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Restructuring firm receiving solid offers for Calexico Tissue plant

March 27, 2002|By AARON CLAVERIE

Staff Writer

CALEXICO — The good news that former employees of Calexico Tissue Co. have been waiting for since September could be coming soon.

Calexico Tissue's Portico Boulevard plant could be purchased by a big paper company in the next few weeks and most of the employees who had been laid off may be rehired, according to Dale Marcus, a partner at Chicago-based Brent I. Kugman and Associates.

Kugman's firm of restructuring specialists is in charge of handling the reorganization of American Tissue Inc., Calexico Tissue's Hauppauge N.Y.-based parent company, which filed for Chapter 11 bankruptcy protection in September.


While Marcus said nothing is yet written in stone, Kugman and Associates has received a number of firm offers for American Tissue's assets, including the Calexico Tissue plant.

Asked if the Calexico plant would be re-opened to full production once it is sold, Marcus said, "In all probability, yes."

After American Tissue filed for bankruptcy, a number of its paper mills and paper-processing plants, such as the Calexico facility, were shuttered.

According to a recent story in N.Y.-based Newsday, Calexico's laid-off employees are among 4,700 people in 15 states who lost jobs in American Tissue's "sudden and calamitous collapse," the article states.

Newsday staffer James T. Madore reports, "In court, American Tissue owners, (Iranian immigrants Mehdi Gabayzadeh and Nourollah Elghanayan) stand accused of using shell companies to drain money from the paper making-operation, filing for bankruptcy to avoid paying nearly a half-billion dollars in debt and then immediately opening a new company to salvage some of their business. Federal agencies are investigating."

In the months following American Tissue's bankruptcy filing, Gabayzadeh and Elghanayan started a company called American Paper. It also is based in Hauppauge; in an office complex two miles east of American Tissue's offices, according to Newsday.

Almost immediately, American Paper hired former American Tissue employees, purchased mills in Tennessee and Vermont and eight other states that once were part of American Tissue and started producing paper at a former Memphis plant that had been owned by American Tissue, according to various published reports.

There had been a rumor locally that American Paper was going to buy the Calexico plant as well.

Marcus shot that rumor down. He said American Paper is not one of the companies the plant might be sold to.

He called American Paper, "rivals."

According to Calexico officials, more than $300,000 of the half-billion dollars that American Tissue owes should be paid to the city's Redevelopment Agency.

Since the liquidation of American Tissue's assets has not been finalized, there is no timetable on when the city might be paid that money.

In August 2000, American Tissue representatives came before the City Council and asked for financial assistance to expand Calexico Tissue's Portico Boulevard plant.

At the time, community members publically questioned why a "successful" company was asking for assistance.

Despite those reservations, the RDA board approved giving American Tissue a $360,000 loan.

When the board did so, Calexico Tissue had a good reputation in the community. It had already paid back around $900,000 it had been loaned in 1998 when American Tissue first built the local plant.

According to former employees across the country and the banks that are owed millions, it has been reported, that good reputation was all show and no go.

Under Gabayzadeh and Elghanayan, American Tissue borrowed money from communities all over the country to finance rapid expansion.

In Memphis, American Tissue "enjoyed a city and county tax abatement program for its Memphis mills," according to a story on

Recently, City Councilman-elect David Ouzan came before the City Council and asked for there to be more care taken when money is given to private companies.

After American Tissue's filing, some New Hampshire or upstate New York paper mills were sold to rival paper companies to pay back American Tissue's lenders. Some of American Tissue's many processing plants were opened up again but on a smaller scale.

That's what happened here.

For the past few months, the Calexico plant has been processing a limited amount of bulk paper; turning it into paper towels or napkins. A select number of former employees have been rehired to do the work but all of the plant's former employees have not been hired back and some have had to get jobs working in the fields, according to sources familiar to the plant's operations.

Calexico Tissue's plant manager, Javid Nassir, could not be reached for comment on the plant's future.

A spokesperson in American Tissue's Long Island headquarters referred all questions to Kugman and Associates.

Gabayzadeh and Elghanayan also did not respond to Newsday's interview requests.

>> Staff Writer Aaron Claverie can be reached at 337-3419 or

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