Main Source announces loan program for flood victims

Bank of America Corp. sought a solution Tuesday to labor protests at a Chicago window-and-door factory, offering a "limited amount" of loans so employees who lost their jobs last week could collect severance, vacation and sick time

December 23, 2008

.Charlotte-based Bank of America found itself the target of sit-in protesters and reproaches from local politicians after Republic Windows & Doors told employees it had to shut down because Bank of America cut off all financing. (See related article.)

Republic had a line of credit with Bank of America secured by collateral. Once the manufacturer exhausted its credit, Bank of America decided recently not to provide more loans because of numerous failed attempts to develop a business plan the bank could support following several years of multimillion-dollar losses, according to a bank official. The discussions about a new business plan took place over the last couple of months, according to the bank official. The plant shut down Friday.

The situation attracted national attention after President-elect Barack Obama said the employees were "absolutely right."

Bank of America said it was "prepared to provide a limited amount of additional loans" without specifying the amount. The bank said it would offer the additional financing "despite the fact that Bank of America is not obligated to pay Republic's employees or make additional loans to Republic."

A spokeswoman said, "we are trying to do the right thing."

A Republic Windows & Doors spokesman called the gesture "positive and productive" and said there was a "willingness" to reach a settlement that would cover the employees' claims.

"The key, " said a representative of the United Electrical, Radio and Machine Workers, "would be what the conditions are."

Also involved in the discussions is New York-based J.P. Morgan Chase & Co., a minority owner of Republic Windows and Doors. A unit of J.P. Morgan made an initial $7 million equity investment in the company in 2007 and then loaned an additional $5 million, according to company spokesman Tom Kelly. The value of that investment is now "zero," he said.

"Our concern," he added, "has been we are disappointed in how the employees of Republic were treated by management and our efforts have been focused on if there are ways we can help employees get paid for their severance and accrued vacation."

Source:http://online.wsj.com/article