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Local vendor concerned that Green Steel is undercapitalized

March 27, 2013
NORTHUMBERLAND — Townspeople remain interested in and concerned about the ongoing demolition of the former Wausau and Groveton Paper Board mill buildings in the center of town, and the topic was discussed at the March 18 selectmen's meeting.

Randy Beaton, who owns and operates Beaton Rental in Groveton, told the select board that he has had checks bounce or payment stopped by customers who apparently are not themselves being paid by mill-site owner Green Steel of Scottsdale, Ariz., or some of its subcontractors.

Beaton explained in a follow-up telephone interview on Wednesday that he believes that Green Steel "just doesn't have deep enough pockets" to undertake a demolition job that is both physically large and environmentally complex.

The local businessman said he wanted to alert other local small business owners to be very careful about extending credit. He specifically pointed out, however, that Bob Chapman of Chapman Scrap Metal Recycling of Milan and Gorham is up to date on paying his bills.

The selectmen do not have any authority in this area, chairman Barry Colebank pointed out.

Green Steel project manager Mike Stirling was asked for a comment on Wednesday morning via email, but has not yet replied.

The selectmen are responsible for an escrow account that they set up instead of requiring cash-strapped Green Steel to take out a performance bond. As steel beams are sold from the demolition project, deposits are made into the escrow account once a month.

According to an email from selectman Michael Phillips on Thursday morning, the escrow account only has a balance of $28,236. This is less than a third of what had been reported at Monday night's meeting when he said the balance would top $96,000 later this month.

"It turns out there was a misunderstanding of the numbers I read out at Monday evening's select board meeting," Phillips reported in his email. "Our mistake was thinking that 'net sales' represented the 10 percent due the escrow account. This is actually steel proceeds after the demolition costs are subtracted."

Green Steel made an initial deposit of $20,000 after the escrow account was set up shortly after New Year's Day.

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