BELFAST – Penobscot Frozen Foods Inc., a processor of potato specialty foods on the city’s waterfront for more than 50 years, is facing foreclosure.

On Wednesday, Key Corporate Capital Inc. published a notice in the Bangor Daily News of its intent to sell the company’s properties in Belfast and Washburn at public auction on April 29.

But Penobscot Frozen Foods President Rick Starrett said later Wednesday that he is confident the foreclosure can be stopped. The company is in discussion with a Massachusetts-based loan broker to secure the necessary funding, he said. “We’re in the midst of putting together a refinancing package,” he said.

The foreclosure was prompted when Key decided not to renew the company’s line of credit, Starrett said. The company owes the bank $1.5 million.

“Key no longer wants to be our bank,” he said. “They’ve been good with us, and they’ve been patient.”

Daniel Amory, an attorney representing Key, said Wednesday the bank had worked with Penobscot for a long time before moving for the foreclosure. “This is not done lightly,” he said.

Starrett said the company experienced a downturn in sales in recent years.

A little more than a year after eliminating 40 jobs, Penobscot employs 200, all but a handful at the Belfast plant. A half-dozen workers sort, grade and store potatoes at the company’s Washburn plant.

Starrett said employees were notified of the foreclosure notice before it was published. And the company’s largest supplier, County Super Spud Inc. of Mars Hill, has agreed to stand by Penobscot through the coming weeks.

The company can pay off its obligation to Key up until the foreclosure auction, Starrett said. Amory confirmed this.

“All the bank wants is to get paid,” he said.

Starrett said the company’s real estate assets are valued at $4.9 million for property tax purposes.

In Belfast, the company’s plant is on a waterfront parcel just below the Veterans Memorial Bridge. It also owns an industrial building on Front Street south of Main Street.

A business analyst’s Web site reported the company’s 2002 revenues at $35 million.

The general economic downturn has contributed to Penobscot’s woes, Starrett said. “It’s starting to pick up,” he said.

Penobscot was founded in 1948 by Frederic “Ted” Starrett and Albert Johnson as Penobscot Frozen Food Lockers. In the early years, the company rented food lockers to the public.

The company then got into retail meat and frozen food sales. In addition, the company cut up deer, moose and bear killed by hunters. In the early 1950s, the company froze chicken from Belfast’s two poultry companies.

Ted Starrett bought out his partners in 1959. After his death in 1985, sons Bruce and Rick took over the company, and remain its sole owners.

In recent years the company has manufactured frozen baked stuffed potatoes.

Penobscot’s specialty is potato appetizers, baked and fried potato skins, and stuffed potatoes. A potato wedge snack, sold in convenience stores, is a key product for the company, Starrett said.

“We’re not giving up,” Starrett said. “We’re part of the Belfast economy. We intend to get this solved. We’ve got 200 very good employees here, and they don’t want to lose their jobs, and I don’t want them to lose their jobs.”

– NEWS reporter Walter Griffin contributed to this story.