FAME approves $25 million loan to Thermogen Industries

Courtesy Thermogen Industries An artist rendering of Thermogen's future biocoal plant in Millinocket.

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By James McCarthy

In an 8-5 vote Thursday, the Finance Authority of Maine’s board of directors approved a $25 million loan to Thermogen Industries that will allow the energy company to proceed with plans to build a $70 million torrefied wood pellet plant in Millinocket.

Patrick Murphy, one of the five board members who voted against the loan, had put forward an alternative $16 million loan amount under FAME’s Major Business Expansion Program, but withdrew it to allow a straightforward up-or-down vote on the higher amount. He made it clear that he supported Thermogen’s overall goals of building up to five torrefaction facilities in Millinocket, but was concerned about lending $25 million to a startup company whose market assurances were as-yet untested. If the company failed, he said, Maine taxpayers would be liable for paying back the $25 million bond.

“There is nobody here that wants to shoot down this project,” he said at Thursday’s meeting in Augusta.

Board member Rosaire Pelletier, the forest products industry liaison for the Department of Economic and Community Development, advocated approval of the full $25 million loan. “We have a proposal to change the forest products industry here in Maine,” he said, describing Thermogen’s plans for Millinocket’s industrial park as a ray of hope in a region hard-hit in recent years by job losses due to paper mill closures or downsizing.

“We feel elated,” said John Hallé, president and CEO of the Portsmouth-based Cate Street Capital, which owns Thermogen. “This is the culmination of a lot of work. It’s good to know that we have true partners in the state of Maine who support our effort. The financials are basically all in place. We’re looking to close this deal.”

Besides the $25 million Major Business Expansion loan, FAME’s board in late August certified $40.4 million of investment capital for Thermogen under the New Markets Capital Investment Program. FAME’s loan analysis indicates the first torrefaction facility is expected to create 36 direct and 184 indirect jobs in the Millinocket region.

Hallé said FAME’s staff and board had “worked very very hard” to reach a higher confidence level in Thermogen’s business plan in the two weeks since tabling the company’s $25 million loan request at its Sept. 30 meeting. He said the company is confident it will find a ready market in Europe for the 100,000 tons of biocoal each torrefaction plant will produce yearly in Millinocket.

The foundation for the first torrefaction facility has been designed, he said, and construction could begin as early as this winter, weather permitting, or by next spring at the latest.