Bankruptcy Court OKs Mills' Sale

A U.S. Bankruptcy Court judge tentatively approved the sale of the two idle pulp and paper mill complexes, owned by American Tissue. The facilities are located in Berlin and Gorham, both in New Hampshire.

Brascan, with interests in the financial services, real estate and power equipment industries, is the buyer of the mills. Along with the mill operation, the complexes have six hydroelectric plants.

The $31.5 million price for the mills includes about $6 million for property, water and sewer taxes owed to Berlin, Gorham and Coos County, the costs of closing the deal, certain contractual obligations, and a $1 million reserve fund for hazardous waste cleanup. Those costs will total approximately $10 million.

The remaining money would be divided among American Tissue's secured creditors. A consortium of banks is owed $130 million, while bondholders have a $165 million claim, according to court papers.

The mills, operating as Pulp and Paper of America, shut down last August. A month later, American Tissue filed for bankruptcy protection.

Fraser Paper, which Brascan has a large minority ownership in, is likely to operate the mill. The company is not sure when the mills will be reopened, although the company is hoping to have the mills operating as soon as possible.

Fraser Papers operates 12 paper machines at three mills and has a facility in Madawaska, Maine. Fraser also manufactures specialty pulp at a mill in Thurso, Quebec.

American Tissue owns mills in 19 states.

In a related move, American Tissue Inc. is seeking a buyer for its paper mill in Greenwich, N.Y. The mill has been idled since last year.

American Tissue, which has been in Chapter 11 bankruptcy protection since last September, announced that it will accept the highest bid for the mill over $3 million, according to local press reports. It has the option to take a lower offer.

So far, the facility appears unwanted. Last week, another company, Cascades Inc. of Quebec, said it would buy American Tissue's Mechanicville mill and the equipment from a tissue-converting operation in Waterford, along with a mill in California and a paper-making machine in Oregon, for $55 million. Cascades said then it had no interest in the Greenwich plant.

American Tissue bought the Greenwich mill in 1996 from Stevens & Thompson Inc. It was one of several that Long Island-based American Tissue acquired as it grew into the country's fourth-largest tissue maker.

U.S. Bankruptcy Court in Delaware needs to authorize any auction. A hearing to discuss the matter will be held later this month.