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101510 smurfit stone

Smurfit-Stone Container Corp.'s Frenchtown mill site is shown in December 2009.

Frenchtown's shuttered paper mill will be sold for scrap, a Smurfit-Stone Container Corp. official confirmed on Friday.

"We have a signed purchase agreement," said Ron Megna, the company's assistant general counsel. "We're in the process of removing some of the equipment that's there to some of our other mills, relocating it. The remainder will all be sold to the buyer."

The buyer is MLR Investments LLC, an affiliate of Ralston Investments of Portland, Ore. Calls to the company's Portland office were not accepted by an overfilled answering machine.

In an e-mail, Megna said "the buyer intends to demo(lish) the mill and salvage what materials it can. This buyer may also sell parts of the paper machines and the power equipment which remain on site, but they do not intend to undertake any manufacturing operations on the site."

The e-mail also noted that MLR and Ralston Investments have a 10-year non-compete restriction prohibiting them from conducting any papermaking operations at the Frenchtown millsite - or from selling the property to anyone who might resume papermaking.

The sale to MLR is expected to close in late March or April, Megna said.

Ralston Investments has shown previous interest in abandoned mills, including the Abitibi-Consolidated newsprint mill in Steilacoom, Wash., which had been in bankruptcy and closed in 2000. A bankruptcy court approved the sale to Ralston, and the company tore down parts of the mill. Speculation then focused on the possible development of the 53-acre site as multi-family residential housing.

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On Dec. 14, 2009, Smurfit announced its plan to permanently close the Frenchtown linerboard plant. The last papermaking shift came less than a month later, and more than 400 workers had lost their jobs by February 2010.

Friday's confirmation that the mill site has been sold for scrap - not for continued industrial use - was met with dismay by Missoula officials.

"It's a big disappointment," said Dick King of the Missoula Area Economic Development Corp. "They are a salvage company. They're selling it for scrap steel."

King said there had been talks with at least 10 investors interested in using the plant for some kind of biofuel or alternative energy production.

"If they're going to buy it, maybe we can add value before they scrap it," King said. "We're willing to talk to anyone who ends up buying it. All the infrastructure is in place. The investment to gear that up for biofuel production is much less than starting in a green field."

Missoula County Commissioner Jean Curtiss wondered what will happen to the rest of the mill property. In addition to the industrial production structures, Smurfit-Stone Container owns 3,200 acres along the Clark Fork River that has been leased for grazing and farming. It also owns water rights that were used to feed settling ponds and other water needs.

"We also have concerns about possible dioxin (a hazardous chemical) in some ponds," Curtiss said. "We'll just have to figure out what the future use will be out there."

Neither officials of Smurfit nor Ralston Investments could be reached Friday to answer the commissioner's concerns.

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Megna did confirm that Smurfit-Stone is also selling its shuttered plant in Ontonagon, Mich., to American Iron and Metal LP. That deal also will involve demolishing and salvaging the plant's materials.

In an e-mail, Megna said:

"We now have fully executed sale agreements for the Ontonagon and Missoula mills. The Ontonagon mill buyer is American Iron & Metal LP, an affiliate of American Iron & Metal Co. Inc. This buyer intends to demo the mill and salvage what materials it can. They may sell parts of the paper machines which are still on site, but no manufacturing operations will be conducted on site.

"There is a five-year non-compete restriction on the buyer which prohibits the buyer from conducting papermaking operations on the site and from selling to any entity which intends to conduct papermaking operations at the site. This sale will close within the next 10 days."

The Missoula buyer, he wrote, "has a 10-year non-compete restriction similar to the one described above. This sale is tentatively scheduled to close March 31, but closing may be extended to allow us more time to remove the equipment which we are relocating to other mills."

Megna said the Missoula and Ontonagon sales will have no effect on the larger merger of Smurfit-Stone Container and competitor Rock-Tenn Co., a Georgia-based packaging manufacturer.

"That's still going through the process of SEC review and approval of the documents that are going to be filed for the acquisition," Megna said. A shareholder vote must also approve the deal.

Reporter Rob Chaney can be reached at 523-5382 or at rchaney@missoulian.com.

 

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