Catalyst Paper to file new creditor plan
Insolvent paper maker looking to avoid sale of assets.
RICHMOND, BC: Catalyst Paper, which has already announced the sale of its assets, says it will file an amended plan of arrangement for court approval in the hopes that the new plan will be approved by creditors after its previous attempt failed.
The Richmond, BC-based company said it is seeking court approval to set meetings of its secured and unsecured creditors to consider the plan.
The meetings are tentatively set for June 25.
“We have received consent from a requisite number of our secured noteholders to move forward to a vote on the amended plan,” said Kevin J. Clarke, president and chief executive officer.
“This reflects the dedication of all parties to work toward a consensual deal that incorporates the many interests involved and that puts our company on better financial footing for the future.”
The major change to the plan is that all claims connected to the elimination of its extended health benefit plan will be able to vote along with all general unsecured claimants.
“Catalyst has been advised that there is substantial support for the amended plan by the holders of the extended health benefits claims that will be compromised under the amended plan,” it said.
“In addition, certain holders of unsecured notes who previously voted against the plan of arrangement or did not vote on the plan of arrangement have indicated that they will support the amended plan.”
The company said it has also proposed modifications to its salaried pension plan and solvency finding relief, adding that the Minister of Finance has indicated he will support those changes.
The company estimates the changes would save it $7 million annually if implemented.
Its previous plan failed to win support from enough of its lenders and from unionized workers at a mill in Crofton, BC, who rejected contract concessions.
Last month, it began the process of asking for proposals from prospective buyers to acquire the assets and business or to invest in the company.
The company said it would suspend the sales process if its amended plan is approved, but will continue with the sale while it is being considered.
The company was delisted from the Toronto Stock exchange in March.
Catalyst Paper has been going through a restructuring process under court protection from creditors. It has secured up to $175 million in debtor-in-possession financing from JP Morgan during the CCAA process.
The company also filed for Chapter 15 court protection in the US, a form that foreign companies operating in the U.S. employ when seeking protection from creditors.
Catalyst Paper manufactures diverse specialty mechanical printing papers, newsprint and pulp and sells to retailers, publishers and commercial printers in North America, Latin America, the Pacific Rim and Europe.
The company has three mills in BC and one in Arizona with a combined annual production capacity of 1.9 million tonnes.
© 2012 The Canadian Press