Catalyst Paper Corp. Debt

[Enterprising Investor]

For sale: Catalyst Paper, now that restructuring has failed (5/28/12)

Since its restructuring plan failed to win approval from unsecured creditors on May 23, Catalyst Paper has begun a sales process for its assets. A 73-day period to complete the sale began May 25.

One forest industry analyst told the Vancouver Sun that secured creditors will likely end up owning the company. The B.C. Supreme Court has already approved a “stalking horse bid” by the secured creditors for $275 million. The bid is intended to initiate an auction process, but Kevin Mason of ERA Forest Products Research says he doesn’t expect any other potential buyers, according to a report in the Vancouver Sun on May 25.

“It's pretty much a lock that they will end up owning the company," Mason said.

Catalyst Paper has said its debtor-in-possession (DIP) financing continues to be available and, combined with the company’s operating revenue, is expected to continue to provide sufficient liquidity to meet ongoing obligations to employees and suppliers and ensure that normal operations continue during the sale process.

Catalyst Paper operates three pulp and paper mills in British Columbia and a recycled mill in Arizona.

The company’s secured creditors approved of the company’s restructuring plan, but only 64% of unsecured creditors in favour of the plan. The plan required 66.6% approval from both sets of creditors.

According to the Vancouver Sun, three investment funds holding a significant number of the unsecured bonds sunk the plan.
The failure of the restructuring plan is not good news for Catalyst pensioners. The company pension plan will be wound up, and is expected to have a $115-million deficit.

Pensioner Gary McCaig told the Vancouver Sun the 1,500 people in the plan could have pensions reduced to 65% of current levels.

http://www.pulpandpapercanada.com/news/for-sale-catalyst-paper-now-that-restructuring-has-failed/1001413252/