The city of Brainerd will act as a conduit for a $500,000 loan from the Minnesota Department of Trade and Economic Development to Missota Paper Co.
Missota Paper Co. was formed specifically to pursue purchase of the Potlatch paper mill in Brainerd. The $500,000 loan, if approved by the state, would be used toward the purchase.
The Brainerd City Council Monday passed a resolution in support of the loan pending review from Steve Bubul, an attorney with Kennedy and Graven, Minneapolis, the city's bond counsel, and Springsted Inc., the city's financial consultant.
The $500,000 loan from the state is through the Minnesota Investment Fund program. If approved by the state, the loan would be issued to the city of Brainerd, which in turn would loan the $500,000 to Missota at 2 percent interest over seven years. As the loan payments are made by Missota the city would retain the first $100,000 in principal plus interest paid to that point. After that all payments would go to the state.
Missota Paper Co. signed a memorandum of understanding Oct. 25 with Potlatch to pursue a definitive purchase agreement for the sale of the Brainerd mill. Terms of the sale agreement were not announced, but are expected to become public later.
Expectations are to employ 145 to 150 people initially with one of two paper machines operating. Once both paper machines are operating, the mill is expected to employ 260 to 270 salary and hourly workers.
The sale agreement between Potlatch and Missota is anticipated to be finalized by Jan. 31, with Missota Paper operating the mill beginning Feb. 1. Missota Paper Co. plans to produce uncoated freesheet paper at the mill, which can be used for office paper and fliers with the mill moving into a specialty niche. Target markets are paper used in books where product can be sold to printers and publishers. Missota Paper Co. also plans to go after greeting card market.
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