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Newton Falls sale as intact paper mill fails

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The sale of the Newton Falls paper mill as an intact operation has failed and the assets will be liquidated in the latest turn of events surrounding the plant.

Scotia Investments Vice President Robert G. Patzelt wrote in an email that the special bid received at the end of an auction Thursday for the entirety of the mill’s equipment was terminated during finalization of the details.

“The owners are disappointed with this development as they put tremendous time and effort into selling the entire mill which was seen to be in the best interest of all the stakeholders and especially the mill and the community,” Mr. Patzelt wrote. “Ideally, we wanted the mill to be sold as a going concern, or, in its current state of being ready to be reopened by another party.”

Scotia will proceed with the disposition of the mill’s assets in an orderly manner, he wrote.

“We have entered discussions with the successful bidders who participated in the auction last Thursday. It is our hope that as many as possible will purchase the assets bid upon,” Mr. Patzelt wrote. “All other assets will be sold to interested parties in due course.”

Scotia Investments, Halifax, Nova Scotia, the parent company of Newton Falls Fine Paper, operated the mill from 2007 to 2010. Last summer, the owners changed their focus from finding an equity partner to restart the mill to one of finding a buyer.

“For the past 27 months, the mill and its machinery has been preserved in a state of readiness and a core team of ten people has been employed on site managing the process, conducting tours with interested parties and ensuring the mill and site is secure,” Mr. Patzelt wrote.

“Since December 2010, Scotia Newton Inc. has spent more than $10 million on Newton Falls Fine Paper operating costs plus additional sums on capital upgrades and debt service. In addition, during the 27 months Scotia Newton has vigorously pursued any and all potential operators for the mill. This search was conducted on a global basis by a highly qualified liquidation firm, which undertook an intensive marketing program targeted at potential buyers.”

In February, Scotia scheduled a liquidation auction, which took place Thursday in Syracuse.

At the conclusion of the auction — during which the mill’s equipment and inventory were sold piecemeal — auctioneer Continental Plants Group announced that a single bid of $2.1 million — 10 percent higher than the total of the individual bids received during the day — would take precedence and that the plant had the chance to reopen.

That was the latest deal that fell through, according to Mr. Patzelt.

He did not comment on whether Scotia had made the bid itself because it was dissatisfied with the prices it had received.

“The owners of Scotia Newton Inc. are grateful to government and Industrial Development Agency partners, former employees and community members for their support; we have tried to find the best possible solution for the mill and for the community of Newton Falls,” Mr. Patzelt wrote. “Unfortunately, and after much effort and continued investment in trying to find a solution, we have concluded that we simply cannot continue on this unsustainable path.”

Despite the announcement, IDA Executive Director Patrick J. Kelly said he was open to continued talks with Scotia.

“We continue to follow the situation. Things seem to be happening fairly quickly and we’re still not sure what the situation is,” Mr. Kelly said. “Until we determine what role or ability there is for the IDA to assist, we’re going to wait and see.”

Town of Fine Supervisor Mark C. Hall, a member of the IDA who attended part of the auction, said the news was disappointing.

“There’s too many unanswered questions,” Mr. Hall said. “It’s an emotional roller coaster that’s really unfair. Everything’s affected and we need jobs.”

St. Lawrence County Legislator Frederick C. Morrill, D-DeKalb Junction, who also attended part of the auction, said the latest twist to the Newton Falls paper mill story was distressing.

“It’s unfortunate if it doesn’t stay an operating concern,” he said.

If the mill’s equipment is sold, the plant should not be abandoned, Mr. Morrill said.

“They’ve got to clean up. We can’t end up with another Jones and Laughlin,” he said, referring to a 54-acre polluted industrial site in the Adirondack Park.

The state Department of Environmental Conservation has started to weigh in.

In a letter to the company, DEC wrote earlier this year that when equipment is dismantled and removed, all fluids had to be properly collected and disposed of. The plant’s wastewater treatment plant also requires a closure plan, DEC spokeswoman Lori Severino wrote in an email.

Since Scotia took ownership, the mill has been run and maintained in environmental compliance, Mr. Patzelt wrote.

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