Two days after announcing a two-year $111 million investment at its Rumford paper mill, ND Paper LLC said Wednesday it has reached an agreement to purchase the Old Town pulp and paper mill, which has been idled since previous owners ended operations there in 2015.

ND Paper, a wholly owned Illinois-based subsidiary of Nine Dragons Paper (Holdings) Ltd. of China, said in a news release that it has agreed to pay an undisclosed sum of cash to OTM Holdings LLC to purchase the shuttered bleached kraft pulp mill and approximately 100 acres.

OTM Holdings, a subsidiary of CVG Inc., previously had announced plans in February to redevelop the site into a wood-fiber-based complex comprised of multiple tenants.

ND Paper stated that under its ownership the mill will be reconfigured to operate at substantially lower manufacturing costs compared to the predecessor company, achieved by three primary tactics:

1. With abundant local availability of softwood, ND Paper intends to move the production mix from hardwood kraft to softwood kraft pulp.

2. By eliminating bleaching operations and focusing on unbleached softwood pulp, the mill will increase its production rates and lower variable input costs.

3. The mill will share several management and administrative functions with ND Paper’s Rumford Division, lowering overall overhead costs.

After a series of phased capital investments, ND Paper expects the mill will restart in the first quarter of 2019 and ultimately produce 275,000 air-dried metric tons annually of unbleached kraft pulp.

“We are absolutely thrilled to restart the Old Town Mill and return well over 100 high-paying jobs to Penobscot County,” said Ken Liu, CEO of ND Paper. “By leveraging our existing manufacturing platform in Maine, combined with the financial capacity to wisely invest in the mill’s production capabilities, we expect to create a very strong future for this facility. Also, similar to our other recent acquisition announcement in West Virginia, this transaction supports Nine Dragons’ company-wide fiber sourcing requirements and global growth initiatives.”

Reactions to the pending sale

“We always knew Old Town was a tremendous asset and would eventually reopen,” said Gov. Paul R. LePage said in ND Paper’s news release. “I want to congratulate ND Paper for showing the confidence and vision to get it back up and running. This is just the latest example of new investment and career opportunities throughout our forest products industry. It’s a trend we expect will continue as we work with various investors and projects in areas such as biofuels, cross-laminated timber and pellets.”

U.S. Sens. Susan Collins, R-Maine, and Angus King, I-Maine, issued this joint statement Wednesday: “Today’s announcement is the latest in a line of important investments that will boost not just our state’s forest products industry, but also the Maine families and communities that rely on this vital sector of our economy. We commend ND Paper for making long-term investments in the Old Town Mill that will create more than 100 jobs in the Bangor region and revitalize one of our state’s most historic manufacturing sites. We will continue working with industry and community leaders to help our state’s forest economy thrive for generations to come.”

OTM Holdings LLC. originally purchased the Old Town Mill properties with intentions of keeping the site viable in the forest products industry. The president of its parent company, CVG Inc., said the sale to ND Paper will advance that goal.

“We see this investment as further proof that the pulp and paper industry is positively adjusting to market changes and is very much alive and well in Maine”, CVG President Jean Carrier said in a statement. “One way or another, it has been our goal to protect the Old Town Mill site and see that it thrives into the future. There are many very talented and hardworking people in the forest products industry who will help make this a tremendous long term success and we are excited to see ND Paper growing at this site”.

David Mahan, president of Old Town’s City Council, agreed.

“We promised the people of Old Town that something great would be coming at the mill site,” he said in a statement. “Over the last few years we’ve worked closely with Bill Firestone from MFGR, and over the last several months with Jean Carrier of CVG Inc. towards my goal of bringing jobs back to Old Town. Thank you all, but a special thanks to ND Paper for investing in our city. Welcome to Old Town!!”

ND Paper expects to complete this transaction in the next 30 days, subject to customary closing conditions and approvals.

Long-term forest economy strategies

Collins and King have been strong supporters of Maine’s forest economy.

In 2016, they called on the U.S. Department of Commerce to establish the Economic Development Assessment Team, commonly referred to as EDAT, which would work across agencies and sectors to create strategies for job growth and economic development in Maine’s rural communities.

The creation of the team and subsequent federal funding from the federal Economic Development Administration and U.S. Forest Service established the 2018 FOR/Maine Initiative, an industry-led effort that last month released the following recommendations to grow Maine’s forest economy:

• Invest, innovate, grow — Sustain and grow Maine’s existing and emerging forest products economy.
• Manage sustainably — Manage the wood resource using sustainable and responsible forest management practices.
• Develop workforce — Prepare workforce for the future of the forest products economy.
• Support communities — Increase prosperity in Maine forest economy communities, especially those in rural areas and those affected by mill closures.
• Coordinate and persist — Organize the forest products industry with committed public sector partners, including the University of Maine, to implement the vision and goals.