BANGOR (AP) – The sale of Augusta’s only paper mill to the son-in-law of its former co-owner, who’s charged with defrauding lenders and investors of nearly $300 million, was approved in federal bankruptcy court Tuesday.

The move by U.S. Bankruptcy Judge Louis Kornreich paves the way for the shuttered mill to reopen, which could create 85 new jobs by the end of the year.

The judge ruled that the mill’s sale by American Tissue could go forward if all city taxes and other charges are paid by May 2004.

Several months ago, a group led by Nimi Nili announced plans to buy the American Tissue Mills of Maine plant and landfill, which has been idle since August 2001.

Nili is the son-in-law of Mehdi Gadayzadeh, American Tissue Inc.’s former president, who now faces federal charges of criminal fraud. The purchasing group plans to rename the mill Augusta Tissue.

Augusta Mayor William Dowling previously said the city would oppose the sale unless it received payment for $334,030 in overdue property and equipment taxes, as well as interest.

But the two sides have since reached an agreement that guarantees all overdue charges will be paid.

“What happened was that they came in and provided us with a surety bond guarantee for the entire amount of taxes within one year,” Dowling said.

The owners of Augusta Tissue have also reached agreements with the Augusta Water District and Central Maine Power Co. to pay overdue bills.

Dowling said reopening the mill on the east side of the Kennebec River will benefit the city.

“The highest and best use for that mill, in my opinion, is to put people back to work,” Dowling said.

The city could have foreclosed on the property next January if overdue taxes remained unpaid.

The mill’s new management has close ties to the former owners of American Tissue, once one of the nation’s biggest makers of paper tissue.

The purchasing group is comprised of Nili, 27, and other family members. Augusta Tissue’s president and chief executive officer is Ron Gasper, the former chief financial officer of American Tissue Inc.

Bob Jackson, who has been asked to stay on as manager of the paper mill, said Nili wants the new business to succeed.

“He said to me, ‘Bob, we want to make this the best paper mill in Maine,”‘ Jackson said.

The Augusta mill would transform discarded paper into large rolls that would be transported to a tissue conversion mill in Coram, N.Y., also owned by Nili.

The mill’s new owners still must transfer a sludge disposal site license to Augusta Tissue, Jackson said.

One papermaking machine is expected be restarted within 60 days of the sale’s closing date, Jackson said, and 45 people will be hired to run it.

Plans call for another machine to be started later this year, which would bring 40 additional jobs, he said.

AP-ES-04-16-03 0216EDT

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