Group agrees to buy Eastern Baldacci ‘optimistic, cautiously’

BANGOR – Fisher International of Connecticut on Tuesday agreed in principle to purchase abandoned Eastern Pulp and Paper Corp. for an undisclosed amount, according to Gov. John Baldacci.

The deal is not in final written form, the governor said, but should be ready to be filed in U.S. Bankruptcy Court in Portland by the end of the day Friday.

“I’m optimistic, cautiously,” Baldacci said.

Baldacci would not disclose the actual names of the buyers or the financial institutions that are lending them money to purchase most of Eastern Pulp’s assets, which would include the former Lincoln Pulp and Paper Co. mill in Lincoln and Eastern Fine Paper Co. in Brewer. What remains at issue is Eastern Pulp’s headquarters in Amherst, Mass.

On Monday, Baldacci confirmed that the state had been in negotiations with John Wissmann, managing partner at Fisher International in South Norwalk, Conn., and Keith Van Scotter, a former manager at Fraser Papers’ Ed-mundston, New Brunswick, mill.

Baldacci on Tuesday reiterated that the negotiations involved the Wissmann-Van Scotter partnership, but would not say whether the team would be the new owners. Instead, the governor identified the suitors as “the buyer group represented by Fisher International, which is made up of paper industry professionals and financial support, and which is led by Keith Van Scotter.”

“If you have an agreement in principle, you still have to draft the fine details, dot the i’s and cross the t’s, a process that needs to still continue,” Baldacci said. “They feel comfortable enough at this point to say they have an agreement in principle with all the key lenders.”

The key lenders are the institutions that will lend the buyers money to purchase and operate the mills and are not Eastern Pulp’s secured creditors, such as Congress Financial Corp. and Corsair Special Situations Funds LP, both of New York City. The two creditors are represented by attorneys in New York City and in Portland. The Maine-based attorneys, John McVeigh and Bruce Sleeper, said Tuesday that they have not been contacted about negotiating a deal that would satisfy their clients’ liens.

The mills’ unions have not been contacted to talk about a contract, according to Steve Corriveau, president of PACE Local No. 1-0396 in Lincoln.

“We’ve been totally left out of the loop,” Corriveau said. “I do not want to say I’m cautiously optimistic because optimistic means there’s something positive. I do realize the governor is doing everything he can to secure a buyer here, but I am very concerned about what I’m not hearing here.”

Jack Cashman, commissioner of the Department of Economic and Community Development, said Tuesday evening that the “fine details” do not include coming to any agreements with state agencies, such as the Department of Environmental Protection on the treatment of hazardous waste at both mills.

“We provided the folks with everything we could give them to date,” he said.

Wissmann said Tuesday evening that he could not comment on the deal.

“Maybe in a couple of days, but not now,” he said.

The agreement in principle does not include any out-clauses, or specific conditions that if not met could break the deal, the governor said.

“This is not exclusive, so there could be other groups or other proposals that could come forward,” he said.

Eastern Pulp shut down operations on Jan. 16 after 31/2 years under Chapter 11 bankruptcy protection from creditors, leaving 750 people without a job. On March 12, a federal bankruptcy judge ordered that the mills be abandoned and returned to their Massachusetts owner because of a lack of money to keep them maintained and the withdrawal of an offer by a prospective buyer.

Now the state wants Eastern Pulp returned to bankruptcy court to be sold because all of the company’s liens would be taken care of at one time.

Since the March 12 abandonment, the state has been paying to maintain the mills, a bill that has exceeded $400,000.

The money has come from the governor’s contingency fund and a DEP hazardous waste account. Now, DEP is tapping into $1 million worth of bond money approved by voters in November 2002 and 2003 that was earmarked to clean up 17 hazardous waste sites statewide. The state has said that if Eastern Pulp’s mills were abandoned and the thousands of gallons of chemicals were left exposed to the weather, an environmental catastrophe could ensue.

Baldacci said the state is talking with the prospective buyers about whether they will pick up the tab to keep the mills maintained until a deal is closed. He said he did not know whether the state’s entire $1 million would be spent by that time.

“We’re going to do this day by day,” Baldacci said. “We’re going to continue until we review this by the close of business Friday.”