AUGUSTA, Maine (NEWS CENTER) -- A major setback came Thursday for the company looking to develop a bio-fuel pellet plant in the Katahdin Region.
The board of directors at the Finance Authority of Maine or FAME voted to decrease the bond amount for Cate Street's Thermogen project in Millinocket from $25 million dollars to $16 million. Officials with Cate Street Capital, which is looking to build the pellet plant on the site of the old Millinocket paper mill, presented their case that the project is now more viable due to changes in technology. Cate Street also argued switching Thermogen's produce from torrefied wood to bio-coal will enable the plant to increase its output at a faster rate.
Yet members of FAME's board expressed concerns about the amount of collateral for the project, some of which includes the Millinocket property which has more than $2 million dollars in tax liens on it. In all board leaders say they weren't completely sold on Cate Street's ability to provide security for the financing and that's why they had to vote 8-5 in favor of the lesser amount.
"We want jobs back in the Millinocket area...there's absolutely no doubt about that," said Patrick Murphy, who is vice chairman of the board, "but we also have a fiduciary responsibility to the citizens of the state."
Thursday's developments were disappointing for many people in the Katahdin Region. Several leaders traveled all the way to Augusta to attend FAME's meeting only to not leave happy with the outcome.
"This impacts the whole region. People don't understand how important this is," said Stu Kallgren, who is a union manager for workers at the East Millinocket paper mill, which is also managed by Cate Street, "Those towns will be completely devastated...completely gone.'
FAME's decision also has bearing on the East Millinocket mill. More than 200 jobs at that site have been in flux since the mill entered a production shutdown earlier this year. Cate Street directors said on Thursday that they were counting on revenue from Thermogen to make the mill more cost efficient in the future.
Cate Street cannot close on any loan from FAME until it settles portions of Great Northern Paper's tax debt.
Officials with the company say they intend to review Thermogen in the coming days and at this point the fate of that project is uncertain.