Sprague Energy Corporation will purchase Merrill Marine Terminal Services, Inc., on Portland’s waterfront. Located on the Fore River inside the Casco Bay Bridge, Merrill Marine Terminal has been a vital part of the working waterfront for 25 years.
P.D. (Paul) Merrill, president, said that he had been in conversation with Sprague over the years, but that in the last couple of months negotiations progressed in earnest.
The two companies are private, and while neither would disclose the purchase price, John McClellan, president of Sprague Energy, said that the terms of the sale were “very satisfactory to both parties, and that Merrill was well compensated for his hard work and entrepreneurship.”
Merrill Marine Terminal handles break-bulk cargo. When Paul Merrill, P.D.’s father, started the business, “he wanted to control the total picture,” said P.D., “because that was the way to exert the entrepreneurial initiatives it takes to get a business going.”
As a privately-held enterprise, Merrill Marine Terminal is unique in Maine. Most terminals that handle containers and break bulk are publicly owned and leased to operators. Between 80 and 90 ships annually call at the terminal for total of nearly 600,000 tons of cargo.
“A private terminal is a very challenging business environment to work in,” said P.D. Merrill, adding that it was hard to compete with the financing available to the state of Maine, which put $16 million into its wharf warehouse cargo terminal at Searsport. Sprague Energy, which has been doing business in Searsport for 100 years, operates the terminal there.
The terminal in Eastport is also state owned and leased to Federal Marine Terminal.
“Merrill Marine Terminal has been carrying the burden of financing on its back for 25 years,” said P.D., “and this led us to the decision to sell the business.” Merrill had been unable to secure financing for a second warehouse. Merrill will continue to own the 30-acre site and wharf.
He has moved quickly to seize opportunities. Nearly three years ago, New London, Connecticut, tried to take over the Maine terminal’s newsprint operation. New London’s new warehouse, which had been built for imported steel rods and bars, lay empty due to new tariffs on the imported steel and was available at a very competitive price.
Merrill was able to borrow $1.7 million from the Maine Department of Transportation to build a new 56,000 square-foot warehouse. “We still have to pay the mortgage off to the state, but not at the high interest of a bank’s mortgage,” said P.D. “While the playing field was not totally level, it made us competitive and able to hold on to the newsprint business.”
McClellan has high praise for Merrill’s business skills in raising considerable capital for the terminal. He said Sprague Energy will continue to use the name Merrill Marine Terminal Services, Inc. because “it has earned a valuable reputation and we plan to build on it.”
Sprague Energy Corporation, as a much larger private entity and as a subsidiary of Sweden’s Axel Johnson group, can command greater levels of capital for improvements. It plans an additional warehouse on the property. In New England and Maine, Sprague owns and operates 19 oil and bulk terminals.
Last year Sprague, with the assistance of the Maine Port Authority and Merrill Marine, began offering break-bulk services to mid-coast and downeast Maine through the Searsport terminal.
While Sprague Energy earns the bulk of its revenue of petroleum products, the materials handling side of the business is growing very rapidly, McClellan said.
Sprague’s materials handling falls into three categories. Liquids such caustic soda, kaolin clay and asphalt are stored in old petroleum tanks. Bulk products include road salt, coal, petcoke and gypsum. The third category, break-bulk, includes items stored in warehouses such as paper rolls and pulp paper. Merrill’s Marine Terminal handles break-bulk materials primarily.
McClellan said that Sprague would continue to evaluate the configuration and mix of customers and products to promote growth at the Portland terminal. Across the Fore River in South Portland, Sprague operates oil distribution facilities, as it does in Searsport. He expects that employees will increase from the forty-two fulltime now working on the 30-acre site. Currently there are 25 part-time employees. Sprague employs a total of 400 people, including 60 at its South Portland facility.