The trustee for bankrupt Great Northern Paper is asking a federal judge to approve the sale of the paper mill in East Millinocket, unless a higher and better offer comes along, to a company that does not appear to have interest in restarting the mill.

A company called GNP Acquisition has offered to buy the paper mill equipment and buildings for $2.6 million. The company is not interested in purchasing the land, but would have the option to buy it for an additional $350,000, according to Randy Creswell, an attorney at Perkins Thompson who is working for Pasquale “Pat” J. Perrino Jr., the trustee for Great Northern.

Federal Bankruptcy Judge Louis Kornreich will consider the motion to approve the sales agreement at a hearing Friday morning in federal bankruptcy court in Bangor.

Creswell would not provide further details about what parties are behind GNP Acquisition, a company set up for the sole purpose of acquiring Great Northern, or what their intentions would be if they purchased the mill. He directed those questions to the GNP Acquisition’s attorney, who did not respond to an email seeking comment.

However, the person who signed the asset purchase agreement on behalf of GNP Acquisition was William Firestone, president of Capital Recovery Group, a Connecticut-based auction company that is, according to its website, “a recognized leader in the appraisal and disposition of industrial and commercial assets.”

A message left at Firestone’s office Thursday afternoon was not returned.


The motion to sell the mill, which Creswell filed late Wednesday, is not a done deal. GNP Acquisition is what’s known as a “stalking horse,” which is essentially an opening bid in an auction for the bankrupt company’s assets. Creswell has also asked the judge to approve a bid procedure. If another party is interested in purchasing Great Northern’s assets, they would have to bid at least $2.9 million to beat GNP Acquisition’s position. Add the land to the deal, and another party would need to come up with $3.25 million.

If the trustee ends up selecting a higher bidder, GNP Acquisition would receive a “break-up fee” of $200,000, which is one of the perks to encourage a company to make the opening bid as the stalking horse.

“The trustee did try to shop this hard to potential operators that we knew were open to it and none of them were able to come forward and be the stalking horse,” Creswell said.

Creswell acknowledged there is an international company that has shown interest in purchasing the mill and reopening it to make paper, but those talks broke down because the company wasn’t prepared to sign a sale agreement to become the stalking horse.

“We understand they may come back at the auction and want to participate in the auction process that way,” Creswell said.

All competing bids on the assets are due Dec. 1 with a final sales hearing scheduled for Dec. 2, according to Creswell.


If a higher bid does not come along, GNP Acquisition would buy the mill for the $2.6 million. The proceeds from the sale would be split between the two entities, both bankrupt, that make up Great Northern Paper: 15 percent of the purchase price, or $390,000, would be allocated to GNP East, which owns the real estate the mill sits on, while 85 percent, or $2.2 million, would be allocated to GNP Maine Holdings, which owns the mill buildings and equipment.

Great Northern Paper, which was managed by New Hampshire-based private equity firm Cate Street Capital, idled the paper machines at its East Millinocket mill in late January and a few weeks later laid off more than 200 employees. The company continued to maintain a skeleton crew at the mill to keep it ready for a potential restart. As recently as July, company officials were voicing confidence that it would restart.

However, on Sept. 22 the company filed for Chapter 7 bankruptcy, meaning the company would pursue a liquidation of its holdings. A Chapter 11 filing would have indicated an attempt to reorganize and continue doing business.

The East Millinocket mill produced paper for newspapers and paperback books, both markets that have come under pressure from foreign competition and the migration of readers from print products to those in digital formats.

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