MILLINOCKET – Great Northern Paper Inc. soon will complete the last of several major financing deals to fund its $140 million paper mill modernization project.

The century-old paper company, which employs about 1,300 workers at mills in Millinocket and East Millinocket, announced Thursday it has entered into a financial agreement with Trilon International, Inc., part of the Trilon group of companies based in North America. Terms of the loan were not released.

Trilon Financial Corp.’s subsidiaries provide financial services such as investment banking, merchant banking, brokerage services, investment management, corporate services and commercial financing. Trilon Securities and Trilon International offer securities underwriting and advisory services. Mining, energy and real estate conglomerate Brascan owns about 70 percent of Trilon Financial. Both Trilon and Brascan are based in Toronto. Great Northern’s parent company, Inexcon, is based in Quebec.

Great Northern officials expect to complete all aspects of the financing in September.

As a result of the deal with Trilon, Great Northern will dissolve its partnership with Duke Solutions, Inc., a subsidiary of Duke Energy of Charlotte, N.C.

Earlier, Great Northern and Duke Solutions created a new company called Great Northern Energy LLC. Duke agreed to invest $20 million in Great Northern’s hydro-electric power system in exchange for 49.9 percent ownership of it.

“As a part of this [Trilon] financing, it was necessary, as an intermediate step, for Great Northern Paper to repay financing on its hydro-electric assets that was previously held by Duke Solutions, Inc.,” said Brian Stetson, the company’s director of environmental and governmental affairs. He said Duke no longer will have any ownership in the company’s power system.

Stetson said Great Northern will retain 100 percent ownership of its power system, which includes a hydro system located along the West Branch of the Penobscot River. “The hydro assets are being used as the mortgage collateral for this [Trilon] agreement,” he said.

“The completion of this financing is an essential component of our plans to complete the upgrade of the mills,” said GNP President Eldon Doody. “We would like to thank Trilon International and Duke Solutions for assisting Great Northern Paper in completing this significant financial milestone.”

Stetson said the financial agreement with Trilon will allow the company to proceed with its modernization projects. Rebuilding the 30-year-old No. 11 paper machine at the Millinocket mill is the cornerstone of Great Northern’s business plan to become a coated and uncoated specialty paper producer.

“The installation of No. 11 paper machine is continuing with the goal of shortening the planned 42-day shutdown, which is scheduled to begin Oct. 15,” Stetson said.

East Millinocket Administrative Assistant Mary Morris said the town was pleased to hear the company will receive its final financing package.

Millinocket Town Manager Gene Conlogue agreed.

“This is great news to know the last of the four financial packages is in place,” said Conlogue. “It is my hope they can close on the deal quickly and move ahead with the modernization project in October. It allows them to bring their many vendors current, including the town,” he said. Great Northern is delinquent on its taxes in both Millinocket and East Millinocket.

Conlogue credited the company’s corporate leadership for bringing an ambitious modernization project to fruition, especially in light of the difficulties faced by the paper industry today.

Stetson said the completion of the financing pieces will put the company on a sound financial footing. He said the Trilon financing will enable the company to catch up partially on its outstanding bills.

Great Northern’s financing package includes borrowing a total of $160 million from various sources, including the Finance Authority of Maine. The loans will fund Great Northern’s $140 million modernization project and will replace financing it secured earlier for the purchase of the company.

In April, FAME approved a $25 million loan to Great Northern. The paper company will be the first to use FAME’s major business expansion loan program. The company will pay a lower-than-standard interest rate for the 10-year, state-backed loan.

One condition of the FAME loan is company owners must provide personal guarantees they each will pay $500,000 to the state should the company default on the loan.

As collateral for the $25 million loan, Great Northern will give the state a first mortgage on its recycling plant and a second mortgage on its massive power system.

In January, Great Northern secured loans with John Hancock Bond and Finance Group and Congress Financial Corp., two large financial institutions. Officials declined to disclose the amount of the loans.

Part of the company’s financial agreement with John Hancock included forming a new company, Maine Timberlands Co., to represent 380,000 acres of forestland. The new company will be a wholly owned subsidiary of Great Northern, which will continue to manage the forestland. Most of GNP’s forestland was used as collateral for the loan.