A California-based venture capital company outbid the Kalispel Tribe during an auction last week to apparently purchase the Ponderay Newsprint Mill in Usk for $18.1 million.
Initial plans call for retooling the idle mill to manufacture cardboard used for shipping, and mining for cryptocurrency, according to court documents.
Bankruptcy trustee John Munding has scheduled a hearing before U.S. Bankruptcy Judge Frederick Corbit for 11 a.m. Thursday to discuss bids, but he filed court records Wednesday indicating the auction winner was Allrise Capital Inc. Corbit must approve the winning bid.
“They are planning to repurpose select portions of the mill for old, corrugated-cardboard-paper production,” said Chris Bell, managing broker for NAI Black, which helped market the mill. California-based Allrise Capital plans on “retooling the plant, making a significant investment to re-fire it and bring back the jobs.”
Todd Behrend, the interim manager who was hired to manage a team to keep the plant operational as its bankruptcy fate was decided, said the plans to reopen the plant presented the best-case scenario after it shut down and laid off about 150 employees in June.
“This is what everybody in the community, including myself, was hoping to see,” Behrend said, “which is to see it productive again and paying taxes again.”
The paper mill, which had been one of Pend Oreilles largest employers, previously was owned jointly by Lake Superior Forest Products, a subsidiary of Quebec-based Resolute Forest Products, and five major U.S. publishers.
Up until the auction process last week, negotiations failed to find a new owner for the 927-acre property, which consists of 29 buildings and storage facilities and is adjacent to the Pend Oreille Valley Railroad and Pend Oreille River.
The land and buildings had a combined assessed value of more than $59 million, according a recent property tax statement from the Pend Oreille County Treasurer’s Office.
The Kalispel Tribe of Indians earlier had expressed interest in purchasing the mill and submitted a bid. But it was rejected in October.
Munding brought in Bell last year to market the site, which was listed for sale in December for $11.5 million. However, the first court-ordered bid that came into purchase the site was $7.5 million.
“We listed it for sale and pivoted marketing to go toward the auction process,” Bell said.
Marketing materials highlighting the mill were sent to tens of thousands of investors.
“We had a great response,” Bell said. “We had people from Europe and South America looking and bidding on it. Because of the multiple parties … it worked out to the benefit of the creditors and to the benefit of the successful bidder.”
Just as important as its potential for production of packaging products was the plant’s available power, Bell said. Part of Allrise Capital’s plans include using the available electricity at the mill to mine for Bitcoin.
“There’s a tremendous amount of power,” Bell said. “With any excess power, they are looking to convert it to ablockchain-infrastructure data center, or crypto mining.”
A call to Allrise Capital for comment was not immediately returned Wednesday afternoon.
Behrend, the interim plant manager, said some of the interested parties had looked at scrapping the plant but using the power for other purposes.
“A range of different opportunities were floated,” Behrend said. “The last conversation I had (with Allrise officials) was they were trying to find a good use for the power infrastructure. They wanted to restore the value to the community in terms of jobs.”
According to court records, the Kalispel Tribe pushed the bidding during the auction before placing its final bid at $17.5 million. Allrise Capital’s final bid came in at $18.1 million, for which Munding indicated in court records he would seek to get approval from Judge Corbit on Thursday.
Bell noted the $18.1 million figure will bring creditors much more money than the original asking listing price of $11.5 million.
“The jobs. That’s the most important thing,” Bell said. “John (Munding) was committed to finding a bidder to satisfy both the creditors and the community. So, I applaud him for that.”
Thomas Clouse can be reached at (509) 953-0561 or at email@example.com