Embattled Tissue Company Makes Promises to Memphis, Tenn., Workers

An official with American Tissue Inc., which filed for bankruptcy last week, said Wednesday the company is operating its Memphis tissue mill with 215 workers, and plans to fulfill its commitments to the city and county.

Michael Baumann, vice president and resident manager of the Memphis plant, said the company doesn't expect to default on a $5 million tax abatement program with the Memphis and Shelby County Industrial Development Board.

Baumann was asked to update the IDB on the company's compliance status. The board grants tax freezes to businesses.

"We expect to successfully emerge (from bankruptcy protection) and move forward," Baumann told members of the IDB during its regular meeting on Wednesday.

Last year, American Tissue of Hauppauge, N.Y., was granted a 10-year tax freeze on its commitment to invest $66.3 million to buy and upgrade the former Global Tissue mill at 400 Mahannah.

Baumann said the company employed 378 workers until it began curtailing operations last month. He said the company has laid off 163 workers, but continues to operate with 215 workers.

American Tissue committed to create 415 jobs by late 2003.

As of last month, it has spent $6.8 million to buy and upgrade the plant. It has $38 million in new machines that have been ordered and are to be delivered in 18 months, Baumann said.

American Tissue, which has 19 mills in the United States, reported last month that it had defaulted on loans with creditors. On Sept. 10, the company filed for Chapter 11 bankruptcy protection, which allows the company to stop paying some bills, but continue to operate.

Frank Ryburn, chairman of the IDB, told Baumann the board wants to be updated regularly.

However, Ryburn said American Tissue is not currently in default on its agreement, but would be reviewed in late 2003 for employment and investment levels. The Commercial Appeal