1st Urban repairs may begin by year's end

October 03, 1997


Staff Writer

Repairs to the former 1st Urban Fiber paper recycling plant could begin before the end of the year, and the work will eliminate odors that prompted complaints from people living near the plant, according to an adviser for bondholders.

"When this is all over we want it to be a community-friendly system," said J.T. Atkins, adviser to the bondholders of the plant now operating under the name Hagerstown Fiber Operations.

Forty-two employees could be rehired by February if the first phase of more than $10 million in repairs is complete, according to Atkins.


How soon repairs on the $250 million plant begin will depend on how soon bondholders negotiate an agreement with the plant's builders, SBCCS Constructors Joint Venture, Atkins said.

The plant's name was changed to Hagerstown Fiber Operations after the plant was shut down indefinitely on Aug. 7 and 53 employees were laid off. Company officials blamed the shutdown on bad market conditions.

The plant was placed in receivership on Aug. 14.

1st Urban had laid off 40 employees in April when the plant shut down temporarily.

Bondholders want SBCCS to share in the cost of fixing the plant, which has problems handling impurities from sticky substances, such as envelopes, said Atkins, managing director for Oppenheimer & Co. in New York. The contract with SBCCS provides for dealing with the damages, he said.

Atkins would not say Thursday how much funding the bondholders want from SBCCS, but he said on Aug. 14 they wanted $1.6 million to fix a wastewater treatment plant plus another $5 million to $6 million in liquidated damages for other claims.

SBCCS officials could not be reached for comment.

Repairs are needed to the deinking and wastewater systems at the plant at the intersection of Eastern and Memorial boulevards, he said.

The plant's large motors and shafts are operated periodically to prevent distortion and corrosion, said George Claypoole, site manager. There are 18 employees at the plant now.

Atkins has said SBCCS wants $6 million from former owners Hagerstown Fiber Limited Partnership, but is unlikely to get it since eventually the company will file Chapter 11 bankruptcy as part of its financial restructuring.

Under Chapter 11 provisions of U.S. bankruptcy law, a company is protected from its creditors during restructuring.

Hagerstown Fiber and its various partners in the plant already face numerous debts as well as a $5 million contractual lawsuit filed by Jefferson Smurfit Corp., which supplied the plant with wastepaper for recycling.

Hagerstown Fiber also faces a state tax lien for $260,136 from Maryland Environmental Service, an independent state authority based in Annapolis that employed six people at the plant.

The service has a contract to operate the plant's water treatment plant, wastewater treatment plant and solids dewatering facilities.

Atkins said he has received calls from potential buyers, but said he won't consider any proposals until plant repairs have been completed.

Hagerstown Fiber's $18 million reserve fund will help pay for repairs, he said.

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