BANGOR (AP) – A Massachusetts bidder seeking to purchase the bankrupt Eastern Pulp and Paper Corp. faces a Friday deadline to complete a definitive sales agreement.

A federal bankruptcy judge last week accepted an $8.5 million “stalking horse” bid by Paper Acquisition Corp. of Topsfield, Mass. That offer sets up a court-sponsored auction scheduled for March 17.

Still to be ironed out, however, is the extent of the financial liability that Paper Acquisition might inherit because of potential environmental problems at the shuttered mills in Lincoln and Brewer that had a combined work force of 750.

The Friday deadline by which Paper Acquisition must complete the agreement or call the deal off is an extension from the Wednesday deadline originally sought by the bidder.

Under terms of its Feb. 25 “letter of intent,” Paper Acquisition could have rescinded its offer if it was unable to reach agreements by Wednesday with the state Department of Environmental Protection along with Eastern Pulp’s creditors and suppliers.

“The environmental protections which we are seeking have not been resolved,” said Robb Osinski, one of Paper Acquisition’s partners. He would not go into specifics, but said he is not interested in terminating the deal at this time.

Jim Dusch, a DEP compliance enforcement officer, said the state could not go along with Paper Acquisition’s initial attempt to be released from any liability pertaining to environmental noncompliance and contamination issues at the mills.

But on Wednesday, Paper Acquisition and the DEP agreed to list and review all the environmental liability concerns.

“The impression I got from the lawyers is there are no showstoppers,” Dusch said.

The definitive agreement is an essential component of the auction because it serves as a guide on the terms, other than a higher price, that other suitors must better in order to bid.

Eastern Pulp, which is in Chapter 7, or liquidation bankruptcy, is being maintained by a skeleton crew. The bidder and the Finance Authority of Maine have agreed to pick up those costs until March 24, when the deal is expected to be closed.

AP-ES-03-04-04 0918EST