The federal government has approved a $13-million grant as part of a $38 million financing package to save the jobs of 1,000 employees of the Okonite Co in New Jersey. The company has a plant in North Brunswick.
The grant is to be used by the N. J. Economic Development Authority (NJEDA) to establish a revolving loan fund for businesses and industries threatened by plant closings and loss of jobs.
The first project to be funded by the NJEDA will be a $13-million loan to Okonite’s Employe Stock Ownership Trust, which hopes to purchase the company from bankrupt Omega-Alpha, Inc., of Dallas, Tex.. Okonite’s parent firm.
The remaining $25 million needed to purchase Okonite is to come from a $21-million line of credit from a banking syndicate headed by the Bank of America and a $4-miition loan from private financial institutions.
The line of credit will be used to satisfy Okonite creditors. Half of the $4~million loan will be guaranteed by NJEDA.
Okonite employs roughly 1,000 persons at its four locations in New Jersey. In addition to the plant in North Brunswick with 360 employes, there are facilities in Passaic. Paterson and Ramsey.
The federal grant, announced by Rep. Edward J. Patten, D-15th Dist., and Sen. Harrison A. Williams Jr., D-N.J., was approved by the Commerce Department's Economic Development Administration.
It is being funded under a provision of the Public Works and Economic Development Act authorizing money for special economic development and adjustment purposes.
In applying for the federal assistance, state officials said Okonite has experienced problems in recent years stemming from a series of changes in ownership.
The wire and cable-manufacturing company, which was started in Paterson in 1878, was purchased by Omega-Alpha in 1971 for $40.5 million.
The parent company is disposing of Okonite as part of its reorganization under Chapter 10 of the federal bankruptcy laws.
Okonite’s employe-owned trust was formed earlier this year after Omega-Alpha announced its reorganization plan in February.
The trust is to repay the NJEDA loan over a 25-year period, with interest rates of 1 per cent for the first five years, 3 per cent for the next seven years, and 5 per cent for the last 13 years.
No payment on the principal is required during the first. 30 months,
NJEDA is to use the repayment of interest and principal to continue the revolving loan plan for other New Jersey industries.