Unpaid bills from vendors, towns and now the Internal Revenue Service are piling up at Great Northern Paper’s idled mills in Millinocket and East Millinocket, company officials acknowledged this weekend.
The IRS last week filed two liens against subsidiaries of the company, alleging that the mill operator failed to pay nearly $2.5 million in corporate income taxes in 2012. The company also confirmed that other vendors have filed liens against the company over unpaid bills and that the two towns where the mills have operated are owed nearly $3 million for late property taxes.
“Great Northern Paper acknowledges the fact that it has outstanding tax and vendor payments,” said Elizabeth Baldacci, spokeswoman for Cate Street Capital, the New Hampshire-based private-equity firm which created the fund that invested in Great Northern Paper beginning in October 2011.
“The company has every intention to work hard to bring the creditors current, including the town of Millinocket and the IRS,” Baldacci said Saturday.
Baldacci said the company blames an ongoing dispute with a hydroelectric dam operator for falling behind on its bills.
Great Northern, which shut down the East Millinocket mill in January due to high energy and wood costs, wants Brookfield Renewable Energy Partners to pay GNP the profits it has made on selling excess power since the mill was idled in January.
Brookfield is the state’s largest producer of hydroelectric power and also supplied power to Great Northern.
Cate Street Capital said it needs a share of the profits to reopen.
Last week, Gov. Paul LePage signed a bill encouraging Brookfield and Great Northern Paper to share the energy profits and provided a one-time exemption from a state law that would have otherwise barred the paper company from benefiting from the sale of electricity while a mill is shut down. However, a stronger version of the legislation that would have required Brookfield to share the profits was watered down earlier this year over concerns about its constitutionality.
Harold Pachios, the attorney representing Brookfield, has said that forcing the company to share the profits was an effort by the state to provide a subsidy to Great Northern. He said it was wrong for the state to try to force a private company to pay the subsidy, rather than the government doing it on its own.
Baldacci said Saturday the failure to reach an agreement on profit-sharing puts Great Northern Paper “at a significant financial disadvantage.”
“Every day that Brookfield delays these negotiations is a day that bills continue to accumulate and hundreds of people are kept out of work,” she said.
Baldacci also said that part of the reason for the unpaid property taxes is Millinocket’s decision to accelerate the due date. She said that’s creating a hardship for all property owners in Millinocket, not just Great Northern Paper.
Edward D. Murphy can be contacted at 791-6465 or at: