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Florelle Tissue plant shuts down due to power failure; workers temporarily laid off

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BROWNVILLE — The Florelle Tissue Corp. closed Monday because of the failure of a power transformer during the weekend, and eight full-time workers have been laid off temporarily until equipment is repaired.

President Harry Minas said Tuesday that the eight workers —along with five laid off earlier this month — are expected to be back to work at the 1 Bridge St. plant in three to four weeks. That time is needed to repair the three-phase power transformer, which will cost about $60,000, he said. In addition to facing the electrical problem, Florelle is trying to prevent foreclosure action announced in May by Chase Bank, which is seeking repayment of about $630,000 in loans made to the paper company starting in 2011.

The plant’s three-phase power transformer started malfunctioning last week and shut down completely Sunday, Mr. Minas said. The plant was closed at noon Monday. Though two-phase electricity is still available, the plant’s eight papermaking machines cannot be operated without three-phase power, he said.

“I had to shut down the plant due to some major breakdowns,” Mr. Minas said. “Yesterday I made the decision to shut down because I couldn’t carry employees on the payroll. We’re in the midst of getting funding in place for operational costs, but we’ve had electrical issues which are hindering our production capabilities. On the other side, we’re also finishing some refinancing and looking for more operating capital.”

Five of the plant’s 13 production workers were laid off temporarily Aug. 16 because of a delay in the shipment of paper needed to maintain full-scale production, Mr. Minas said. All 13 should be employed again by the end of September, he said.

“I cannot afford to pay people who aren’t working,” the Canadian businessman said. “Cash flow is the biggest thing right now, because everything costs money. I’ve now tripled the investment out of my pocket for this project, and now I have to go out and find more funds to fix the problems we have.”

The plant has five napkin lines, along with individual lines to produce bathroom tissue, kitchen towels and industrial towels. In January, Mr. Minas said he planned to hire 50 to 60 workers at the plant by the end of the summer. That would have enabled operations to run 24 hours a day, seven days a week, with two 12-hour shifts daily.

But news of foreclosure action taken by Chase Bank on loans delayed those plans, Mr. Minas said. Florelle now is having discussions with Chase to develop a forbearance plan that will delay foreclosure action, he said. But if Chase decides to move forward with the foreclosure, Florelle will have to seek financing from another financial institution, he said.

“Chase could decide to hold off on the foreclosure and work with us to get the company up and running,” Mr. Minas said. But “we could eventually decide to bring in another finance company to take out Chase, but we are trying to avoid that because of the expenses involved. We do now have interest from a couple of other financiers.”

Donald C. Alexander, CEO of the Jefferson County Industrial Development Agency, who learned about the plant closure Tuesday, said he is “guardedly optimistic” that Florelle will rebound from its financial woes.

“Running a paper mill is extraordinarily difficult and very capital-intensive, so I empathize with him and think they’ll be able to pull things together,” he said.

The JCIDA issued loans of $250,000 and $300,000 to Florelle, which started production in May 2012 at the 94,000-square-foot plant, previously Brownville Specialty Paper Products Inc. Other public agencies that issued loans include Development Authority of the North Country, $250,000; North Country Alliance, $125,000, and Adirondack Economic Development Corp., $200,000. The project also received a $250,000 grant from Empire State Development Corp.

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