By Renee Worthing 

Staff Writer

Sanford Town Councilors authorized Sanford Town Manager Mark Green to submit a pre-application for a development loan for US Felt Company, Inc. despite previous financial issues with the company’s former owner.

  Sanford Economic Director Les Stevens said funds would come from Housing and Urban Development Community Development Block Grant (CDBG) and would be distributed by the Department of Economic and Community Development. Unlike previous CDGB business assistance grants, which go directly to the beneficiary, these funds are a loan, which will be repaid by US Felt Company.

  US Felt specializes in the manufacture of non-woven material made from wool fiber, including products used for absorption, filtration, sealing, insulating polishing and cushioning. Customers of US Felt include GE, Electrolux, Regal Beloit and Karastan.

 “Sanford is simply acting as a conduit because businesses cannot apply directly to the Department of Economic and Community Development for loans, but must go through a municipality,” Stevens said.

  The loan will be used for working capital as well as to finance inventory, raw materials, wood, synthetics and receivables and is not for job creation, but retention of 32 existing jobs, Stevens said. 

  He said the loan must be matched 1-to-1 with other sources of revenue such as gap financing and the length of the loan and interest rate will be worked out between DECD and the US Felt.

 Stevens said the town is “not on the hook for this loan” should new owners default or fail to pay taxes as the previous owner of the company did, then called US Felt Manufacturing Co.

In August 2007, TD Banknorth seized the property and assets of US Felt Manufacturing Company from the company’s owners for non-payment of debt, Stevens said.

“The prior owners had unpaid property taxes – real estate and personal property,” Stevens said, adding the town of Sanford is owed $41,700 in real estate taxes and $41,200 in personal property taxes.

The company’s new owner, Cheryl Bouragine, acquired machinery, accounts and equipment of US Felt Manufacturing Company in June for $675,000 and formed the new company, US Felt Company, Inc. last fall.

BDR Properties LLC acquired the real estate at auction July 30.

The investment group, although a separate company, is tied to US Felt Company and includes Cheryl Bouragine, Stevens said. 

The sale is expected to close around Sept. 15 and the new owners have agreed to pay the back taxes after the real estate deal is closed, “even though they aren’t the ones who did not pay,” Stevens said.  

  “The new owners agreed, in principal, in a memorandum of understanding, to repay the property taxes,” Stevens said, adding it was reviewed and approved by Attorney Peter Garcia of Skelton, Taintor and Abbott based in Augusta.