Newark Group Files for Bankruptcy Protection

The Newark Group Inc. has reached an agreement with its primary creditor constituencies to significantly reduce debt and restructure the company's balance sheet and has begun a solicitation of votes for its prepackaged Chapter 11 plan of reorganization.

The company announced that it reached an agreement with a group of note holders representing more than three quarters of its outstanding 9.75 percent unsecured senior subordinated notes that would eliminate about $200 million of the company's unsecured debt upon the effective date of the prepackaged plan.  

The debt reduction would reduce annual cash interest costs by about $13 million and provide the company with the flexibility to focus on growth and profitability. In exchange for canceling the notes, note holders will receive 96.5 percent of the equity of the company upon the effective date of the prepackaged plan.

"We are pleased to have the support of our note holders and lenders as we move forward to strengthen our balance sheet and position the company for profitability," says Robert Mullen, president and CEO of The Newark Group. "As we navigate this process, we will continue to focus on customers, servicing them better than anyone else and developing product solutions to address their most difficult issues."   

The company adds that, subject to approval of the Bankruptcy Court, the claims of trade creditors, suppliers and employees will be paid in full in the ordinary course of business.  

During the Chapter 11 case, the company will continue normal operations under current management and does not anticipate any changes to its overall business or its ability to produce quality products.

In North America, The Newark Group operates a number of recovered paper operations that supply the company with substantially all of the recovered paper used in its domestic paperboard mills, which in turn supply the company with nearly all of the needs of its converting operations.

In North America, The Newark Group has 11 recovered paper plants, 8 paperboard mills and 22 converting plants. In Europe, the company has three paperboard mills and six converting plants. The company also has investments in three paper recovery businesses and 2 tube and core manufacturers in Europe.