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Joyce Endee

$10 million Gorham tissue machine loan guarantee before G & C today

August 26, 2012
NASHUA — The New Hampshire Business Finance Authority (BFA) will hold a public hearing shortly after 10 a.m. at today's meeting of Governor and Executive Council (G & C) at the Nashua Community College.

The Authority is asking the G & C under its Guaranteed Asset Program to authorize a resolution that would back a state guarantee for a 10-year loan of $10 million from the Gorham branch of the Bank of New Hampshire, formerly the Laconia Savings Bank, to White Mountain Tissue, LLC, at 72 Cascade Flats in Gorham.

White Mountain Tissue, LLC, is an joint venture of Gorham Paper & Tissue (GPT) and Old Town Fuel & Fiber of Old Town, Me., both independent companies owned by Lynn Tilton of Patriarch Partners of New York.

The company is described as employing 200 full-time employees, but apparently this refers to GPT's facility in Gorham, said BFA executive director Jack Donovan.

If granted, the loan guarantee would be in an amount equal to 80 percent of any deficiency determined to exist after the lender has diligently pursued specified available collection rights. That is, if the borrower defaults under the loan, the BFA and the state would be obligated to pay the lender up to 80 percent — $8 million.

"By so limiting the lender's risk, the Authority hopes to facilitate the provision of this important financing," reads the backup material provided to the public and the Executive Council.

The guarantee is for partial financing to facilitate the purchase of a new tissue machine and related equipment for the manufacture of tissue paper for towel, bath and napkin tissues.

Donovan estimates that the machine and related equipment is in the $30 million range.

The 6.5 percent interest rate that the Bank is charging is a typical commercial market rate, Donovan said.

Loan guarantees are designed to provide for the public good and to assist the state in providing conditions conducive to ensuring prosperity.

The new tissue machine will be "commissioned," starting on Sept. 4, with newly trained workers checking it out for the rest of the month. Central National-Gottsman, Inc., will act as the exclusive sales and marketing representative for all tissue produced on this new state-of-the-art machine. Through CNG, White Mountain Tissue intends to establish long-term supply relationships with North American tissue converters, according to its earlier press release.

This new machine, delivered by ABK Machinery, will produce 36,000 tons a year of premium virgin parent rolls of bath tissue, towel, and napkin, serving the needs of independent and integrated tissue converters. In early 2013, the installation of a re-winder will allow the mill to also supply multi-ply grades.

Most of the pulp for White Mountain Tissue will be supplied by Old Town Fuel & Fiber, which is FSC-certified. The Maine facility produces 200,000 tons per year of premium quality, northern bleached hardwood kraft pulp.

Martin Lord Osman
Salmon Press
Garnett HIll
Varney Smith
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