A Los Angeles-based investment firm has made the winning bid of $5.4 million for the Great Northern Paper mill in East Millinocket at an auction in Bangor, according to news reports.
Pasquale “Pat” Perrino Jr., trustee for the bankrupt Great Northern Paper, accepted the winning bid from Hackman Capital Acquisition LLC, which is a subsidiary of Los Angeles-based Hackman Capital Partners, according to WLBZ 2 in Bangor.
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A federal bankruptcy judge still needs to approve the sale, which is expected to happen at a hearing scheduled to begin at 1 p.m. at federal bankruptcy court in Bangor.
Hackman’s intentions for the mill are still unclear. Its website describes the company as “a privately-held, asset-based investment firm that focuses on the acquisition of industrial real estate and the purchase and sale of industrial equipment.”
The bankruptcy auction began at 10 a.m. and featured a bidding war for the East Millinocket industrial property. The three most active participants in the bidding were GNP Acquisition, a subsidiary of Connecticut-based auction company Capital Recovery Group; Montreal-based AIM Development; and Hackman. GNP Acquisition was the “stalking horse” bidder, a term in bankruptcy auctions for the party that offers an opening bid. Its opening bid was $2.6 million.
The auction is the climax of bankruptcy proceedings that began on Sept. 22 when Great Northern Paper filed for Chapter 7 bankruptcy.
If the judge approves Hackman’s $5.4 million bid, the majority of that amount would be returned to the paper company’s creditors, who are collectively owed more than $60 million.
Creditors for Great Northern Paper are split into two categories: secured and unsecured creditors. Secured creditors, who are at the top of the pile and include two Louisiana-based financing agencies, are owed $42.3 million and will be paid first out of proceeds.
The unsecured creditors, which are mostly Katahdin-area businesses, are owed $22.6 million. Left as is, unsecured creditors would be unlikely to receive anything. However, Perrino was able to reach a compromise in November with various stakeholders and secure what’s known as a “carve out,” which is a way in bankruptcy cases to protect and reserve funds for unsecured creditors.
The carve out returns 30 percent of the proceeds from the sale of the mill to unsecured creditors, which means if Hackman’s $5.4 million bid is approved, unsecured creditors would receive $1.62 million.
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