Special Report: Payday at the mill

[mahatmakanejeeves]

Last edited Wed Apr 22, 2015, 01:39 PM - Edit history (2)

Special Report: Payday at the mill

How sophisticated financiers used a Maine investment program they devised to wring millions of dollars in risk-free returns at taxpayer expense

By Whit Richardson Staff Writer
[e-mail] | @whit_richardson | 207-791-6463

First of two parts

Sometime this year, the state of Maine will cut two checks worth a total of $2.8 million and mail them to out-of-state investors. Next year, it will send two more checks, worth $3.2 million, to the same recipients. It will repeat that process for the next three years until roughly $16 million of taxpayer money has been withdrawn from Maine’s General Fund.

This payout of taxpayer dollars through 2019 will make whole a commitment the state made in December 2012 to encourage what was – on paper – touted as a $40 million investment in the resurgence of the Great Northern Paper mill in East Millinocket.

But the resurgence failed. A year after the investment was received, the mill’s owner, private equity firm Cate Street Capital of Portsmouth, New Hampshire, shuttered the mill and laid off more than 200 people. Great Northern filed for bankruptcy a few months later with more than $20 million in unpaid bills owed to local businesses, leaving many to wonder what happened to that $40 million investment that was supposed to save the mill.

The reality is most of that $40 million was a mirage. .... In the end, here’s what really happened: Two Louisiana financial firms arrived in Maine with a plan to create such a program, hired lawyers and lobbyists to get it passed in Augusta, then put together the Great Northern deal using one-day loans that made an $8 million loan look like a $40 million loan. While they claim they did this to leverage more investment, the result is that Maine’s taxpayers are going to pay $16 million to banks and investment firms that invested only half that amount. And all of it was legal.

[packman]

1. I'm reminded - looking at the charts - of the old Mafia saying

of the crew "Wetting their beaks" in the crime going down - everyone getting a piece of the action.

[luckyleftyme2]

2. seems everything isn't always as it seems

the 16 million we mainers will have to pay back for paper mills who failed after getting tax rebates and loans from the state ; do we really know the facts?
you know I could be wrong but didn't the gov now seated stop the sale of "great northern " then his crew made the deal that lasted a very short time? how about the old town deal! hmmm seems to me those casting the doubt know their followers eat up any half truths they spew! Where are our leaders on the left and independents to throw this back in the gov. lap in public media?
Oh by the way how many of these successful recipients are republican? hmmm my guess from experience would be at least 50 % probably more.(we all know how republicans like to spend others money on themselves)
have a good day and call your local representative be they independent or democrat and make them aware