Principles assure negotiations continue despite lack of progress

BY STEPHEN H. COWLES/CONTRIBUTING WRITER
Playback58@gmail.com

FRANKLIN—As far back as early 2010, a group of investors that includes Democratic gubernatorial candidate Terry McAuliffe, announced an interest in buying International Paper Co.’s mill in Franklin. At that time, the plant was already in the midst of closing. The investors wanted to convert it into a wood-fired and biomass power plant. A company called Franklin Pellets was eventually formed.

A little more than three years later, there has not been any tangible evidence that Franklin Pellets is any closer to a groundbreaking. Within those three years, ST Paper, a subsidiary of TAK Investments, established a presence at the mill and became operational in 2012. International Paper, after shutting down the mill in spring of 2010, has since repurposed part of the mill, and began producing fluff pulp there last year. Enviva, which also makes wood pellets, identified a location in Southampton County in fall of 2011 and broke ground on its new facility in July 2012. The company anticipates beginning operations by mid-September.

Despite the lack of any publicly visible progress, some of the principals that were contacted, starting with McAuliffe, have assured The Tidewater News that Franklin Pellets can still happen.

“We are in serious negotiations. They are active and very close, and we hope to hear something in the near future,” he told the newspaper Monday during a visit to Paul D. Camp Community College.

McAuliffe has been quoted in the past expressing his interest in getting Virginia to progress with green power as a way to either keep or create jobs.

However, he has been connected to at least one other green manufacturing project that has so far failed to live up to its billing. McAuliffe is also a major investor and the former chairman of GreenTech. That is a proposed auto manufacturer with plans to build environmentally friendly vehicles in Tunica, Miss. McAuliffe has received criticism for GreenTech’s lack of progress and for their decision to locate the plant in Mississippi rather than in Virginia.

Among the aforementioned parties invested in Franklin Pellets is CMI, an investment company based in Washington D.C., led by Peter O’Keefe. He’s a longtime associate of McAuliffe with deep roots in fundraising for the Democratic National Party where McAuliffe was once chairman. O’Keefe is one of his partners in the Franklin Pellets venture.

On Tuesday, prior to contacting CMI for comment, McAuliffe was listed as a partner on CMI’s website. As of Friday, reference to McAuliffe had been removed.

When contacted, after initially requesting to not be mentioned in this story, O’Keefe replied in an e-mail, “We are still actively engaged in our due-diligence process. Once we have completed this phase, we will have further announcements to make.” He also gave no reason for McAuliffe’s information being removed from the CMI website.

George Lyons, vice president of MultiFUELS, a Texas-based energy investment firm and the second partner in the Franklin Pellets project, told the newspaper he initially forwarded an e-mailed question to O’Keefe, “who does all the public relations and handles discussions with the media.”

Lyons added, though, “We’ve got some conditions and can’t speak openly to the market.”

Jenny Hutto, mill communications manager for IP’s Franklin Mill, when contacted, replied in an e-mail to the newspaper, “International Paper continues to explore and evaluate opportunities to bring other third party re-purposers on site. Due to confidentiality agreements, I cannot comment on specific companies at this time.”

Sandra McNinch, a spokesman for the Virginia Economic Development Partnership, explained her inability to speak on the record by saying only, “I cannot comment on any economic development projects, either real or imagined.”

Someone who did say a little more on the subject was Lisa Perry, executive director of Isle of Wight County’s Department of Economic Development.

“We are actively engaged with Franklin Pellets, and it’s been over two years working with them,” Perry told the newspaper. She quickly added the department had signed a non-disclosure agreement, and she “cannot say anything to anyone about it until a final contract is signed, which has not been done.”

Perry explained that a lengthy due diligence is occurring, but that’s typical in such matters.

A company interested in establishing itself would need to look at where to locate, what facilities or utilities might already be in place. If water’s needed, how much is required and how to get it on site.

“Everything that impacts the business has to be considered,” Perry said. “It’s strenuous.”

The same occurred with ST Paper and its set-up at IP, she added.

“IP is like a small city — it’s extremely complex. There are expense and liability concerns,” Perry said, and continued that IP wants to make sure it’s got a dependable tenant.

“A lot has happened, but there’s no straightforward timeline,” she said.

Asked why ST Paper and Enviva have made progress,” Perry noted that Enviva is “a completely different project.” Further, “There’s no comparison. They all started at different times, and don’t complete at the same time. No one size fits all.”

Associate Publisher Tony Clark and Managing Editor Lucy Wallace contributed to this story.