YORK — Facing a mounting list of debts to the IRS, to the towns of Millinocket and East Millinocket and to numerous suppliers such as Brookfield Energy Group, Cate Street Capital has been running around Maine blaming everyone but themselves for their financial woes.
Brookfield has become the prime target for Cate Street, the owner of Great Northern Paper. But as John Adams said, facts are stubborn things, and for Cate Street they don’t paint a pretty picture.
In August of 2011, Brookfield and Cate Street signed a 10-year contract in which Brookfield agreed to provide electric power to Great Northern Paper at a significantly discounted rate exclusively for the purpose of operating the mill. As part of that agreement, Brookfield retained the right to sell to other customers any and all power not purchased by Cate Street.
Fast-forward three years to today. Cate Street is now struggling to make Great Northern Paper viable, so company officials have decided they are unhappy with the agreement they signed in 2011. The remedy? Declare that Brookfield should give them a share of the revenues it gets from the sale of power to other customers.
Not only does this claim fly in the face of free-market rules, but also basic common sense.
That hasn’t stopped Cate Street.
With no contractual right to a share of Brookfield’s revenues from power generation, Cate Street hoped to get legislation passed that would require Brookfield to give some of its revenues to Cate Street. Ultimately, that effort was unsuccessful because it would have violated the U.S. Constitution.
Undeterred by all of this, Cate Street has continued its campaign with the hope that Brookfield will yield to Cate Street’s demands to change the terms of the 10-year contract.
While Brookfield will not agree to Cate Street’s unreasonable demand to share profits, our company has been involved with Northern Maine mills for nearly 15 years. We do recognize the need to restart the mill and hire back workers, and we have offered to help.
Brookfield has continued to provide a constant and reliable supply of electricity to the mill over the past several months for which it is not being paid, and has offered to continue doing so until May.
In addition, our company has offered to provide a portion of the capital that Cate Street says it needs to restart the mill by forgiving $2.5 million of the debt that Cate Street owes to Brookfield.
In exchange, Brookfield is asking that Cate Street provide financial information about the mill and its future to ensure that a viable plan is in place. Specifically, Brookfield is asking Cate Street to disclose basic financial information: How large are its unpaid bills and outstanding tax obligations? What are the capital needs required to reopen the mills, and what sources of funds have been secured other than the Brookfield offer? How much of Cate Street’s own money will be invested to restart the mills? And how much are the management fees that Cate Street is taking off the top of Great Northern Paper?
Brookfield has an obligation to its shareholders to perform due diligence, and expects that the contract with Great Northern Paper be backed by a creditworthy-entity with a credible business plan.
To date, Cate Street has refused to provide the requested information. As a result, our company remains skeptical about Cate Street’s public statements and stated intentions.
Brookfield, through its actions, has demonstrated a real commitment to the state of Maine and the communities in northern Maine. Brookfield maintained the mills for nearly two years while the state found a new owner, then transferred the mills to the new owner, Cate Street, for just one dollar.
In addition, Brookfield has invested hundreds of millions of dollars in renewable energy facilities throughout the state of Maine over the past several years, providing meaningful and steady employment for hundreds of Maine people.
Brookfield is proud of its record as a responsible corporate citizen in Maine, and looks forward to a strong presence for many years to come. The important question: Is Cate Street Capital ready to do the same?