Governor Scott and local and state officials celebrated on January 18 the sale of the Neenah paper plant in Brattleboro to Long Falls Paperboard. BDCC photo.
Vermont Business Magazine Long Falls Paperboard (LFP) and Brattleboro Development Credit Corporation (BDCC) announced today the sale of the Brattleboro paperboard plant, formerly owned and operated by Neenah Paper, Inc. On December 31, 2018 LFP completed a complex financial transaction to acquire the business. This project has had support from numerous local, regional, and statewide partners. Neenah Paper, Inc bought the assets of the former FiberMark in 2015 for $120 million. Neenah reported in February that it received $5 million in cash for the Brattleboro plant.
In its FY 2018 fourth quarter report issued on February 12, 2019, Neenah stated that earnings included $1.37 per share of expense related to the impairment loss and subsequent sale of the Brattleboro facility. It said operating income in 2018 included favorable items totaling $4.1 million, primarily related to adjustments to the impairment loss of the Brattleboro facility based on terms of the sale. Income in 2018 included a $3.1 million benefit, primarily for an adjustment to the Brattleboro impairment loss. Income in 2018 included a $31.1 million impairment loss related to the sale of the Brattleboro mill and associated research and office facilities. Following the divestiture of Brattleboro, consolidated net sales in 2019 will decrease by approximately $30 million and consolidated operating income will improve by approximately $5 million annually..
Less than three months ago the fate of 100 local workers was in question, when Neenah Paper unexpectedly announced it would cease operations in Brattleboro. In October when BDCC learned of the pending closure, they immediately met with Neenah Paper representatives to assess options to support ongoing operations. The only alternative to their planned shutdown would be a successful sale, fully executed prior to January 1, 2019. Otherwise Neenah Paper would proceed with closure of the Brattleboro facility and liquidation of its local assets.
LFP had recently been unsuccessful in a bid to acquire a paperboard mill in New York State, making them an ideal suitor. The NY based plant was represented by the United Steelworkers Union (USW) who recommended to LFP that they explore an acquisition of the Brattleboro based operation that the USW also represented. The closure announcement had produced a high level of publicity, and several interested parties immediately contacted Neenah Paper, with LFP quickly establishing itself as the most willing and able suitor to meet a December 31, 2018 deadline for transfer of ownership.
BDCC’s past communications with Neenah Paper provided for immediate introductions to representatives of LFP and within a few short days an acquisition plan and team was formed. “The BDCC has built the capacity for this kind of rapid response and management of complex, impactful development projects that partner with State of Vermont Agencies to directly benefit employees and the regional economy,” said Adam Grinold, BDCC’s Executive Director. “We do these projects to meet our mission of building a thriving regional economy,” said Grinold, “but the real impact comes because LFP and their partners have chosen to invest in doing business here in Southern Vermont.”
A project closing prior to January 1, 2019 meant an unusually fast turnaround and would require significant assistance. BDCC and LFP created a public-private partnership to support the acquisition in under 60 days. The speed with which this project was embraced by BDCC’s local and state partners was driven by the potential loss of 100 jobs. Successful, timely completion of this complex and multifaceted project is a model for local economic development partnerships. This includes approval from the Vermont Economic Progress Council on December 14 for a Vermont Employment Growth Incentive, which will provide critical cash incentives paid out over the next five years, allowing LFP the ability to maintain and grow employment in Brattleboro as it invests in the facility and business growth. BDCC Board President, Bob Stevens shared, “This transaction is a huge win for the region, and we are pleased to have nimble public, private, local, and statewide partners who understand our region’s continued vulnerability from the lost wages following the closure of VT Yankee and that they made it a priority to help this deal come together quickly. Without this successful purchase by LFP, we would be looking at 100 layoffs in the new year.”
On December 31st, 2018, LFP purchased the business and assumed operations at the former Neenah Paper plant. BDCC, acquired the building and lands and will work with Vermont’s Department of Environmental Conservation (DEC) to facilitate a Brownfields assessment. Once BDCC obtains a certificate of completion from the DEC, LFP plans to purchase the building and lands.
“Since our first visit to the mill in November we have been welcomed and supported by BDCC, the employees, the USW, and a wide variety of state offices. We deeply appreciate this support, without which we would never have been able to purchase the paper mill in the very short time available. We look forward to being part of the Brattleboro community for many years to come.” Ben Rankin, LFP.
While the availability of the environmental cleanup and support was critical to LFP’s decision to proceed with the purchase, they also needed assistance in obtaining debt for the project as well as incentives and operational support. Many supporting organizations and partners worked long hours over the last 60 days to make this project happen, without whom this project would not have been viable in such a short period of time. These partners include the Vermont Economic Progress Council as manager of the Vermont Employment Growth Incentive (VEGI), Green Mountain Power’s (GMP) Economic Development Incentive Program, Efficiency Vermont, the Vermont Agency of Commerce and Community Development and its Vermont Training Program, the Windham County Economic Development Program, and the Vermont Department of Environmental Conservation (DEC). Financing was provided by the Vermont Economic Development Authority (VEDA) and People’s United Bank. Additional financial assistance from the Vermont Department of Environmental Conservation (DEC) and the Town of Brattleboro Brownfields Cleanup Fund will help BDCC and DEC install monitoring wells and additional brownfields cleanup.
About Long Falls Paperboard:
Long Falls Paperboard was formed to hold and operate assets in the pulp and paper industry for the benefit of owners, employees and communities. Its partners include Human Capital Investments LLC and Northrich Inc. Human Capital Investments, based in Washington state, develops leaders and cultures with a focus on sustainable industrial projects. Northrich was founded in Quebec in 2001 and produces packaging materials at several locations across North America.
Brattleboro Development Credit Corporation is a private, nonprofit economic development organization that serves as a catalyst for industrial and commercial growth throughout Southeastern Vermont, including Windham County and the towns of Readsboro, Searsburg, and Weston. BDCC serves as the State of Vermont’s certified Regional Development Corporation (RDC) for the greater Windham County area. BDCC is one of 12 RDCs throughout Vermont.
Source: BRATTLEBORO, VT. BDCC 1.7.2019 brattleborodevelopment.com