2012-04-12 / Front Page

Seven months after filing bankruptcy, paper mill reaches agreement to sell

The Pioneer-Tribune has learned that as of 3:26 p.m. Wednesday, Manistique Papers Inc. had reached an agreement with The Watermill Group to sell the 91-year-old paper mill.

According to MPI General Manager Jon Johnson, the agreement was signed Wednesday afternoon and was transmitted electronically to the U.S. Bankruptcy Court in Wilmington, Del., for approval.

The so-called stalking horse bid by Watermill initiates a short timeline, where the court could review any other bids should they be submitted.

Approval of the Watermill bid is anticipated to be April 17, with the close of the transaction to take place early May.

Terms of the deal are undisclosed pending bankruptcy approval.

The Watermill Group, a Bostonarea private investment firm, has been involved in over 100 transactions with a total value of over $4.1 billion in a variety of transaction types, including private sales, corporate carve outs, secured party sales and bankruptcy auctions.

Collectively, they have over 140 years of executive management experience at public and private companies ranging in size from $25 million to $2.2 billion in sales in approximately 25 industries.

In November 2009, Watermill purchased the FutureMark Paper Company in Alsip, Ill. Upon their purchase, they injected new capital and management expertise into the company, reinventing it to serve the growing number of publishers and retailers wanting to print on environmental paper.

The Future- Mark mill was built in 1968 to make recycled newsprint.

In 2002, then owners Myllykoski of Finland invested $200 million to convert the mill’s production line to make lightweight coated paper.

Two years later, when the facility opened its coated production line, it became the only mill making recycled lightweight paper in all of North America – a distinction it still retains to this day.

Today, FutureMark Paper makes some of the “greenest” publication paper in the world and serves highprofile customers recognized for their strong environmental commitments.

Everyone at Manistique Papers is happy that we have reached this junction in the process of selling the mill and continue to do everything possible to give confidence to the potential buyer that the purchase of Manistique Papers is a sound financial decision.

This has been a long and trying process for everyone involved and although the deal is not yet finalized, getting to this step certainly provides a level ofstress relief” to the employees, customers, suppliers and the Manistique community.

Jon Johnson

Manistique Papers, Inc.

General Manager mBank President and CEO Kelly W. George is pleased to comment as to the following recent developments with regard to the Manistique paper mill.

“We are very happy to report that after months of negotiations with multiple parties, we have signed a tentative deal to fund the transaction for a new potential owner of the mill to purchase its assets and then continue to operate the mill and have it successfully exit the Chapter 11 bankruptcy proceedings it has been operating under since last summer.

The several new credit facilities will retire all the previous legacy debt with MPI that mBank had purchased from RBS Citizens in August of 2011, and also replace the debtor-in-possession line of credit originated in September last year to fund the continued operations of the mill through this bankruptcy process. The loan facilities will be supported by both the MEDC, through a participation arrangement on a working capital line of credit, and an anticipated USDA loan guarantee for real estate and equipment financing. The new loan commitments for the new potential owners are subject to formal bankruptcy court sale approval next week of a final consummated asset purchase agreement between all parties, which we are confident in, and then a final close of the transaction in early May.

We sincerely thank both the MEDC for their continuing support of this transaction, and welcome the new USDA guarantee commitment to the project. Both government agencies and their staffs have been great to work with, and without them we would not be where we are today. We are also very grateful that a new potential owner has been procured that is ready to make a significant positive commitment to this community and we look forward to working with them in the future as we do continuing to work with Jon Johnson, his management team, and all the employees of the mill who have done a tremendous job of keeping the mill functional, and improving its operations to make this transaction a possibility.

Both City and County Officials have been accommodating to various parties requests to help facilitate this transaction, and we thank them for their continued efforts as well. While today’s notice is not the final piece of the puzzle for the full rehabilitation of the mill as there are still some pitfalls that need to be navigated through for final approval from the bankruptcy court, this is a strong positive step forward with a new potential owner, fresh equity to augment the mills balance sheet, and a good loan package from mBank to provide operating capital and term debt to support the mills operations and infrastructure going forward and out from under bankruptcy”.

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