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April 7, 2014

Brookfield wants proof Cate Street is ‘a going concern’

The company supplying power to Cate Street Capital’s East Millinocket Great Northern paper mill said it needs evidence that Cate Street is financially stable before negotiating a revenue-sharing agreement for power from its three hydropower dams on the Penobscot River.

The Bangor Daily News reported Dan Whyte, vice president of Brookfield Asset Management, said the company wants proof that Cate Street is capable of continuing to operate before modifying a 10-year power purchase agreement signed in 2011. State law requires the dams to supply power to the mill and the 10-year deal allows Cate Street to buy power at below the market price. Beyond renegotiating a revenue-sharing agreement, Whyte told the newspaper Brookfield will seek to terminate the power-purchasing contract if Cate Street can’t prove it is a going concern.

Harold Pachios, Brookfield’s attorney, told the newspaper Cate Street owes Brookfield around $2 million in electricity payments since December. Cate Street owes around $3 million in overdue property taxes to the towns of Millinocket and East Millinocket and also faces a lawsuit alleging it failed to pay around $1 million to vendors in connection with a failed water-recycling business in Wyoming.

The mill owner wants to negotiate a contract that would allow it to back down or stop power consumption at the mill in order to resell that power at market prices, sharing the profit with Brookfield. Those negotiations are likely to become possible under state law, as lawmakers sent a bill to Gov. Paul LePage’s desk last week that would allow the parties to negotiate a revenue-sharing deal. The governor was the first to publicly propose the arrangement that mill officials said would help it bring back more than 200 workers who were laid off on Feb. 6.

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