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Lincoln Mill Declares Bankruptcy

LINCOLN, Maine — Lincoln Paper and Tissue announced Monday that it has filed for Chapter 11 bankruptcy.

President and CEO Keith Van Scotter says instead of seeking reorganization under Chapter 11, the company will look for a buyer, something he says has been quietly underway for awhile.

The news comes after a tumultuous couple of years for the company and its 170 employees.

Almost two years ago the Lincoln mill was rocked by a boiler explosion in the papermaking side of the plant, which resulted in the layoffs of about 200 workers. But the company hung on, and over the last 18 months invested $10 million in capital improvements, including a self-sufficient power generator.

Van Scotter says the idea was to focus solely on the tissue-making side of the business.

"And while the investments were good there were some things that didn't go perfectly," he says. "This is a result of a number of issues."

Van Scotter says the company has financing in place to continue normal business operations while it seeks potential buyers. He anticipates an auction for the mill within 45 days.

In the meantime, he says workers and suppliers will be paid. He says it's possible that the buyer will want to keep the operation going.

"I'm optimistic and I believe that the assets will be sold," Van Scotter says. "The other option, of course, the assets could be sold just on a liquidation basis, a shutdown and liquidation. However, our view is we think the assets have got value as a continued operation."

According to filings made public Monday, the company owes more than $10 million to more than 200 creditors.

Duane Lugdon of the United Steelworkers International Union says the news does not come as a surprise to the 170 workers at the mill who are represented by the union. He says the Steelworkers have been talking to company leaders for quite awhile about the difficulties they've been facing.

"We find it distressing, obviously, that another of our pulp and paper mills here in the state of Maine has had to take this route but there are a lot of competitive pressures and dynamics that make that happen," he says.

Those pressures, Lugdon says, include foreign competition, especially from companies that are in an expansion mode in countries where wages and benefits are lower than they are in the United States or even nonexistent.

"So they can create paper and ship it here into the United States sometimes cheaper than we can even make it domestically," he says.

Lugdon says he's hopeful that there will be no more layoffs, but it's unclear.

A spokeswoman for Gov. Paul LePage says the bankruptcy filing is the latest example of why the Maine Legislature needs to address the high cost of energy in Maine.

"Things like this are going to continue to happen," says spokeswoman Adrienne Bennett. "We've seen it with Verso Paper, with Old Town Fuel and Fiber and now we're seeing it, unfortunately, with Lincoln Paper and Tissue."

She says the governor's office will be working with Lincoln Paper and Tissue to provide the best outcome for the mill.

A call to the Lincoln town manager was not returned by airtime.