SHUTDOWN OF N.J. NEWSPRINT MILL MAKES FEW WAVES Enron collapse takes out Garden State Paper, but current supply is well over demand.

The collapse of Enron Corp. took out one recycled newsprint mill, but the shutdown has had little evident impact on the newsprint market.

Garden State Paper Co. LLC of Garfield, N.J., filed for Chapter 11 bankruptcy on Dec. 17. In its filing with the U.S. Bankruptcy Court for the Southern District of New York, Garden State estimated its assets to between $50 million and $100 million and its debts to be between $10 million and $50 million.

The filing came after Enron Corp. of Houston filed for bankruptcy on Dec. 2, as did several of its subsidiaries. Among them was Enron North America Corp., the parent of Garden State and the newsprint maker's largest customer by far, explains Jennifer Walker, an Enron manager of public relations in Houston.

Enron North America is the trading unit of Enron Corp., "the money-making arm, if you will," Walker says. The unit traded in commodities such as natural gas, electricity, steel, coal and forest products. The Dec. 7 Garden State shutdown idled 250 mill workers, but a companion intake facility for recyclable items continues to operate.

Despite the bankruptcy, Enron is "still offering fixed price contracts for multiple year terms" for newsprint, Walker says, while declining to quantify any outstanding forward contracts. Enron continues to operate a newsprint mill in Canada, Papiers Stadacona in Quebec City, whose output is sold on the open market.

"We are actively seeking potential buyers for Garden State," she says. Enron acquired Garden State in 2000 for $72 million from Media General of Richmond, Va.

"We hated to see the mill shut down," says Media General spokesman Karl Rhodes. "Those employees were our employees for many years and we knew them well. When we sold it to Enron we really thought we were putting them in a better situation. It didn't turn out that way."

Walker says Enron is working with customers to help them secure a recycled newsprint supply. That appears not to be a problem. One former Garden State customer, who asked not to be identified, says newsprint is plentiful.

Several newsprint manufacturers outside Garden State's market agree. Says one, also declining to be identified, "Their shutdown in the meltdown of Enron has zero impact upon us or our customers."

The Garden State mill produced 234,000 tons a year, which Rhodes points out "is not a huge amount, given the total supply and demand in the U.S. market. "Supply is far greater than demand right now, says Ron Osberg, thanks to declining page counts and circulation at newspapers nationwide.