Despite the loss last week of $9 million in state-backed financing, Thermogen Industries says it is still committed to bringing its manufacturing project to fruition.

Thermogen is a startup that wants to build a plant at the site of the former paper mill in Millinocket to manufacture black wood pellets, called bio-coal, for export to power plants in Europe and other customers that want a cleaner-burning alternative to coal.

Cate Street Capital, a New Hampshire-based private equity firm, manages the investment fund that owns Thermogen Industries. It also manages the fund that owns Great Northern Paper, which operates a paper mill in East Millinocket that’s now idled.

The Finance Authority of Maine’s board voted Thursday to reduce the amount of the bond it would sell on Thermogen’s behalf from $25 million to $16 million. FAME’s board had approved the $25 million bond in October, but reconsidered the project after Thermogen announced a change in technology that was deemed substantive enough to require a new vote.

The bond is being provided through FAME’s Major Business Expansion Bond Program. That means the state is responsible for paying back the bond if the company is unable to do so.

Comments by FAME board members after the vote suggested that financial troubles at Great Northern Paper, including roughly $3 million in unpaid property taxes, influenced their decision to reduce the amount of the bond.

The fate of the $140 million Thermogen Industries project was uncertain after the vote. Alexandra Ritchie, Cate Street Capital’s managing director of government and community relations, said after the vote that she was disappointed with the outcome, but wouldn’t comment on what it means for the future of the project.

However, Cate Street Capital released a statement Tuesday confirming its commitment to the Thermogen project.

“Thermogen is disappointed with FAME’s decision to reduce the loan guarantee by $9 million for our proposed project in Millinocket. While this setback is certainly unfortunate, our team’s passion and determination is inspiring and I have full confidence that we will prevail,” Dammon Frecker, Thermogen’s project manager, said in the statement. “We are working around the clock to restructure our financing plan and finalize a new path forward. Thermogen is committed to people of the state of Maine and plans to be in Maine long-term. We are committed to developing this project and putting people back to work.”

Thermogen Industries’ plan calls for 55 jobs to be created in Millinocket.

The company’s long-term plans call for three bio-coal production plants in the state, including one in Eastport, that it claims would create 1,000 direct and indirect jobs and revolutionize Maine’s forest products industry.

“Thermogen is the way of the future for Maine’s forest products industry, and our team of top-notch professionals continues to work tirelessly to develop the project as quickly as possible,” Frecker said.

Whit Richardson can be contacted at 791-6463 or at:

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