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Florelle asks for a break on loans

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BROWNVILLE — Florelle Tissue Corp. President Harry Minas's goal in May was to hire 70 to 75 workers by the end of 2012. He said that would give him enough time to finish his $4.1 million project to renovate the 94,000-square-foot plant at 1 Bridge St. with machinery to produce paper products.

But today, the business has only 15 employees and one napkin machine operating. In November, the company stopped making interest and principal payments on taxpayer-backed loans because of low cash flow.

The 41-year-old Canadian businessman blames the setback on unforeseen delays in the shipment of machinery and equipment breakdowns at the factory. Now Mr. Minas is asking for more time to pay back the loans from the economic development agencies that lent him startup money.

On Tuesday, the Jefferson County Industrial Development Agency's loan review committee will vote on whether to grant Florelle a six-month forbearance on principal and interest payments, retroactive to November, on loans of $350,000 and $250,000. Similar forbearances with the same criteria already have been approved by the North Country Alliance and Adirondack Development Corp., which lent $125,000 and $200,000, respectively.

Florelle also received a $250,000 loan from the Development Authority of the North Country and a $250,000 grant from Empire State Development Corp.

Mr. Minas primarily blames the prolonged delay on the late arrival of machinery ordered from China, Italy and Wisconsin.

“Delay in the machine manufacturing was a big part; also, major breakdowns and problems we had at the end of the year that put up stumbling blocks,” Mr. Minas said. “We've had to lay off a few employees, but we're still trying to keep them here doing other jobs.”

A second napkin machine that was installed in June broke down in late October, Mr. Minas said, compelling the staff to be downsized from 19 workers to 15. Two additional napkin machines and a paper towel machine are expected to arrive in early February, and the broken napkin machine should be repaired by then. To operate that machinery, 15 employees will be hired by the end of March.

If all goes as planned, Mr. Minas said, four additional napkin lines should be installed by June. A paper machine that will convert virgin pulp into paper also should be installed by then, enabling the company to save money by producing its own paper; it now purchases paper from Clearwater Paper Corp. in Gouverneur.

After that work is accomplished, Mr. Minas said, 50 to 60 workers will be employed at the plant, which will operate 24 hours a day, seven days a week, with two 12-hour shifts daily.

Though Mr. Minas said loan agencies are concerned about the delay in production, he's convinced his business plan will move ahead now without any hiccups.

He said that the delay has been a frustrating experience, but that he is committed to making the project a success and creating jobs. He began making plans for the project here in November 2009.

“This has tried my patience, but I should have realized it would take long when it took two years just to get this project started,” Mr. Minas said. “We were persistent and tenacious, and we stuck to it for two years to get started. Now I've had five months of delays, but I plan to be here for another 50 years. We may be a little headstrong. But like mules, we keep pushing forward.”

Lyle V. Eaton, chief financial officer of the JCIDA, said board members from the agency are convinced the project will be successful in spite of the problems.

“He ran into cash-flow problems and stopped making payments in November,” Mr. Eaton said. “Without the machinery to produce the product to sell, it affects the cash flow and ability to pay off loans. But we're convinced it won't be a concern when they have the conversion equipment in there. The area in the warehouse is all wired, and now it's a matter of moving the machines in there and plugging them in,” he said.

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