PORTLAND (AP) – A do-or-die hearing in U.S. Bankruptcy Court ended Friday when a judge signed an order authorizing the sale of Eastern Pulp and Paper Corp. to a Connecticut-based company that plans to reopen an idle paper mill in Lincoln within a few weeks.

After a full day of negotiations among the various parties, Chief Judge James Haines accepted a 26-page agreement spelling out the terms of the purchase by First Paper Holding LLC for nearly $24 million.

The closing is expected to take place in about two or three weeks, and the buyer said it hopes to restart one of the tissue machines in Lincoln about a week later.

First Paper Holding, soon to be known as Lincoln Paper and Tissue, said its plans for the other Eastern Pulp mill, in Brewer, were up in the air.

“The path for Brewer is still not clear,” said Keith Van Scotter, a 25-year paper industry veteran who plans to move to Lincoln to manage that mill. He said the Brewer operation has a higher cost structure and is less competitive than the one in Lincoln.

About 750 people worked at the two mills and at Eastern Pulp headquarters in Amherst, Mass., and about 350 could return to work in Lincoln.

A major stumbling block to the deal was cleared up earlier in the day when negotiators reached agreement on a $400,000 breakup fee to a Massachusetts-based company that submitted a bid for Eastern Pulp in March.

“It doesn’t come close to covering our costs,” said Rob Osinski, an attorney for Paper Acquisition Corp. “But I’m pleased they can move forward and try to close this transaction.”

A potential bidder, which was waiting in the wings, failed to come forward with a competing offer as attorneys for creditors and other parties scrambled to put the finishing touches on the purchase agreement.

The lawyer for the trustee of Eastern Pulp’s bankrupt estate said it would be inappropriate to delay the proceedings so that the would-be bidder, identified only as Eastern Acquisition, could have more time in which to carry out due diligence.

“The current offer is the best offer that the trustee has received for the assets,” Fred Bopp III told the judge.

The $23.7 million deal includes a $3.2 million cash payment, with the remainder in long-term promissory notes to lenders and creditors.

Union leaders who endured a series of lengthy hearings on the fate of Lincoln’s biggest industry said residents of the northern Maine town finally had something to cheer about.

“I’m sure they’ll be dancing in the streets,” said Steve Corriveau of PACE Local 396. “It’s been a long haul and a long struggle.”

Gov. John Baldacci, who was praised by labor leaders for his high-profile efforts to move the deal forward, hailed the agreement as “a great thing for the state.” He said “it’s important to get people back to work.”

The hearing came six weeks after Haines ordered the mills abandoned following a report from the trustee that money needed to maintain them had run dry. The judge had indicated that if no sales agreement were reached Friday, he would wash his hands of the case that he had worked on so long.

But in accepting the deal, Haines expressed appreciation for the expert and innovative work by all parties and said it reflected well on the legal profession.

Eastern Pulp, based in Amherst, Mass., filed for Chapter 11 bankruptcy protection in 2000 in hopes of restructuring its debt. Haines changed the bankruptcy status to Chapter 7 liquidation in February.

AP-ES-04-30-04 1854EDT