Donside Paper is on course for its second MBO in four years.
But no details about the MBO team’s backers or the value of the deal have yet been released.
A company spokesman declined to comment.
But any agreement is likely to be worth less than the £33m deal cut with UK Paper in 1997 because in December last year the company called in the receivers.
Last week, receivers PricewaterhouseCoopers announced that an MBO team led by managing director Mike Duckett had signed Heads of Agreement.
Donside went into receivership on December 12. PricewaterhouseCoopers was called in and quickly cut the workforce by about third, leaving 262 employees.