GORHAM, N.H. (From news reports) -- Gorham Paper & Tissue has filed for Chapter 11 reorganization at the U.S. Bankruptcy Court in Delaware.
It has also agreed to sell the mill assets to an investment group interested in operating the facility.
Gorham Paper said it entered into an asset purchase agreement with Behrens Investment Group on Wednesday night.
The deal, which the parties expect to close during the bankruptcy proceedings, would see the New York investment company acquire most of Gorham Paper & Tissue and its subsidiary, White Mountain Tissue, for $8.75 million in cash and the assumption of several million dollars in liabilities.
Behrens will serve as what is called a "stalking horse bidder" in the proposed auction and has agreed to provide, subject to the bankruptcy court's approval, financing to allow Gorham Paper keep operating through the bankruptcy proceedings. The mill currently has 106 employees, including both salaried and hourly.
A release issued by Gorham Paper & Tissue Chief Executive Officer Dick Arnold said the two companies will immediately file a motion seeking the court's approval of bid procedures in connection with the sale to Behrens. Other parties will be offered the opportunity to submit higher and better bids for the company's assets. Arnold described Behrens's efforts as "comprehensive" and "very collaborative."
"Through this process, the mill will be positioned for success and remain an integral component of the North Country economy. We believe the Behrens team brings the vision and resources to make it happen," said Benoit Lamontagne, the state's North Country industrial agent.
Berlin Mayor Paul Grenier said he met last week with Behrens officials and said they believe they can make the mill profitable. He said the investor has had its engineers going over the plant for three or four months.
If Behrens is successful in obtaining the mill, Grenier said one immediate focus will be modernizing the energy usage. He said long-range, Behrens is interested in adding converting equipment.
In court documents, Gorham Paper & Tissue described the bankruptcy filing as in the best interest of the companies and its creditors. It reported debts ranging from $50 million to $100 million. Included in those debts are $438,930 to the town of Gorham, $172,010 to the city of Berlin, and $247,464 to the Androscoggin Valley Regional Refuse and Disposal District. Grenier said that in his discussions with Behrens officials, they emphasized their desire to be good corporate citizens and pledged to assume those payments.
"We commend Behrens for its interest in the Gorham mill. We are optimistic that Behrens' efforts will have a positive impact on the state of New Hampshire and the local community," said the Bank of New Hampshire and the New Hampshire Business Finance Authority, which are lenders.
Purchased by the Lynn Tilton and Patriarch Partners, the Gorham mill was part of her Zohar III collateralized loan fund. The U.S. Bankruptcy Court of Delaware recently approved an effort to sell off assets of the fund.