Great Northern Paper Bankruptcy an Issue in Maine’s Race for Governo...

The closure of Great Northern Paper Co.’s paper mill in Maine and subsequent bankruptcy of the company has become a campaign issue in the state’s race for governor, with a lagging gubernatorial hopeful trying to bring into the race the state money provided to the paper producer’s owner Cate Street Capital.

“Before the state of Maine goes the way of the Great Northern Paper Company, we need new management,” independent candidate Eliot Cutler said at a news conference last week.

The original Great Northern Paper Co., once a giant of New England’s pulp and paper industry, traces its roots to the beginning of the 20th century, when it began manufacturing newsprint. The company boomed in the mid-1900s but has changed hands several times recently, landing Cate Street Capital as its owner in 2011.

Cate Street purchased mills in Millinocket and East Millinocket, both shuttered at the time, for $1 and reopened the East Millinocket mill. Earlier this year, that mill was also closed and the company was placed in Chapter 7 bankruptcy last month.

“The story of Cate Street Capital, its investors, and Maine’s governor is a massive scandal—a story of corporate welfare and crony capitalism at its worst,” Mr. Cutler said. Cate Street benefitted from $50 million tax credits promoted by Maine Gov. Paul LePage, Mr. Cutler said in a news release, and received campaign contributions from the company, which specializes in investing in green technologies.

“The people of Maine have been victimized in a financial shell game because no one—especially the governor—was asking the hard questions. Now, we’re left with the question ‘where’s the money?’” he added.

In response, Gov. LePage’s campaign said in a statement to The Wall Street Journal that “Governor LePage and his administration have been working day and night to ensure the employees that are affected by the impending closure are connected with the Department of Labors [sic] rapid response unit to help find new employment opportunities, and ensure they are taken care of during this time of uncertainty.

“While the Department of Labor is working on the ground to ensure the necessary services are available for these displaced employees, Governor LePage and his economic team are searching for potential buyers or alternatives that can keep the mill open and the employees working.”

Cate Street didn’t respond to request for comment on this article.

Mr. Cutler, who was polling in third place with 13% of the vote as of Oct. 1, according to Real Clear Politics polling on WSJ, hit the issue heavily ahead of five upcoming governor debates. But during the first debate Tuesday night, he struck a lighter tone, according to the Bangor Daily News.

“And while Cutler did go after LePage for refusing the expand Medicaid and for his role in the botched takeover of Great Northern Paper by Cate Street Capital, the independent and Republican seemed almost friendly on stage; the two high-fived and even shared a hug,” the newspaper reported.

Gov. LePage, a Republican, is in a near-tie with democratic challenger Rep. Michael Michaud, according to the same polling numbers. Rep. Michaud worked for Great Northern Paper at the closed mill for more than 29 years but has focused his campaign against the governor on social spending issues. Still, Rep. Michaud has taken up the mill closure issue as well in press releases, promoting his economic plan in response.

The next debate is scheduled for Thursday.

Write to Stephanie Gleason at [email protected]. Follow her on Twitter @stephgleason.