Eastern Pulp and Paper announced mills in Lincoln and Brewer would be shut down.

BANGOR (AP) – About 750 workers at mills in Lincoln and Brewer were locked out of work after Eastern Pulp and Paper Corp. abruptly announced that the mills were being shut down.

Most of the employees were notified Thursday night about the shutdown and the rest were told Friday, said Doug Walsh, manager of Lincoln Pulp and Paper Co. and Eastern Fine Paper Co.

The mills were unable to secure supplies and the parent company has been unsuccessful in securing an emergency $1.5 million loan from Congress Financial Corp. of New York, Walsh said.

Some suppliers said they will not ship materials unless they are paid in full, he said. Eastern Pulp and Paper has been under Chapter 11 bankruptcy protection since September 2000.

“Our hope would be that it’s on a temporary, short-term basis,” Walsh said. “I have no information at this point to say anything different.”

The shutdown came nine days after a judge rejected the terms of a $1.5 million loan during an emergency hearing in U.S. Bankruptcy Court.

Since that hearing on Jan. 7, potential lender Congress Financial Corp. and Eastern have been in negotiations on terms of a new loan, and those talks have been described as slow.

U.S. Rep. Michael Michaud, himself a former mill worker, said he hopes workers at the two mills in Brewer and Millinocket will eventually return to their jobs.

But he said Friday he was taking steps to help in case the shutdown becomes permanent. He said he was working with the state, town and Maine Department of Labor Rapid Response Team.

“While this does not necessarily mean that people will be laid off permanently, I have taken action today to make sure we can help in case workers do lose their jobs,” he said.

Since late December, the mills have been operating sporadically as orders and the supplies to fill them come in.

The emergency loan sought last week would have covered supplies such as wood chips and chemicals, plus pay overdue bills to Bangor Hydro-Electric Co., health care insurer Blue Cross and Blue Shield, as well as creditors.

The $1.5 million loan would have carried the company through Feb. 4, when company officials were expected to return to bankruptcy court in Portland to present a financial reorganization plan.

At last week’s bankruptcy court hearing, Gordon A. Lewis III, a principal with Altman and Co. Management Consultants in Stoughton, Mass., which was hired by Eastern three years ago, told the judge that if the company didn’t receive $1.5 million soon, the mills would have to close.

“If we do not get funding, I would recommend to the company to immediately let employees go,” Lewis said at the time.

The problems came to a head Thursday night, when the local union president was informed of a plant lockdown.

That meant no more supplies would be accepted and that workers would stop once existing supplies were depleted, said Steve Corriveau, president of PACE Local No. 1-0396 at Lincoln.

“When it’s processed, it’s done,” said Corriveau Thursday night. “We’re out of money and we’re out of supplies.”

AP-ES-01-16-04 1247EST