UPDATE 1-French Michelin plant workers free two managers

(Adds Michelin statement, paragraphs 7-10)

TOUL, France Feb 17 (Reuters) - Workers at a Michelin (MICP.PA) plant in eastern France who locked two managers in a room for three days to protest the plant's closure released the pair on Sunday, and the firm said a deal on payouts was reached.

The French tyre giant has said it plans to shut the production plant in the eastern town of Toul at a cost of around 130 million euros ($190.9 million).

Talks between management and staff on compensation for the factory's roughly 800 staff have broken down, prompting the lock-in, which began on Thursday, and Economy Minister Christine Lagarde's appointment of a mediator on Saturday.

A Reuters witness saw the two managers leaving the factory accompanied by a local official on Sunday afternoon. The plant's staff stood in silence, turning their backs on the two men.

"We turned our backs on the management because it has been turning its back on us for at least four years," said one worker, who declined to be identified.

In a statement issued overnight, Michelin said an agreement with workers had been reached.

"Michelin wishes to express its satisfaction following the agreement reached tonight with the trade unions," it said, without elaborating on the terms of the agreement.

But it also said discussions would continue.

"This agreement makes it possible to pursue the implementation of measures to accompany the employees of the Toul factory in conditions favourable to the progress of discussions," it added.

The company said it would check security and production conditions by Monday morning.

Pierre Kovalski, a representative of the powerful CGT union, met the state mediator on Saturday, and Kovalski said on Sunday that the company had agreed to some concessions.

Michelin had agreed to give workers an extra payoff of between 2,000 and 3,000 euros per year worked at the company, and talks were due to continue.

"The conditions are in place for dialogue to be restored," the head of the factory, Henri de la Graviere, said.

But Michelin managing partner Michel Rollier said the plant would definitely shut down.

"It is unavoidable," he said in an interview with newspaper La Tribune released ahead of publication in Monday's edition.

"We are offering each employee two jobs in one of our group's 16 factories in France. For those who do not want to or cannot move, we are offering personalised help until they find a job. Until then, they will remain Michelin staff. The period will last up to twelve months," he said. (Reporting by Marine Jobert; writing by Francois Murphy; editing by Jeffrey Benkoe)