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HARTLAND – After months of maneuvering, courtroom negotiations and extended deadlines, a local leather tanning company emerged Monday from bankruptcy as its sale to a private investment firm was completed.
Meriturn Partners LLC, which has its primary offices in Raleigh, N.C., and San Francisco, has been trying to purchase Irving Tanning Co. since May. Irving had filed in March for Chapter 11 protection in U.S. Bankruptcy Court in Bangor after its chief creditor, TD BankNorth, pulled its line of credit.
“It’s obviously quite a relief,” Richard Larochelle, Irving’s CEO, said Monday afternoon of the completed sale. “Now we can devote all of our time to managing the business.”
With the purchase, the tannery will continue to operate and approximately 200 jobs will remain intact, according to officials.
Gov. John Baldacci said Monday the deal is good for the state and especially good for the economy of central Maine.
“This was very important,” he said. “We weren’t going to let this go without a fight.”
In July, the Maine Department of Economic & Community Development loaned the tannery $250,000 so it could keep operating while Irving and its creditors were trying to resolve its debts.
Baldacci, who met last week with Meriturn officials during the final stage of negotiations, said other state agencies also were involved in the transition. Finance Authority of Maine and Maine Rural Development Authority also helped keep the tannery afloat before the deal was completed, he said.
“I’m really proud this has all come together,” the governor said. “People should be very pleased.”
Peggy Morgan, town manager for Hartland, said Monday the sale is good news for everyone in the region, not just for Irving employees. She said she is optimistic that Meriturn will be able to increase the number of jobs at the tannery.
“It’s wonderful,” she said. “[Local residents] very much wanted the sale to happen.”
In a statement released Monday afternoon, Meriturn indicated it had lined up more than $14.5 million in new equity and debt capital in order to complete the purchase.
“We have a very strong capital structure behind us,” Franklin Staley, a partner with Meriturn, said Monday. “It’s probably not great news for our competitors.”
While under bankruptcy protection, Irving reduced its work force from 240 to roughly 200 employees, according to Staley.
The deadline for completing the deal was extended twice, at the end of July and again at the end of August.
Besides getting support from the state and from the town of Hartland, Irving’s restructuring also is getting a boost from the federal government.
Sen. Olympia Snowe indicated Monday in a press release that the U.S. Department of Agriculture is backing a $2 million loan to the tannery from Wells Fargo.
“This loan guarantee is the only means by which Irving Tanning can emerge from bankruptcy after years of restructuring and intensive planning,” Snowe said in a written statement.
Irving also filed for bankruptcy in 2001, emerging from Chapter 11 protection the following year. The company, which was founded in 1920, had as many as 525 employees five years ago.
With Monday’s closing, health benefits for Irving’s employees were restored, according to Staley. The health benefits had been suspended this summer as the tannery operated under scant financing.
Staley said that in addition to restoring the health benefits, Irving will reimburse its employees for any health care costs they may have incurred since the benefits were suspended in June.
As part of the sale to Meriturn, the new owner is expected to pay TD Banknorth $3.75 million, according to bankruptcy court documents. Other sale conditions approved by the court include:
. Full payment by Meriturn to the town of Hartland on Irving’s back taxes and other debts.
. Transfer of ownership of two landfills from Irving to the town.
. Reduction in annual payments Irving makes toward the operating costs of one of the landfills and Hartland’s wastewater treatment plant; and
. Establishment of a land trust to help settle any environmental claims against the tannery.
Larochelle said the company has been operating on a slightly more limited schedule for the past few months because of its financial situation. Now that Irving has successfully restructured itself, he said, it should boost its production by about 10 to 15 percent.
The tannery has annual sales of $65 million and, according to Meriturn’s press release, the capacity to produce more than 25 million feet of leather per year. Leather produced at the tannery is used to make goods for the U.S. military and for shoes, handbags, belts and similar products made for retail sale.
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