Eastern Pulp loan delayed; hearing set

BANGOR – Bankrupt Eastern Pulp and Paper Corp. was unable to finalize terms of a $2 million loan prior to a scheduled bankruptcy court hearing Thursday and will try to have them completed by this morning, the company’s attorney said.

George Marcus, a Portland attorney representing Eastern Pulp, said Thursday evening the postponement of the court hearing did not mean that Eastern Pulp would not get the money.

“It’s a go,” Marcus said. “There’s some details that need to be worked out.”

Those details are “minor ones,” he said.

Eastern Pulp was to seek permission for the loan from a federal bankruptcy judge Thursday morning. At the time, the company asked that the hearing be postponed until Thursday afternoon. At 3 p.m., the company asked if they could present the loan plan at 9 a.m. this morning.

According to one courtroom observer, who asked not to be identified, Eastern Pulp’s creditors are concerned about the company borrowing money from a new lender and are worried about the papermaker taking on more debt. Original loan terms stated that Corsair Special Situations Fund LP of New York City would lend the money at 15.45 percent interest, a 3 percent “upfront fee,” and other financial considerations and property liens.

Marcus said he could not comment on whether those loan terms have changed and added that Eastern Pulp’s current creditors do not have a problem with the borrowing plan.

“I’m not aware of any creditors that are concerned about that,” Marcus said.

The money is to be used to pay for routine maintenance at the company’s mills in Lincoln and Brewer, which is scheduled to begin on Sept. 1, said Doug Walsh, Eastern Pulp’s vice president. He said that currently all of the machines are operating and that the company has received orders for all of them.

In the meantime, Eastern Pulp’s president, Joseph Torras, met with Bangor Hydro President Ray Robinson on Wednesday to discuss the company’s nearly $465,000 past-due balance with the utility, as well as the business relationship between the two entities.

Late Tuesday, Bangor Hydro filed documents in U.S. Bankruptcy Court in Portland that stated Eastern Pulp was behind on its bills and the utility wanted to be made current on them. In those documents, the utility said Eastern Pulp could be given a 24-hour written notice to pay its bill or risk having the electricity turned off.

On Thursday, Robinson said the court filing was the utility’s way of preserving its rights to payment while the paper company continues with its plans to emerge from Chapter 11 bankruptcy protection by the fourth quarter of this year.

“That’s what we have to file to protect ourselves, but behind the scenes it’s a much different story,” Robinson said.

Jonathan Doolittle, a Portland attorney representing the utility, said Thursday that Eastern Pulp has made arrangements to pay its power bill.

“It’s all good news from our perspective,” he said.