Flambeau River Papers

Flambeau River Papers in Park Falls, Wisconsin.

A Price County judge could determine next week if the Park Falls paper mill reopens in early July.

Rebecca DeMarb, the court-appointed trustee of Flambeau River Papers after it entered receivership May 7, filed an emergency motion Monday for an order on continuing a relationship with CellMark Paper Inc., the company that accounts for 80% of the mill’s revenue. The motion seeks court approval of a settlement agreement reached between the two companies that would be the first step in reopening the mill, according to court documents.

CellMark abruptly suspended payment June 5, causing the mill to idle its machines and lay off most workers two days later. The weekly Wednesday payments made by CellMark normally allows FRP to make its payroll commitments each Friday, accounting for approximately $1 million each week.

The settlement agreement put forth by the two companies establishes a purchasing relationship that would allow FRP the cash flow it needs to reopen. The agreement directs CellMark to purchase an estimated 4,500 tons of paper over a 60 day period, starting from the mill reopen date. After that initial window, CellMark agrees to solicit orders for the resale of paper and pulp and to submit purchase orders for FRP, though no minimum amount is required.

Among several other measures, the agreement also establishes that CellMark will aid in the marketing and sales efforts of FRP, including CellMark providing customer contact information for customers it has sold the mill’s paper products to over the last two years. If approved, the mill would only be allowed to contact those customers through CellMark. CellMark also agrees to aid in FRP’s efforts to sell the mill.

FRP would also make monthly installments beginning in July to repay a $750,000 loan CellMark granted the mill last October.

In turn, FRP agrees to release CellMark from over $2.2 million in invoices due to the mill, according to the agreement.

The hearing is scheduled for 2:30 p.m. Monday, July 1 at the Price County Courthouse.

The second critical piece to reopening the mill, according to DeMarb, is the approval of a pending financing agreement, which would allow the mill to borrow $2 million to restart the plant.

If both motions are approved by the court, FRP will be able to pay employees who have been permanently laid off as if they had worked through July 7, fulfilling the 60 day notice required by the WARN Act and Wisconsin’s Plant Closing Law.

The financing motion had not yet been filed as of Thursday morning. DeMarb warned Monday that if the financing agreement did not come together in the next few days and receive a hearing July 1, that FRP would have to withdraw the first motion with the terms between FRP and CellMark.

Should both motions be heard at the same time next week and receive court approval, DeMarb said the mill could reopen as soon as July 8.

Under the agreement, CellMark agrees to purchase paper from one of the two idle paper machines at the mill. “In doing so, FRP will be able to keep the existing remaining 26 employees and bring back an additional 89 employees,” states DeMarb’s motion. “For the remaining 68 employees laid off on June 7, the June 7 layoff will be permanent.”

DeMarb goes on to explain that as of June 24, all mill employees have been paid in full for time worked.

In response to a Price County Review request for an update on the sale process of the mill, DeMarb said in an email Monday that the mill is being marketed for sale, but “we are not ready to move for approval of that sale process.”

Managing Editor, Price County Review

(Copyright © 2019 APG Media)

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