LINCOLN (AP) – A paper mill that resumed operations after a shutdown arising from its former owner’s bankruptcy now plans to double its tissue-making capacity with an infusion of capital from a California investment firm.

The expansion at Lincoln Paper and Tissue LLC will add at least 35 full-time employees to its 350-member work force and increase this northern Maine town’s annual tax revenue by about $794,000.

The $35 million investment was announced Friday by PCG Capital Partners of La Jolla, Calif., the private equity investment arm of Pacific Corporate Group LLC. As part of the deal, the company will name two members of Lincoln Paper’s board of directors.

Lincoln Paper “closely fits our objective of partnering with companies that enjoy leading market positions and proven management teams,” said Douglas Meltzer, managing director of PCG Capital Partners.

“The company has a line of profitable niche products that will grow more important as retailers increasingly choose private label products over major consumer brands,” Meltzer added.

The investment represents a vote of confidence for efforts of Keith Van Scotter and John Wissman, who purchased the assets of the abandoned Eastern Pulp and Paper Co. for $23.7 million.

Bankrupt since September 2000, Eastern Pulp laid off 750 people, including many in Brewer, when it abruptly shut down in January of last year. The new owners did not reopen the Brewer mill.

While it still faces challenges, Lincoln Paper was running in the black by the end of its first year of operation. The mill creates specialty napkin and tissue rolls for independent, private label and specialty converters and high bulk, uncoated printing papers used in direct mail applications and business reply cards.

Town Manager Glenn Aho said the company’s strong performance and the new investment will likely dispel any residual shock left from Eastern Pulp’s demise.

“I’m extremely pleased,” Aho said. “It certainly builds upon the foundation of our community, and it most certainly is a $35 million testimony that investing in Lincoln is a good idea. Psychologically, it helps a lot.”

Construction of the new tissue-making machine will likely begin next month, Aho said.

“They want to do this quickly,” Aho said. “They’re already behind schedule.”

PCG is also working with Lincoln Paper to address four or five potential capital projects, Meltzer said. Those projects include installing a stand-alone electricity generator and a wood mill that would help the company operate independently and fill its chronic and expensive need for wood pulp and sawdust.

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