Tuesday, September 28, 2010

Samoa Pulp Mill Officially Dead

Posted By on Tue, Sep 28, 2010 at 9:31 AM

Freshwater Tissue owner Bob Simpson made the announcement in a press release this morning. The last remaining pulp mill on the Samoa peninsula -- a feature of the Humboldt County skyline for the last 50 years, for better and worse -- will be parted out.

MEDIA ADVISORY

FOR IMMEDIATE RELEASE

September 28, 2010 - Samoa Pulp Mill Permanently Closed

Samoa, Ca - Freshwater Tissue Company announced the permanent closure of the Samoa pulp mill. Evergreen Pulp, the prior owners of the pulp mill, closed the mill in October of 2008 after a global collapse of the banking industry left Evergreen insolvent.

Freshwater Tissue purchased the Samoa mill assets in February of 2009 with a vision of converting the pulp mill to an integrated pulp and tissue plant that would convert forest residuals into consumer-ready, eco-friendly toilet paper. The projected cost of the plant conversion was $400 million. The owners anticipated borrowing the funds from the Department of Energy. Unfortunately, DOE loans were only available to green energy projects, such as wind energy, solar energy, and the production of electric cars.

After failing to fund the integrated tissue mill project, Freshwater scaled down its business plan and reduced its capital requirement to $30 million. The company's new plan was to produce eco-friendly pulp, and it secured a 10-year sales contract for 100% of its production. Freshwater obtained all necessary regulatory permits to re-open the mill, it received unprecedented environmental and labor support, and it had bi-partisan government support. When the company received notice from the U.S.D.A. that it qualified for a $25 million loan guarantee Freshwater believed a loan was certain, but it soon discovered banks would not loan against a government backed guarantee.

In a statement issued by Robert M. Simpson, Freshwater's President, Simpson said "I am disappointed in our failure to re-start the pulp mill. We exhausted all possible means of funding the project with the intention of re-hiring union workers. Unfortunately, FDIC regulations made it impossible for banks to finance startup projects like ours."

Freshwater reported that it has received an offer for its power and recovery boiler. When asked about the offer Simpson said "we have two groups interested in acquiring the boiler but we are not in contract and we don't have any expectation as to when a sale will be completed." Simpson didn't offer any details of Freshwater's future plans for the 156 acre industrial site. 

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