The administration has decided not to endorse a plan by a company hoping to fill the void left by the closure of the Sanmina plant last year.

City Administrator Jerre Bryant said after giving the project careful consideration, the administration decided not to bring a request by NPL Systems Inc. for a $200,000 loan from the city’s revolving loan fund because the administration feels it would pose too big of a risk to the city.

Bryant said the administration felt the company, even with backing from the city, state and small business loans, did not have enough start-up money to successfully get off the ground. “They were undercapitalized,” he said.

Bryant said it was a difficult decision to make. “We were very attracted to the project initially because it was going to put some displaced Sanmina employees back to work,” he said. “The concept of the project was very attractive, but the economics simply didn’t work.”

Emile Cardali, one of the principals in NPL, said he was disappointed in the city’s decision. “It’s kind of upsetting that the city takes a stance like this,” he said, adding the company’s plans have been put on hold while it figures out its next step.

Cardali, a former Sanmina employee, said NPL hoped to help return some of the jobs lost by the city when Sanmina closed its plant here last year. He said the company had already lined up agreements with some former Sanmina customers and had begun purchasing equipment from Sanmina plants that were closing in Maine. Like Sanmina, NPL was going to manufacture electronic equipment, specifically enclosures for electronic components.

Westbrook Director of Economic and Community Development Erik Carson said the company was approved for a $200,000 state grant that allowed it to use the money as capital to launch the business. As part of that grant, the company had to guarantee it would create at least 10 new jobs, with at least 51 percent of those jobs going to low or moderate-income workers. The city was also required to sign a guarantee saying if the jobs weren’t created, the city would be liable to repay the entire grant.

The money for the grant has not been loaned out yet. Because the project has been put on hold, it will not be loaned out and the city will not be responsible to repay it.

In addition to the grant money, Cardali said the company had secured a commitment for up to an additional $400,000 in business loans, and was seeking $200,000 from the city.

After looking at the project, Carson said the city made the decision that if the project did not succeed, the city would be liable for $400,000 between the state grant and the money from the city’s revolving loan fund.

Carson said the administration decided it was not worth exposing the city to a situation where $400,000 of taxpayer money would have to be repaid. Carson added the administration felt NPL did not have adequate collateral to make the deal acceptable to the city.

“It was too much of a risk,” he said. “Banks have shareholders. We have taxpayers. I’m very disappointed that we weren’t able to make it work out.”

Bryant said the city worked with NPL to try to find other sources of money in an effort to save the project, but the efforts were unsuccessful.

Cardali said NPL is trying to decide what to do next. The company has almost $200,000 worth of equipment in storage. He said a number of potential employees who had expressed interest in joining NPL have taken other jobs or moved out of the area.

“We’re losing valuable employees,” he said.

While NPL would still like to open up in Westbrook, Cardali said he has been fielding calls from other towns in Maine and even in New Hampshire interested in having the company locate there. He said he has even appealed to Gov. John Baldacci for help.

“We’re just trying to evaluate whether we want to relocate to another location,” he said. “It’s kind of sad when other states will call you and offer you things your state should.”

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