$85 million in bond financing to help fund start-up at former Madison paper mill in Somerset County
At yesterday’s monthly meeting, the board of directors of the Finance Authority of Maine (FAME) approved up to $85 million in conduit bond financing for GO Lab, Inc. The funds will be used to finance a portion of the construction costs to renovate the former Madison paper mill, purchase equipment, and other eligible costs of the business. The company plans to recycle wood fiber biomass to produce wood fiber-based building insulation products. The project is expected to create approximately 114 well-paying jobs in Somerset County.
FAME’s Revenue Obligations Securities Program provides tax-exempt bond financing to eligible borrowers without any recourse or obligation on the part of the state. The bonds carry no liability or credit enhancement on the part of FAME or the state. FAME acts as a conduit for borrowers in order to allow them to access favorable interest rates and to help stimulate the economy and create and retain Maine jobs. Because this project will involve both manufacturing and solid waste activities, the bonds will be eligible for tax-exempt treatment under federal tax law.
FAME’s utilization of tax-exempt private activity bonds has helped to create and retain thousands of Maine jobs over the past five years alone. Such bonding, commonly referred to as “conduit bonds” due to their relatively risk-free, pass-through nature, are authorized by the Internal Revenue Code in order to stimulate economic development in certain targeted industries. The projects financed in recent years range from not-for-profit health and higher education projects to solid waste improvements, public infrastructure, and manufacturing.
“We are pleased to provide additional support for GO Lab’s project in Madison,” stated David Daigler, chair of the FAME Board. “Finding new uses for wood fiber, including innovative building materials, has the potential of re-vitalizing the forest products industry in Maine and is a key recommendation of the state’s Ten-Year Economic Development Strategy.”
In addition to today’s bond financing, FAME has approved approximately $860,000 in Seed Capital Tax Credit financing for the company, as well as a FAME Direct Loan totaling $1,200,000, with FAME as lead lender at $500,000. Other partners in the loan include Coastal Enterprises Inc. (CEI) at $250,000, and Maine Technology Institute (MTI) at $200,000. Eastern Maine Development Corporation (EMDC) also has approved a $250,000 loan to round out the early-stage financing.
Other key Maine financing entities have partnered to provide critical financing needed to complete the purchase and begin the refurbishment of the now-vacant Madison mill, as well as to purchase the necessary production equipment and transport it to the United States from Germany. The Maine Rural Development Authority (MRDA) has approved $500,000 for the project, while the Town of Madison has authorized a $400,000 loan, which includes a Community Development Block Grant Program (CDBG) contribution through the DECD of $300,000, which will be used for engineering costs. Additionally, the Somerset Economic Development Corp. (SEDC) has authorized a $300,000 loan for the project.
“We are grateful for the continued support of FAME. GO Lab, Inc. plans to revitalize the Madison mill and provide approximately 114 well-paying jobs, which will help stimulate the local economy, the forest practices industry, and the state of Maine as a whole,” stated Dr. Joshua Henry, Go Lab, Inc. President.
Also at today’s board meeting, the board approved another three-month extension of FAME’s special COVID relief programs through June 30, 2021. In March of 2019, FAME announced that it would be partnering with local Maine lenders to offer special, limited-time loans and loan insurance for eligible Maine businesses affected by COVID-19. Since then, FAME has maintained close communication with its lending partners and business customers and received feedback regarding its product offerings, including suggestions on how to improve and expand them.
FAME and participating lenders have made special terms available to Maine-based businesses that have experienced interruption or hardship due to COVID-19. Benefits include: loans up to $50,000 offered at reduced interest rates; interest-only payments; up to 75% pro-rata loan insurance on loans up to $250,000; and refinancing of existing lender debt.
The FAME COVID-19 business response programs are outlined in greater detail at FAME’s website, www.FAMEmaine.com
“During this key period of transition as the Maine economy enters its recovery phase, FAME is pleased to extend our COVID-relief programs to enable us and our lending partners to meet the needs of Maine businesses as they prepare for the summer tourist season,” stated Carlos Mello, Acting CEO of FAME.