HARTLAND (AP) – The state has agreed to loan $250,000 to Irving Tanning Co. so it can remain open until a prospective buyer can complete its acquisition of the bankrupt company.

Jeff Sosnaud, deputy commissioner of the Maine Department of Economic and Community Development, said the money will keep the leather production company in operation until Meriturn Partners LLC assumes control of Irving.

The state agreed to the loan after it became more evident that Meriturn will be able to buy the company out of bankruptcy, he said.

“There’s no other money to run the company,” Sosnaud said. “This needs to happen soon.”

Irving operates a tannery in the central Maine town of Hartland and has roughly 200 employees. It filed for bankruptcy protection in March.

As part of the sales agreement, San Francisco-based Meriturn has agreed to pay more than $3.7 million to TD Banknorth, Irving’s chief creditor, to satisfy the bank’s claims against Irving. The tannery has already paid $2.1 million to the bank since filing for bankruptcy.

A bankruptcy court hearing scheduled for July 22 will determine whether the sale will go through.

Different stakeholders in the company, including tannery employees, will get to vote as groups on the proposed deal before the hearing. The deadline for casting ballots is July 21.

Gov. John Baldacci said that by getting involved in negotiations and making the loan, the state is helping to preserve a key employer in the region.

“You’re talking about jobs that will be saved,” Baldacci said. “These are good-paying jobs with benefits. It’s like a small GM plant.”

Before the Economic and Community Development Department agreed to the loan, the agency consulted with the two companies to ensure that the “vast bulk” of the tannery’s work force would keep their jobs, Sosnaud said.

—

Information from: Bangor Daily News, http://www.bangornews.com

AP-ES-07-09-05 1316EDT