” of $5 million by the successful bidder for its efforts to start the auction process.

“The price and the form and the structure of the offer proposed by Belgravia will continue to be tested in the marketplace,” wrote Great Northern attorney Richard Mikels in the court documents filed Tuesday night. “Great Northern believes that the winning bid or bids that emerge from this process will be the highest and best bid(s) obtainable for the assets.”

Belgravia, however, lists numerous conditions in its offer that should be met for it to continue as a possible buyer. If all of those conditions aren’t met, the company has to notify Great Northern by 9:30 a.m. on the final bidding date that a deal has not been reached.

Those conditions include successful renegotiations of all agreements with Brascan, the unions, “critical vendors and critical customers.”

Belgravia wants assurances that all vendor and customer relationships remain viable or restored to adequate levels. The company also wants assurances that Great Northern is in compliance with federal and state environmental laws, and that its assets are in good working condition and fully operational.

Giffune is optimistic that a sale will be completed by the April 21 deadline, and Belgravia’s bid essentially initiates the sale process.

“As part of the sales process, renegotiation of the various essential agreements with all of the various parties in interest must urgently begin so that the future operations will be highly competitive and stable on a long-term basis,” said Giffune in a statement.