An accusation that Jefferson Healthcare commission candidate Bruce McComas had a hand in the bankruptcy of the Port Townsend Paper Corp. in 2007 is unfounded, say two former mill employees: the former comptroller of the mill, Loren Monroe, and former CEO and president of the company, John Begley.

Both Monroe and Begley are supporting McComas’ bid for a seat on the hospital board.

The issue of McComas’ involvement in the bankruptcy surfaced in a letter to the editor by a supporter of candidate Cheri Van Hoover. The letter was published in a daily newspaper in August and in similar letter in the Sept. 20 edition of The Leader.

Monroe worked for the mill for 37 years and was the head of the accounting and finance department when it was going through bankruptcy. He said he was “the point person” during the bankruptcy and so knew what was going on.

Monroe said that the bankruptcy happened after the mill owners decided to finance the purchase of four box plants in Canada. To do that, they sold bonds.

“Bruce had nothing to do with that decision,” Monroe said of McComas, who was manager of the Port Townsend mill at the time of the bankruptcy in 2007. “The mill division was profitable. We had our best safety records going into bankruptcy, the best margin returns going into bankruptcy.”

“If you don’t see this on paper, it’s hard to split the mill from the corporation,” Monroe acknowledged.

While the mill was doing well, Monroe said, the corporation was in trouble and wasn’t profitable because of selling bonds to buy the four mills.

“Preferred stock interest was eating us alive,” Monroe said. “And these were decisions that Bruce did not make.”

After the bankruptcy, Monroe said, the company that bought the mill and financed it wanted new upper management, which is why both Begley and McComas were terminated. (The letter writer implied that McComas’ departure was related to the bankruptcy or poor management performance.)

Monroe said he was “down on the ladder and not high enough to warrant being let go.” Monroe continued to work at the mill until 2014.

CEO’S TAKE ON BANKRUPTCY

Begley was dismissed from his position in 2008, shortly before McComas was let go. Begley had a slightly different take on what caused the bankruptcy.

“Buying the Canadian mills was a great move. What happened was how we financed it,” he said.

“When we bought them, the Canadian dollar was at 65 cents on the U.S. dollar and then when we went into bankruptcy six years later, it was almost on par,” he was. “It was a foreign exchange issue.”

Begley said the expectation was that the bonds used to buy the four mills would be retired earlier, but that didn’t happen.

“It had nothing to do with the operation. The mill was actually setting records and running OK,” Begley said. “[McComas] had nothing to do with the bankruptcy, absolutely nothing.”

NEW MILL VENTURE

Begley and Monroe are involved in a new $185 million mill in eastern Washington. And they have hired McComas as a consultant.

The $185 million Columbia Pulp project plans to use waste straw from wheat fields to create paper pulp, similar to that made in Port Townsend. The mill would produce 140,000 tons of pulp per year at a mill on a 449-acre site near the Lyons Ferry Bridge in Columbia County in what the company calls the “heart of wheat country.”

A number of other former employees of the Port Townsend Paper Corp. also are involved, including Eveleen Muehlethaler, Begley said.

McComas is serving as a consultant on the project, Begley said.

The new mill would make unbleached market pulp, similar to the kind of paper produced at the mill in Port Townsend, Begley said, and it would use roughly 10 percent of the amount of water the PT mill uses, he added.