BANGOR (AP) – A potential buyer has emerged for the bankrupt Eastern Pulp and Paper Co.’s shuttered mills in Brewer and Lincoln, but the unidentified suitor says any deal is contingent on reopening the mills.
The prospect met Wednesday in Phoenix with Eastern Pulp’s lenders, according to Jack Cashman, commissioner of the state Department of Economic and Community Development.
“They had a great meeting,” Cashman said. “I’m cautiously optimistic.”
The interested buyer seems more committed to pursuing a sale than other “tire kickers” who have come forward in the last week, Cashman said.
Eastern Pulp, which has been under Chapter 11 bankruptcy protection from creditors since September 2000, owns Eastern Fine Paper Co. in Brewer and Lincoln Pulp and Paper Co.
More than 750 people are employed at the mills, which were shut down abruptly last week because of lack of money and supplies.
Only a skeleton crew has been keeping the equipment in “start-up mode,” according to mill officials, but they haven’t been informed yet of an actual start-up date.
Eastern Pulp has been trying for more than a week to secure a $2.5 million loan to operate its mills for at least 13 weeks. The former Great Northern Paper Inc. was sold last year in bankruptcy court in roughly 14 weeks.
The Phoenix meeting was arranged Tuesday after the state produced a signed letter from the suitor indicating its willingness to perform extensive financial and operational analyses required to purchase a paper company.
If the party is satisfied with Eastern Pulp after the analyses is completed, it would submit a “stalking-horse bid,” a strategy bankrupt companies use to obtain an initial bid on their assets, and purchase agreement in U.S. Bankruptcy Court in Portland.
Other interested companies could review the bid and try to meet or beat it during a court-sponsored auction.
Employees at the mills received notice Wednesday from their health insurer that their policies would be canceled Feb. 9. Eastern Pulp warned workers last week that the letter could be in the mail at any time because the company was unable to pay its health premiums.
AP-ES-01-29-04 0944EST
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