Thermogen loan guarantee reduced, developers still committed

By Anna Simet | April 23, 2014

The Finance Authority of Maine has approved a $16 million taxable bond for Thermogen’s black pellet project in Millinocket, Maine, reducing its initial commitment, approved in October, by $9 million.

The reduction in financial backing comes on the heels of an unrelated announcement by Thermogen, which is owned by Cate Street Capital, declaring that the company decided to switch process technologies from Scotland-based Rotawave’s microwave torrefaction technology to Zilkha Biomass Energy’s steam-exploded Zilkha Black Pellet process. The decision was based on the fact that Zilkha’s technology would allow Thermogen will to ramp up production up quickly for overseas customers, a Thermogen spokesman told Biomass Magazine last month.

FAME released the following statements regarding its decision to reduce the loan guarantee, which it insinuated is based on the fact that currently idled Cate Street Capital subsidiary Great Northern Paper owes over $2.5 million in property taxes to the towns of Millinocket and East Millinocket.

“In considering an application under the Major Business Expansion Bond Program, the board is required under the governing statute to find that the applicant is creditworthy and that there is a “strong likelihood” that the securities will be repaid through the revenues of the project and any other sources of revenues and collateral pledged to the repayment of the bond securities.

“Among the conditions imposed as part of the approval by the FAME Board are the requirements that any outstanding property taxes owed to the towns of Millinocket and East Millinocket be paid, and that any other liens against collateral for the bond be satisfied.”

Thermogen Project Manager Damon Frecker said Thermogen is disappointed with FAME's decision to reduce the loan guarantee, but indicated the company is still pressing forward. “While that presents a setback, it will not stop us,” he said. “ We are entirely confident in our ability to continue moving forward to full project execution, and we have an exceptionally talented, experienced and dedicated team that is working tirelessly to do exactly that. “

Frecker added that the company is deeply committed to the state of Maine, where it intends to be for the long term.  “Development of our Millinocket facility represents the next generation forest products industry, along with 300 direct and indirect jobs,” he said. “While the FAME decision potentially delays these benefits, our team continues to work around the clock to bring the project and its benefits to fruition.”

The project is expected to help to create 55 direct jobs and approximately 281 indirect jobs in the Millinocket region.  Members of the FAME board have noted that the project has the potential to boost the area and state economy, while supporting Maine’s traditional natural resources and manufacturing industries.