Catalyst Paper Corp., headquartered in Richmond, British Columia, has applied for and received an initial court order under the Canada Business Corporations Act (CBCA) to commence the restructuring process with its note holders first announced on Jan. 14, 2012.
The company stresses that the restructuring is not a bankruptcy proceeding.
Catalyst says it also is seeking recognition of the proceedings with the U.S. Court in order for the Canadian order under the CBCA to be recognized in the United States.
According to an earlier Catalyst new release, the agreement for a recapitalization transaction will result in a significantly reduced debt burden. The paper company’s board and management team say that the recapitalization will offer a number of benefits, including:
- Enhanced flexibility to respond to the downturn in the market for paper, newsprint and pulp;
- Improved capital structure: $315.4 million reduction in debt; and
- Reduced cash interest expense of up to $25.5 million reduction in annual cash interest expense ($37.0 million if paid in kind to the maximum extent possible).
“This transaction addresses the company’s capital structure and interest payment obligations, extending its operating horizon,” says, Dallas Ross, director and chair of the company’s independent committee overseeing the note holder negotiation. “Based on extensive management analysis and independent review of options related to preservation of enterprise value, the board of directors is unanimous in its recommendation that all shareholders and note holders support this transaction.”
In a follow-up announcement, Catalyst Paper says a hearing on the proposed recapitalization transaction has been scheduled for Feb. 3, 2012.
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