LAWRENCE, Mass. – With their backs to the wall, few CEOs get much sympathy these days. Aaron Feuerstein gets checks in the mail from strangers.

The unsolicited contributions started eight years ago, after Feuerstein became a corporate hero for refusing to lay off workers after a fire devastated his Malden Mills textile plant. Now, Feuerstein is fighting to keep control of his company, and the pace has quickened.

“The checks come in every single day,” the sneaker-wearing 77 year old said in a recent interview. “People write two-page, three-page letters. You cannot imagine. They all feel that the average corporation in America has not done right by them.”

Feuerstein returns the money, but such small change wouldn’t help much at this point. The checks he really needs are from big lenders; in the wake of Malden Mills’ 2001 bankruptcy filing, he has until Aug. 26 to raise $92 million or lose control of the company his grandfather founded almost a century ago.

Feurestein says he will make it, but it is taking every ounce of his energy to persuade investors to back a twice-bankrupted company that promises to put people over profits and is competing in an industry where virtually everyone else has fled overseas.

With or without Feuerstein in control, Malden Mills is expected to emerge from bankruptcy protection next month. Feuerstein’s option to buy back the company will remain, but the price will rise, so this is his best shot.

If he fails, the plan calls for Feuerstein to remain in an advisory role that would pay him and his wife $425,000 annually. But few consider second fiddle Feuerstein’s natural instrument.

“Malden Mills is in Aaron’s DNA,” said David Orlofsky, brought in as chief financial officer by Kroll Zolfo Cooper Inc., the turnaround specialist firm that’s running the company. “I don’t think he could get it out of his blood. He’s been doing this for 50 years.”

Feuerstein’s quest is being keenly watched in Lawrence, a city of 72,000 about 25 miles north of Boston. Once the center of the American textile industry, Lawrence is now one of the poorest cities in Massachusetts with a 14.2 percent unemployment rate – nearly three times the statewide rate.

“Lawrence simply can’t afford to lose a company like Malden Mills,” said Rep. Marty Meehan, D-Mass., whose district includes the city.

Even if Feuerstein comes up short, the creditors couldn’t immediately sell the company, and Feuerstein says they’ve treated him well. But he doesn’t believe Malden Mills would stay long without him calling the shots.

“Their history in such situations does not augur well for the security of the 1,200 employees and the security of the community, which is part of the Malden Mills mission,” Feuerstein said.

If Feuerstein can’t raise the money, the company’s future will be entirely in the hands of the new management, said Richard Jones, a spokesman for the lead creditor, GE Corporate Financial Services.

Since its bankruptcy filing, the company has increased profits – excluding massive debts – from $1.5 million to about $20 million. But that has come almost entirely from cost cutting, including about 60 layoffs. Revenue in the businesses it still operates has declined, from $179 million to $169 million.

Feuerstein says Malden Mills can compete. Its niche is the high-tech threads, like Polartec, it makes for the military and upscale customers like Lands’ End and Columbia Sportswear.

A new version of sweat-sucking fabric will not only keep users cool but minimize body odor, thanks to anti-microbial strands of silver woven into the fabric.

Another bright spot is the military, which is steering $27 million to Malden Mills this year.

Feuerstein tells prospective lenders he’s a safe bet. Loan guarantees from the cities of Lawrence and nearby Methuen, plus state development funds, could produce $10 million. There’s also $19 million of potentially useable company cash. And last week, Feurestein met with officials from the Export-Import Bank about loan guarantees.

In addition, Feuerstein says the company’s assets are worth $170 million, plus another $90 million for the Polartec brand, which should be adequate collateral.

Andrew Bene, a managing director at Marshall & Stevens in New York hired to line up the money, said Feuerstein’s fame and contagious passion have opened a lot of doors.

Still, he admits lenders are nervous about everything from the possibility a warm winter could sink the company to overseas company ripping off its patents to Feuerstein’s age. Ultimately, Bene said, Feuerstein will likely pay interest rates “north of 10 percent” in a final deal expected to include several private equity firms and at least one well-known name, possibly Merrill Lynch.

“Equity sources are going to demand a lot of control, and he’s reluctant to give up control, and I don’t blame him,” Bene said.

Pam Poremba, a Malden Mills sales assistant, said she hopes Feuerstein will prevail. But she isn’t averse to combining Feuerstein’s vision with some fresh leadership.

“It might also be good to have some new people, to get some new blood and give us some new ideas,” said Poremba, a 12-year employee whose mother worked 30 years at the company.

Feurestein said giving day-to-day control has been “very, very difficult for me personally” and makes no secret of his dislike not having the final say.

“He’s strong-minded,” said Orlofsky, acknowledging some disagreements over the last two years but says they’ve generally worked well together. “He’s an entrepreneur, and entrepreneurs are used to doing things their own way.”

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On the Net:

Malden Mills: http://www.mmreorg.com/

Polartec: http://www.polartec.com

AP-ES-07-27-03 1101EDT

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