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City plans on hold during SMART wait-and-see
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By Lisa A. Bernard
Staff Writer
HAMILTON — Fearing a major hit to city coffers, Hamilton leaders are keeping a close watch over SMART Papers’ bankruptcy proceedings.
Today a U.S. Bankruptcy Court judge is being asked to determine whether the Hamilton-headquartered company can put itself up for auction. The company is under an Aug. 15 deadline to sell most of its assets in order to meet a $40 million loan agreement with Wachovia.
More than 350 employees are stationed at SMART’s B Street paper mill, paying about $400,000 into the city’s general fund annually in earnings tax. Uncertainty over the continuation of that income has led Hamilton’s administration to hold off on filling positions requested by some city departments.
“The city has scrutinized very closely... the filling of any position that is funded 100 percent by general fund monies,” said Deputy City Manager Mark Brandenburger. “Those would include positions in the Health Department, Parks Department and elsewhere in the city where there are no minimum manpower requirements existing in collective bargaining agreements.”
Officials in Hamilton, which operates its own waste water utility, noticed cash flow changes at the paper mill earlier this year, Brandenburger said.
“We were experiencing late payments from SMART in the first quarter of the year,” Brandenburger said. “During that first quarter we made the conscious decision, based upon our fears that there could be something wrong, to fill those positions pending what happens with SMART because it could be a big hit to the general fund if they don’t make it.”
Since filing for chapter 11 bankruptcy in March, SMART Papers has made good on its utility payments. However, the company still owes the city $266,033 plus $40,000 in late charges for overdue waste water bills from the first quarter Brandenburger said.
How much of that money, if any, Hamilton will see will be up to the courts.
SMART Papers is Hamilton’s largest waste water customer, operating under an agreement to pay the city at least $90,000 a month for its services. That agreement stems from one the company assumed when it purchased the Hamilton operations from International Paper, formerly Champion Papers. Also tied to the agreement is another stipulation that dates back to Champion’s reign: If SMART goes under, Champion is to pay the city’s waste water utility $5.46 million to cover improvements Hamilton once made to its Waste Water Treatment Center “for the benefit of that waste stream coming from what once was Champion,” Brandenburger said.
On Thursday SMART officials said they believe the company is in a strong position to meet the looming deadlines.
“Management’s goals at SMART is that we get a sale done with a strategic investment banking group who will help us get our business back on track,” said SMART President Tim Needham. “The (potential buyers) we have met with are extremely interested in working with the company.”
Contact this reporter at (513) 820-2186 or lbernard@coxohio.com.
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