Esskay, the financially strapped Baltimore meatpacking firm, appears to have obtained the necessary financing to allow it to remain in Baltimore rather than relocating to Indianapolis, sources said yesterday.
The 126-year old company, which created an uproar in Baltimore last month when it announced plans to move, has spent the week in intensive negotiations with local banks seeking financing to build a new plant and make other improvements the company has said it needs to remain in Baltimore. More than 400 jobs hinge on whether the company stays or relocates.
Esskay's board of directors is scheduled to meet this morning, and the firm is expected to announce it has secured the financing. A press conference has been called for 1 p.m. today.
Sources say that the Maryland banks involved expressed a significantly stronger interest in providing the necessary financing after Esskay workers voted Sunday to ratify a rescue plan hammered out between company officials and union leaders.
Esskay's president, LeRoy Joseph, said earlier this week that the banks the company was negotiating with included Mercantile Safe Deposit and Trust, Union Trust Co. of Maryland, Maryland National Bank and Wells Fargo Business Credit Co. One source close to the company said that more than one bank is involved in the financing, and he speculated that the partnership would include Wells Fargo, where the company already has a $4.5 million credit line.
The Maryland banks became more interested in providing financing, according to Executive Vice President Joseph Kershaw, because the union agreement delayed the new plant another year while at the same time keeping labor costs down.
Under the agreement that caused Esskay's change of heart, the United Food and Commercial Workers, Esskay's largest union, voted to extend its contract and continue for five more years wage cuts it accepted last year. The new contract allows Esskay a year's delay in building a modern factory to replace its 1920s-vintage plant.
Baltimore Mayor William Donald Schaefer and the Baltimore Economic Development Corp. have been scrambling all week to help Esskay secure the loans. Neither office would confirm that an agreement had been reached.
Indianapolis bank officials, who were negotiating with Esskay about financing for the relocation in Indianapolis, visited the plant earlier this week. But sources said their reception of Esskay has not been as favorable as expected. The meat packers were having difficulty obtaining financing from the Indiana banks, sources said.
Charles D. Preston, of the Indiana Department of Commerce, said yesterday that he has recently met with other meat packers about what facilities might be available in Indianapolis, but he would not confirm whether Esskay has obtained financing from the Maryland banks.
Esskay announced on Feb. 1 that it would move to Indianapolis if it could obtain the financing there, and that it would permanently lay off about 460 of its 800 Baltimore employes during the next two to three months. The company said it was forced to move because it could not get the financing to build a new plant in Baltimore.
The Schluderberg-Kurdle Company Inc. -- Esskay's formal name -- employes about 800 people, including 630 union members, at its East Baltimore Street plant. The plant processes hams, bacon, sausages, hot dogs and other meat products.
"Esskay will either sink or swim in Baltimore," said a source close to the company, who added that Esskay had decided to stay.