CHICAGO - Minnesota will update a review of Northwest Airline's finances before it issues up to $350 million of bonds to assist the carrier.

Although a court ruling earlier this month cleared the way for the state's bond issuance, the airline's troubled financial condition, which fueled rumors of bankruptcy recently, prompted the state to take a second look at the Eagan, Minn.-based airline's bottom line, said Bob Benner, Gov. Arne Carlson's spokesman on the Northwest financing.

Benner said the new review will be conducted by an independent group. It will begin next month and be completed by January, he said.

Last year, the state agreed to issue bonds to help Northwest build maintenance facilities in Duluth and Hibbing, based on a review by the Arvai Group. That review concluded Northwest was financially sound enough to make lease payments that would back the bonds.

Based on conclusions from the new study, state Finance Commissioner John Gunyou will determine whether Northwest has the ability to fulfill its end of the deal, Benner said.

Benner was optimistic that the state will move forward with the bond issue, which could allow Northwest to begin building its maintenance bases in the spring, he said. "We are going to find a way. It is going to happen, " he said.

Doug Miller, spokesman for Northwest, said the airline will be ready to begin building the maintenance facilities as soon as the bonds are issued.

However, the airline's shaky flnancial situation continues to cloud the picture, reportedly ralsing concerns by some Northwest executives about a possible Chapter 11 bankruptcy filing.

Miller denied that the airline plans to file for bankruptcy.

Standard & Poor's Corp. this month downgraded NWA Inc.'s $200 million of sentor unsecured notes to Ccc-plus from B-minus and put the rating on Creditwatch with negative implications.

Standard & Poor's also placed a B rating on subsidiary Northwest Airlines Inc.'s $7.7 million of Los Angeles Regional Airport Improvement Corp. special revenue bonds. The rating was included on CreditWatch for a possible downgrade.

Moody's Investors Service officials did not retum phone calls.

To add to its problems, Northwest recently exhausted the final portion of a $600 million credit line provided by its banks. The airline has about $4 billion of outstanding debt.

Benner said recent developments will provide the carrier with up to $600 million to help it weather the slow winter months.

He said the International Association of Machinists, which represents about 25,000 Northwest employees, has indicated a willingness to negotiate up to $300 million of wage concessions. In addition, KLM Royal Dutch Airlines yesterday announced it would lend the airline $50 million.

KLM invested $400 million in the 1989 buyout of Northwest by Wings Holdings Inc., a holding company. Northwest and KLM are reportedly completing a merger that would enable them to operate as separate companies. Benner said that "it is anticipated" that Bankers Trust and other banks will lend the airline the remaining $250 million.

"It's real good news," Benner said. "It isn't the long-term solution. We all know that. But the fact that this has occurred makes us positive that a more complete and long-term solution is possible. "

In addition, he said it was fair to assume" that the unions and Northwest management "will press" for a restructuring of the airline's existing debt. He said it was likely that Northwest would negotiate with the banks and KLM to "stretch out" the debt payments.

Under an agreement finalized last December among the airline, Minneapolis/St. Paul Airports Commission, and Minnesota, the state agreed to issue up to $350 million of general obligation and lease revenue bonds to finance Northwest's construction of the two maintenance facilities. Up to $175 million of the bonds will carry the state's GO pledge. Rating agencies have said it would mark the first time a state has given its GO pledge to benefit a major airline. In April, the Cqmmission sold $270 million of taxable bonds to help Northwest refinance its debt.

The state's portion of the deal had been delayed by a lawsuit challenging the state's ability to issue bonds for a private entity. But the Minnesota Supreme Court this month cleared the way for the state to issue bonds by upholding a lower court's dismissal of the suit.

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