Eastern sale may go through today

LINCOLN – Late Thursday, Connecticut-based First Paper Holding LLC was able to satisfy the concerns of an unidentified lender or creditor over language in its contract to buy bankrupt Eastern Pulp and Paper Corp. for almost $24 million, thus clearing the way for the sale to be completed this morning.

The talks with the unidentified entity were characterized as similar in nature to discussions that have taken place in and out of U.S. Bankruptcy Court over the last five months. Previously, when a loan or purchase agreement was announced as ready to go, questions were raised that delayed or killed them.

This time the dispute was not serious enough to jeopardize the deal, just worrisome enough to delay the start of paper production at one of Eastern Pulp’s two mills. First Paper Holding plans to reopen Eastern’s Lincoln mill next week under the name Lincoln Paper and Tissue Co., re-employing 360 of the 500-plus people laid off last January.

“It wasn’t a deal killer, just a deal delayer,” Robert Keach, a Portland attorney representing First Paper Holding, said Thursday night.

Added Keith Van Scotter, a First Paper Holding partner, “There’s just some people in this deal that you have to work on a little bit to get them there. They’re there.”

What remains today is for the release of at least $12 million in funds from lenders to pay some of Eastern Pulp’s secured creditors in accordance with First Paper Holding’s April 30 asset purchase agreement. The creditors must be paid in order to release liens on Eastern Pulp’s properties so that First Paper Holding can take ownership of them. Some of that money already is in escrow accounts awaiting disbursement while the rest will be wired into an escrow account early this morning, Keach said.

Van Scotter said he would not disclose the name of the creditor or lender that still was uncomfortable with the hundreds of pages of documents that were being reviewed by dozens of attorneys. He also would not say what details the creditor or lender was questioning.

“If you ask me how to run a paper mill, I could tell you,” Van Scotter said. “But I cannot possibly begin to explain the little nuances that are going on here. I’m not an attorney. This has been truly amazing and it’s been an education unto itself. It’s also a testament to perseverance.”

On Wednesday, First Paper Holding returned to bankruptcy court with an amendment to its April 30 asset purchase agreement. The agreement was changed to clarify confusion among creditors as to whether they would be receiving long-term promissory notes to repay Eastern’s debt or just assume Eastern’s debt through existing contracts, said Keach. Now they are assuming some of Eastern’s debt, but they are not going to be repaid any amount greater than what was specified in the purchase agreement, he said.

“From an economic perspective, the deal will be exactly the same,” Keach said Wednesday.

U.S. Bankruptcy Chief Judge James B. Haines agreed to the changes.

Eastern Pulp, bankrupt since September 2000, owned Lincoln Pulp and Paper Co. in Lincoln, Eastern Fine Paper Co. in Brewer and a corporate office in Amherst, Mass. The company employed 750 people when it shut down operations in January. First Paper Holding is purchasing all of the properties but will only reopen the Lincoln mill. The buyer intends to give the Brewer mill to the city of Brewer.

In Lincoln, millworkers and townspeople anxiously are awaiting the restart of the Lincoln facility. More than 50 members of the Lincoln Lakes area business community gathered at a local restaurant Thursday evening hoping to meet Van Scotter and his partner, John Wissmann, for the first time as the mill’s new owners.

The event attendees had expected an announcement that the deal was done. Instead, Van Scotter and Wissmann had to cancel because of contract negotiations.

Jack Cashman, commissioner of the state Department of Economic and Community Development, informed the group that the purchase was almost completed, just not yet.

“They ran out of time,” Cashman said. “Money has to be wired around and people have to be paid before things are finalized. They’ll finish up in the morning.”

In its asset purchase agreement, First Paper Holding planned to complete the sale by May 14 at the earliest or May 24 at the latest. Last week, the company filed a notice in bankruptcy court that the closing date was changing to May 31 at the latest.

Earlier Thursday evening, Van Scotter said the latest delay in completing the deal was forcing him to consider changing what he called an aggressive start-up schedule for the Lincoln mill. Now, instead of a day or two behind schedule, delays could be a matter of hours if at all.

Last week, Wissmann said the company already has a month’s worth of orders from customers.

For the last couple of weeks, maintenance work has been ongoing at the mill in anticipation of a start up and management has been finalizing production plans. Wissmann and Van Scotter are paying the workers even though they aren’t formally employees yet of First Paper Holding.

According to Van Scotter, the tentative operations schedule for the mill includes completing maintenance at the tissue mill so that the boiler is started by Tuesday. First Paper plans to start making paper on the No. 7 tissue machine on Thursday. Between 100 and 150 people would return to work next week and the remaining 210 employees would return by mid-August.

During the week of June 14, First Paper wants to start the pulp mill, the No. 6 tissue machine and one paper machine. The other paper machine would go online by the end of July.

“It’s an aggressive schedule,” Van Scotter said. “But I wouldn’t be surprised if it moves slightly. The slippage in the closing has impacted it.”

Earlier Thursday, U.S. Sen. Olympia Snowe met with Lincoln town councilors and commended them for their perseverance during the last five months when their town’s major employer was shut down. She also crossed her fingers and said she was hopeful the deal could be completed by the weekend.

“I really applaud you for your spirit, your dedication, your commitment,” Snowe said.

“We’re ready to go,” state Rep. Rodney Carr, R-Lincoln, told Snowe.