Gov. Bob McDonnell announced Monday that Tak Investments will invest $60 million to establish a recycled tissue plant at International Paper’s Franklin mill.

The company subsidiary, ST Tissue, will recycle waste paper into tissue for napkins and towels and will create 85 jobs. Virginia competed against Wisconsin for the project.

The project will be the second to take a portion of the mill and repurpose it since International Paper’s paper-making machines were idled with the mill’s closure in 2010.

Another company, Franklin Pellets, announced in April 2011 that it planned to use a portion of the mill to produce wood pellets, and those plans are still on track, one of the business partners said recently. Isle of Wight County officials have confirmed that negotiations are in progress with at least one other co-user of the site, The Tidewater News reported earlier this month.

“Isle of Wight County is on a positive economic upswing, as this project brings the total jobs the region has gained since 2011 to more than 1,000,” McDonnell said in a press release announcing the Tak Investments project on Monday. “Not only will Tak Investments bring significant investment and 85 new jobs to the region, the company will repurpose and put into use a vacant portion of the International Paper mill.”

“It is a perfect fit, as ST Tissue has the opportunity to modify certain paper-making machinery already in the plant to produce its tissue products,” he said. “The available infrastructure and high-quality machinery, trained workforce and nearby abundant supply of natural resources put Virginia and Isle of Wight County ahead of the competition.”

Headquartered in Gaithersburg, Md., Tak Investments is owned by Washington, D.C.-area entrepreneur Sharad Tak, who got his start in providing computer-programming services to the federal government. Tak owns companies in several lines of business, including power generation, engineering and information technology.

“We enjoy the challenge of helping rebuild communities that we do business in,” said Tak, president and chief executive officer of Tak Investments. “A few years ago, we acquired a struggling tissue mill in Oconto Falls, Wis., and with help from the workforce and the surrounding community, we transformed the facility into a successful business. We envision the same sort of success here in Franklin, because the community has been incredibly supportive of our project, and the talent base here is also exceptional.”

The Virginia Economic Development Partnership worked with Isle of Wight County to secure the project. McDonnell approved a $200,000 grant from the Governor’s Opportunity Fund to assist with it.

The company also is eligible to receive state benefits from the Virginia Enterprise Zone Program, administered by the Virginia Department of Housing and Community Development. Through its Virginia Jobs Investment Program, the Virginia Department of Business Assistance will provide funding and services to support the company’s recruitment, training and retraining activities.

“We welcome ST Tissue and Tak Investments to our corporate community,” Al Casteen, chairman of the Isle of Wight County Board of Supervisors, stated in the governor’s release. “We are especially pleased that it involves repurposing a portion of the original International Paper property and again provides an opportunity for our very skilled paper mill employee labor pool to demonstrate their real talent at producing paper-related products in an effective and efficient manner.”