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July 18, 2008

Red Shield approved for new loan

A U.S. bankruptcy court has approved a $1.25 million loan from Chittenden Bank of Burlington, Vt. to help Red Shield Environmental LLC pay its laid-off workers.

The loan will cover payroll and health insurance for workers of Red Shield and its subsidiary, RSE Pulp and Chemical, as well as pay for some chemicals, the Bangor Daily News reported. About 160 workers have been laid off since Red Shield shut down its pulp mill June 6. 

After idling the mill, Red Shield filed for Chapter 11 bankruptcy protection to give it time to obtain new investment capital or restructure its debts. The company is in negotiations with two or three private equity firms to secure more loans to restart the mill, and Red Shield's lawyer, Robert Keach, said the company could be back in court by next week to announce a new lending deal.

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