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Joyce Endee

Patriarch Partners buys Gorham paper mill

May 18, 2011
GORHAM — The Gorham paper mill got a new lease of life on Friday when it was purchased by investment funds managed by New York-based Patriarch Partners, LLC.

The official word that the mill would reopen went out in mid-morning when the embargo was lifted on a prepared statement sent out by the New York office of the Finsbury Group, an international public relations firm.

"Patriarch intends to begin the process of refurbishing the paper mill promptly and expects production to resume within four to five weeks," was the statement that thrilled the Berlin-Gorham area.

The paper mill, now named Gorham Paper and Tissue LLC, was purchased from FP (Fraser Papers) Acquisitions LLC, a wholly owned subsidiary of Counsel RB (Reich Brothers) Capital, LLC.

Adam Marc Reich signed the sales document paperwork on behalf of the seller, and Richard "Dick" Arnold of Old Town (Maine) Fuel and Fiber signed purchase documents for the buyer.

Just before noon, the buyer's attorney, Richard Shinay of Drummond Woodsum & MacMahon of Portland, Me., registered the deeds, a mortgage, and a sub-mortgage at the Cos County courthouse in Lancaster.

The $30,000 real estate transfer tax stamp representing 15 percent of the sale price indicates a $2 million purchase price.

Two mortgages were recorded in conjunction with this transaction, both involving Gorham Paper and Tissue LLC: one to Charlotte, N.C.-based Patriarch Partners Agency Services LLC and the other to Zohar III, Ltd.

The paperwork included the easements for the water and all utilities necessary to operate the mill efficiently and economically, including documentation that had been sticking points for previous potential buyers.

The closing itself took place in Concord.

Patriarch is a private equity firm and holding company (www.patriarchpartners.com) that manages 74 companies with annual revenues of more than $8 billion.

Founder and CEO Lynn Tilton heads up the firm that she describes as the largest woman-owned business in America that employs more than 120,000 people. According to articles in topnotch business magazines and newspapers, Tilton has earned the reputation as a brash, out-of-the-box-thinker who wears provocative and untraditional business clothing and is committed to reviving manufacturing in rural America.

"We are extremely excited to have finalized this transaction and look forward to the journey of rebuilding and revitalizing the business," said Tilton in Friday's prepared statement. "Patriarch is committed to turning around distressed and dormant businesses with the dual goal of building portfolio value while sustaining and creating jobs in America. This acquisition presents an opportunity to achieve both goals as we rehire the mill's workforce and make the necessary investments and operational changes to return the company to long-term profitability."

Patriarch bought the mill, now named Old Town Fuel and Fiber, in Old Town, Me., in Nov. 2008. The mill, working with the University of Maine, hopes to use wood fiber to produce bio-butanol, designed to fuel helicopters commercially. The once-shuttered mill will now supply pulp to the Gorham mill, reestablishing a form of vertical integration, Tilton has explained.

Gorham now has three paper machines: a towel machine and two specialty paper machines.

The towel machine is expected to resume production within 30 days.

The other two machines are expected to begin to operate within 90 days, the press release said.

Patriarch intends to re-hire approximately 200 union workers and management during the next several months and has already hired its highly respected plant manager, Willis Blevins.

"I am honored to have Mr. Blevins as part of our senior management team," Tilton said. "He has extensive, valuable experience managing the mill and is highly respected by the union workers and the entire Gorham community. He shares our dedication, work ethic and commitment to ensure the mill will operate successfully."

Political leaders hailed the news that a deep-pocketed company had bought the paper mill.

"This is a great day for Gorham and Berlin, the North Country and the entire State of New Hampshire," said Gov. John Lynch in a press release. "This mill is important to the North Country economy, and it's important that we keep our workers employed. And we all recognize it is because of the workers — and their skills and strong work ethic — that made this agreement possible.

"I want to thank Patriarch for recognizing what an asset this mill truly is. Patriarch is a company with a successful track record and commitment to manufacturing, and we are very pleased they are choosing to invest in the hard working men and women of the North Country."

Sen. Shaheen echoed his sentiments.

Both Tilton and Blevins praised the many people who helped put the deal together, with special kudos to Gov. Lynch, Commissioner George Bald of the state Department of Resources & Economic Development (DRED), and executive director Sharon Gauthier of the Androscoggin Valley Regional Refuse Disposal District plus her board.

"I also greatly appreciate the support we received from the United Steel Workers Union, Local 75, and I look forward to working with its leadership and members," Tilton said.

"We couldn't be happier about people soon going back to work and the company's plan to install a $35 million tissue machine," said Gorham town manager Robin Frost in a Friday afternoon telephone interview. Frost praised Lynn Tilton and her people for their sensitivity in keeping town officials apprised of her plans and said she looked forward to a good working relationship.

The mill complex pays approximately $180,000 a year in property taxes, she reported in answer to a query. A small portion of its land lies in Berlin.

Former state Rep. Paul Ingersoll of Berlin said that he was very pleased to hear the good news. "They're already power-washing the paper mill's interior walls, getting rid of years of dirt and grime," Ingersoll said. "It's sounds like Patriarch and Tilton have made a long-term investment, and now it's time for all factions to pull together and work for the county's common good."

Gorham selectman Paul Robitaille, who left the paper mill's employ a decade ago to work in social services, said, "This is the first step on the way to recovery, and I'm really enthusiastic."

There are three things, he said, that are particularly encouraging to him: Patriarch's pulp mill in Old Town, Me., will supply pulp; Patriarch will pay for the new gas line; and Tilton and Patriarch goal is to grow back the country's manufacturing sector and to reinvigorate its middle class.

When asked why he thought the typical "man-on-the-street" was only "cautiously optimistic," Robitaille explained that the seemingly ever-increasing speed of ownership turnovers has left Androscoggin Valley residents feeling burned and wary: the Brown Company gave way to Gulf & Western, which in 1980 sold its 80 percent interest in the Brown Company to James River, which morphed into Crown Vantage, then Pulp and Paper of America (PPA), and then American Tissue which closed the mills in August 2001 and filed for bankruptcy on Sept. 10, 2001.

Ultimately, its president, Mehdi Gabayzadeh, was found guilty in 2005 of perpetrating a $300 million fraud in an unsuccessful effort to save the company from bankruptcy and sentenced in 2006 to 15 years in jail.

Brascan Power Corporation-Nexfor Fraser Papers of Canada purchased the hydroelectric dams and pulp and paper facilities in Berlin, Gorham, and Shelburne on May 31, 2002. The hydroelectric facilities, however, were later severed from the pulp and paper mills, becoming part of Brookfield Asset Management.

In March 2006, Fraser Papers announced the permanent closing of Berlin's pulp mill, and then, just short of five years later, Fraser closed the Cascades paper mill in November 2010.

Recalling the mill's history over the last decade, Robitaille said: "We owe a lot to then-Gov. and now-Sen. Jeanne Shaheen and to Gov. John Lynch, but we should really raise a statue in appreciation of all the efforts of Commissioner George Bald on behalf of the Androscoggin Valley, Cos County, and the North Country."

Martin Lord & Osman
Salmon Press
Varney Smith
Garnett HIll
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