FRANKLIN, Va. — Terry McAuliffe wasted little time pursuing new business opportunities after his defeat in Virginia’s gubernatorial primary four years ago. Having campaigned as an entrepreneur with business savvy, McAuliffe again turned his eye to ventures that would build the alternative energy industry and create jobs.
So when International Paper moved to shut its paper mill here, McAuliffe announced plans to transform the property and build a wood-fired power plant and restore hundreds of lost jobs.
State and county economic development officials said his company is still in talks about a possible venture, but to date, nothing has been finalized by Franklin Pellets or any other entity of McAuliffe’s at the site.
In February 2010, before the mill’s gates swung shut, McAuliffe met with Gov. Robert F. McDonnell (R) about his idea, according to published reports. And in April 2011, he created Franklin Pellets and announced a “letter of intent” to study the feasibility of manufacturing wooden pellets there as a source of renewable energy.
Last fall, another McAuliffe company teamed with a Houston investment firm to sign a 20-year lease with the Virginia Port Authority for a 15-acre storage depot at the Portsmouth Marine Terminal to ship wood pellets to Europe. Authority officials hailed the deal as a significant investment. But it’s unclear when that business will be operational.
“They haven’t done anything with the space yet,” authority spokesman Joe Harris said.
McAuliffe, the former Democratic National Committee chairman who is running for governor, has said he has the business know-how Virginia needs in its chief executive. He has said his opponent, Attorney General Ken Cuccinelli II (R), is an ideologue consumed more by divisive social issues than economics.
Cuccinelli’s campaign has countered that McAuliffe’s business experience is overstated. It has pointed to McAuliffe’s founding of GreenTech Automotive, a green car company that he said would produce thousands of U.S.-made vehicles and thousands of jobs in the United States. McAuliffe quietly resigned as company chairman last year and has since distanced himself from the struggling firm amid questions about its production claims, financing and governance.
The Cuccinelli campaign is now raising similar questions about McAuliffe’s plans in Franklin.
McAuliffe’s team said this week that his partners remain engaged in “extensive business discussions” to fulfill his vision of creating a Franklin-area company that will manufacture wood pellets and ship those and other manufacturers’ pellets to Europe as a source of renewable energy.
“Many business deals have been negotiated for a long time,” McAuliffe said in an interview Wednesday. He also suggested a deal could be reached in “a couple weeks.”
He also said that he and his business partners have been constrained about what they can say because those negotiations are confidential. He also disputed earlier published reports about his plans for the plant.
“I was not trying to buy International Paper,” McAuliffe said, adding that he had only been pursuing a possible lease of the property.
“You don’t actually buy. You do the lease deals on them or whatever, because of the environmental issues on that.”
McAuliffe also suggested that buying the plant wasn’t possible after International Paper decided to hold on to it.
“We wanted to do a biomass facility,” McAuliffe said. “But as you know, obviously, International Paper decided they weren’t going to sell the asset. . . . So we couldn’t buy what was no longer for sale. That had nothing to do with us. So then, obviously, we moved to wood pellets.”
McAuliffe’s Republican opponents say his plans for International Paper’s mill fit a pattern of announcing big ventures with few lasting businesses or jobs.
In October 2009, when International Paper said it would close its paper mill outside this small city in Southside, members of the community mourned the loss of an industry that had employed generations of workers since the late 1880s.
By June 2010, the plant was shuttered, with a loss of about 1,100 jobs. The closure also blew a $6 million hole in the Isle of Wight County budget, said Lisa T. Perry, director of the county’s Department of Economic Development.
“It was a devastating blow to the economy,” Perry said.
Four months after International Paper’s announcement, McAuliffe and Peter M. O’Keefe — a friend and business partner whom McAuliffe once kiddingly referred to as his “Irish consigliere” — first told reporters of a plan to transform the mill into a wood-fired power plant. Europe has promoted the use of such alternative energy, using wood pellets milled from sawdust, logging debris and other waste.
O’Keefe, 44, who lives in the District, worked at the Democratic National Committee and served on President Bill Clinton’s White House staff. McAuliffe, in his autobiography, calls him “one of the best fundraisers I ever trained.”
By April 2011, McAuliffe had taken another step toward transforming the mill into a renewable energy plant with the formation of Franklin Pellets, a Delaware-based partnership between Houston-based Multifuels and Capital Management International. Capital Management International, or CMI, is a McLean-based entity in which McAuliffe and O’Keefe are partners.
“It is essential to create new jobs in the local community and at the port,” McAuliffe told The Washington Post then. “This investment and these jobs are part of a clean energy future.”
But Perry said last month that no such deal has been finalized, though talks among Franklin Pellets, International Paper and economic development officials are continuing.
“We’re hoping to announce that project this year,” Perry said.
She said confidentiality rules about potential projects prevented her from discussing the matter further.
The Virginia Economic Development Partnership also cited confidentiality rules about proprietary information and potential projects in releasing few details about McAuliffe’s venture.
Sandra Jones McNinch, the partnership’s general counsel, said Tuesday in a letter that the agency was working on an “ongoing economic development project with Franklin Pellets and its affiliates.” Her letter also said that because “no final location decision has been made by the company,” the agency couldn’t confirm or deny that the company was seeking a business location in or around Franklin.
In the meantime, International Paper reopened part of the plant last year, creating more than 210 jobs. With the help of state incentives, the Memphis-based corporation invested $83 million to make “fluff,” which is used in diapers and other moisture-absorbing products.
In May 2011, Tak Investments, the Gaithersburg-based parent of ST Tissue, announced a $60 million investment at the plant, creating about 85 jobs. The company became operational last fall.
In October 2012, McAuliffe’s Ecofuels, which is another joint venture between Multifuels and CMI, leased about 15 acres at Portsmouth Marine Terminal. The firm’s plans call for building two storage domes and equipment to transport at least 1.2 million tons of wood pellets bound for Europe.
“Ecofuels will be making a significant capital investment,” Rodney Oliver, interim director of the Virginia Port Authority, said in a news release at the time. At the moment, the site is empty buildings.
The office of Randall Gibbs, who is the principal shareholder of Multifuels, referred questions to O’Keefe. In an e-mail Tuesday, O’Keefe said Ecofuels has signed confidentiality agreements with “numerous counter parties, including those related to our financing, the sale of our pellets, and potential manufacturing locations.”
“When this phase of our process is complete, we will have further announcements to make,” he said.
Laura Vozzella contributed to this report from Franklin.