The Stench Of A Rat.


The deal hasn’t even closed yet and already I’m starting to smell the stench of rat which in this case is a bad thing. Especially for the NH taxpayers.

In a recent edition of the Union Leader there was a short press release about the bankrupt Gorham Paper Mill and its proposed, subject to approval acquisition by Manchester based Merchant Banc and its CEO Jeffrey Pollock. The press release outlined briefly what happens next: The mill undergoes a name change, the natural gas pipeline to the mill will hopefully move forward and the mill will be entering new market segments for its paper.

This is pure speculation on my part-- but my read is this: Merchant Banc and its CEO Scott Pollock has no realistic idea or experience of what they are getting into. How dangerous these waters are; and, I’m speculating again-- if his strategy is what I think it is how much damage this whole sales pitch and idea could cost in terms of capital, NH taxpayers money and ultimately real people and real families. So what I’m saying is that I think Merchant Banc and Mr. Pollock have bit off more than they can chew.

So it starts with the name change, and of course it has to build image and brand identity, like North Woods Paper.  This is certainly a catchy title and commensurate with some of the economic development activities in cash strapped Coos County.  But it’s going to take more than a sales pitch and buzz to make this mill successful, especially with some of the other players in this field whose turf CEO Pollock proposes to impact.

The Natural Gas idea is certainly a novel one especially since it’s already been tried and the grant money ended up in Wisconsin thanks to the grant writer Northern Community Investment Corporation based in St. Johnsbury, Vermont.  If Mr. Pollock can get this taxpayer money returned and a new line put into to the Gorham mill then this is leadership. NH taxpayers deserve to have this money returned and used for its intended purpose. But a brand new shiny natural gas pipeline can’t change the realities of the paper market, a market that is likely going to tear this whole north woods idea to sheds in a matter of months. The press release stated that North Woods Paper will be entering the pulp market(s), i.e. paper towels and tissues. So in other words North Woods Paper goes up against the heavy hitters and the well established paper companies in an already tough-adversarial market, names like International Paper, Scott Paper, Kimberley-Clark, Wausau Papers and the list continues on.

So what does this have to do with the NH taxpayers?

Enter the Governor and Executive Council.  

If you notice Mr. Pollock hasn’t discussed money or exactly how he intends to finance his visions for this historic mill. I’m confident that it won’t be long before an application is submitted to the Business Finance Authority (BFA); for a state loan guarantee to not only fund the acquisition of this mill and also the visionary ideas for the future, visionary capital ideas that will cost millions of dollars. Last winter I predicted there would be no purchaser for the Gorham Frasier Mill. I still think I’m right in this prediction. Merchant Banc isn’t a paper company it’s an investment firm. And investment firm that is making an end run attempt to be successful against some powerful geopolitical players that have centuries of experience under their belts. I’m confident that when pressed CEO Pollock believes there is some kind of niche market that his new paper mill can survive in, meanwhile the NH taxpayers will be asked to make a massive financial investment in this mill in Coos County.

What niche market?

I’m not trying to be overly negative. If NH based Merchant Banc hadn’t come forward the 240 papermakers would probably have been out of a job adding more percentage points to an already bealeagued Coos County which is not a good thing. My last question is exactly how much of its own capital Merchant Banc has put into this whole idea?

My guess is that it isn’t very much. Bankrupt Frasier Papers was looking to evacuate from New Hampshire, think pennies on a dollar so that the new owner could have financed this whole acquisition through the mill assets and its cashflow as collateral supported by the idea that taxpayer financed grant applications are going to advance the sales ideas and visions into the future.

And all at NH taxpayer expense.The rat is also smiling. He knows what he is doing and that he can't be stopped.

Too bad NH taxpayers.