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Court approves Flambeau River Papers, CellMark agreement

PARK FALLS, Wisconsin (From news reports) -- In court on Monday, July 1, Price County Judge Kevin Klein approved an agreement between Flambeau River Papers and CellMark Paper Inc., as well as a request for the mill to pursue financing in the amount of $2 million. This court action will allow the mill to reopen within the next two weeks, returning 89 employees to work, and pay the wages of the 68 employees laid off by the mill on June 7.

According to the court-appointed trustee of Flambeau River Papers, Rebecca DeMarb, CellMark Papers accounts for 80% of the mill's total revenue. When CellMark ceased payments on June 5, the mill was no longer able to make payroll and the vast majority of its employees were laid off, leaving only 26 individuals employed by the mill.
The agreement approved by the court on Monday allows CellMark to keep the $1 million it suspended in June, but requires CellMark to continue purchasing paper from the mill for 60 days, and make efforts to continue doing so after the 60 days elapse. It also requires CellMark to make efforts to continue purchasing wetlap.
The second motion approved by the court will allow FRP to receive $2 million in new financing from existing customer DuPont and CellMark.
"Together with the CellMark agreement, this new financing is absolutely crucial to allow Flambeau River Papers to bring back all 89 employees to work, and to pay the 68 employees who will not be brought back as if they had worked through June 6, which is the end of the WARN Act period," DeMarb told the court.
Part of the $2 million will also be put toward paying post receivership vendors, including a trucking company who DeMarb said has been unable to pay their own employees until they receive payments from FRP.
The main aim of both the agreement and the financing is to allow the mill to resume operations, which will make it more desirable to potential buyers.
DeMarb told the court she intended to take the mill to auction within six weeks of reopening, although she said it could take some time to close that sale.
Support for the agreement and financing was voiced by the legal representatives of CellMark, DuPont, and the Steelworkers Union. No objections were received by the court. Representatives from Johnson Timber Corporation had a presence in the court via telephone, and voiced no objection to any of the court proceedings.
In his ruling, Judge Klein said that -- as no objections were received -- the court found it in the best interests of the mill's employees and the community that the mill be reopened and sold at the maximum price.
"Certainly the idea of keeping the mill open and running into the future is the best for all of the possible scenarios," Klein said. "It is important to note that creditors that could have voiced objections .... have not objected."
"The court is satisfied that there is a good cause for what is proposed and it does not run contrary to the statutes," Klein concluded.
The court's decision was welcome news to Park Falls Mayor Michael Bablick, who attended Monday's hearing.
"Hopefully this means that we can get 115 people back to work in Park Falls within a week," Bablick told the Review. "The city will continue to be in communication with all parties involved to make sure the buyer is in the best interests of the community and will bring the maximum amount of employees back to work."
"We're happy to get this far," DeMarb commented to the Review. "It's looking like we're definitely going to be able to get the mill reopened. We have some attorney documentation left to do, but I think it's going to happen."
The mill was projected to restart machine two within two weeks of the court hearing.

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