LANSING – The Michigan Strategic Fund (MSF) today approved a loan of up to $5 million for Manistique Papers, Inc. (MPI), through the Michigan Business Growth Fund – Loan Participation Program (MBGF-LLP).
“Less than two months after its shutdown and bankruptcy, Manistique Papers will soon be fully operational with more than 130 people back on the job, thanks to the company’s management, their bankers at mBank, the MEDC, the U.S. Department of Agriculture, U.P. legislators, especially Sen. Tom Casperson, and local partners, who all worked together to make this possible,” said Gov. Rick Snyder. “This is what we mean by economic gardening, leveraging state resources to foster private sector solutions for businesses of all sizes and industry sectors.”
The company announced the closing of its Manistique operations and filed for Chapter 11 bankruptcy on August 5 when its lender, RBS Citizens, declined to continue its relationship. As a result, the company faced a hearing to move it into a Chapter 7 liquidation with a total sell-off of company assets and an end to all hopes of renewed operations in Michigan’s Upper Peninsula.
Under a financing agreement reached in late August, Manistique-based mBank bought the company’s existing loans from RBS for $6.8 million and sold $2.5 million to the MEDC’s Michigan Business Growth Fund – Loan Participation Program. Under terms of MEDC’s participation, MPI would hire back 100 employees in addition to the 35 it then employed, over the next six months.
The settlement plan gave company management additional time to retool its business plan, reduce its operating cost structure and secure long term relationships with its many customers and suppliers.
Today’s loan will provide Manistique Papers with start-up financing needed to get the mill up and running again, including to purchase inventory and other raw materials, to fund employees being recalled to work and to initiate the sales cycle to generate new receivables.
MPI’s current job count of 45 will see an additional 90 employees to be added over the next six months. Prior to the shutdown, MPI employed 156 workers who earned average annual wages of about $60,000. It was the largest private employer in Schoolcraft County and one of the largest generators of economic activity in the U.P.
“The potential loss of jobs and its economic impact across the Upper Peninsula was enormous and this was all happening despite the fact that the company had never missed a loan payment and investors were willing to guarantee the company’s notes,” said Michael A. Finney, President and CEO of MEDC. “We are pleased that so many came together in short order to help get this company back up and running.”