The remains of an Energy Department-backed biorefinery plant in Maine formerly owned by embattled private-equity chief Lynn Tilton will go on the auction block later this month.
The plant, a pilot project to turn wood byproducts into ethanol fuel, was still in the exploratory phase when the paper plant that launched it, the Old Town Fuel & Fiber Mill, was pushed into involuntary bankruptcy last fall by a group of creditors.
Now, assets tied to the biorefinery facility are up for sale, according to notices posted by New Mill Capital and Joseph Finn Co., which are running the auction. Interested parties can bid on the assets online from April 14 to April 16.
In December, Ms. Tilton’s Patriarch Partners sold the rest of the then-shut Old Town mill for $10.5 million to Expera Specialty Solutions LLC, a Wisconsin-based paper manufacturer owned by investment fund KPS Capital Partners LP. Expera restarted the mill, located in Old Town, Maine, and brought back 180 employees in early January, an Expera spokeswoman said Monday. Now, the mill supplies hardwood and softwood pulp to four paper mills Expera runs in Wisconsin.
The biorefinery operations, meanwhile, weren’t included in the Expera sale. A bankruptcy judge noted at the time of the December sale, however, that if the biorefinery equipment hadn’t been dealt with within 120 days, its ownership would switch to Expera.
Supported by a $30 million grant from the Energy Department, the ethanol-fuel production site was touted as a potential savior to Maine’s paper and pulp production industry.
An Energy Department spokeswoman said Monday that no equipment or property funded by the department is being included in the sale and that the department is “working with interested parties to ensure the best value for the American people and that the valuable information gained from this project can be utilized” to further the country’s energy strategy. She added that the initial $30 million commitment dropped to $25 million and that the Old Town mill’s owners spent less than 25% of those funds.
Up for auction, according to the sale listing, is a series of heavy-duty pieces of machinery, including a biomass feed system, 15 tanks, an air compressor and a decanter centrifuge.
The court-appointed trustee tasked with paying the Old Town mill’s bankruptcy creditors didn’t return a call for comment Monday, nor did representatives for the two companies running the sale.
Meanwhile, the mill’s former owners, Ms. Tilton and Patriarch Partners, are facing allegations from federal authorities that they defrauded investors by hiding the true value of loans in some funds managed by the private-equity firm.
The Securities and Exchange Commission last week said Ms. Tilton and Patriarch, which invests in troubled companies, “breached their fiduciary duties” by valuing the loans using a different methodology than described in the funds’ offering documents. In doing so, Ms. Tilton misled investors about the quality of complex investment products managed by Patriarch and collected almost $200 million in fees she wouldn’t otherwise be entitled to, the agency said.
Ms. Tilton is fighting the allegations and last week said, “My reputation is very important to me and my companies. When my integrity or my intent are questioned, I fight back and let truth prevail.”