Catalyst Paper Corp. Debt

[Enterprising Investor]

Catalyst Paper publishes notice of sale and investor solicitation process (5/31/12)

RICHMOND, BC, May 31, 2012 /PRNewswire via COMTEX/ -- Catalyst Paper Corporation advises that under order of the Supreme Court of British Columbia authorizing procedures for a sale and investor solicitation process, the following notice was published today in The Globe & Mail and The Wall Street Journal:

TAKE NOTICE THAT pursuant to certain Court Orders of the Supreme Court of British Columbia (the "Court") in respect of Catalyst Paper Corporation and related entities (collectively "Catalyst Paper") in the matter of the Companies' Creditors Arrangement Act, the Canada Business Corporations Act, and the British Columbia Business Corporations Act, Catalyst Paper obtained Court approval to conduct a sale and investor solicitation process (the "SISP"). Pursuant to the SISP, Catalyst Paper, with the assistance of its financial advisor Perella Weinberg Partners LP ("Perella"), is soliciting proposals from prospective trategic and financial parties to acquire the property, assets and business of, or to invest in, Catalyst Paper. atalyst Paper manufactures diverse specialty mechanical printing papers, newsprint and pulp. Its customers include retailers, publishers and commercial printers in North America, Latin America, the Pacific Rim and Europe. With four mills, located in British Columbia and Arizona, Catalyst Paper has a combined annual production capacity of 1.8 million tonnes. Catalyst Paper is headquartered in Richmond, British Columbia, Canada and is ranked by Corporate Knights magazine as one of the 50 Best Corporate Citizens in Canada. The SISP contains certain timelines that are required to be met including a requirement that parties who are interested in participating deliver certain information and take certain steps no later than June 6, 2012.

Interested parties should make inquiries as soon as possible and can obtain additional information by contacting:

Nancy Turner, Managing Director
PERELLA WEINBERG PARTNERS
One California Street, Suite 2250
San Francisco, CA 94111
Tel: [phone]
[e-mail]

The Court appointed PricewaterhouseCoopers Inc. as the Monitor (the "Monitor") of Catalyst Paper. A copy of the Court Order approving the SISP, as well as a copy of the SISP and related documents, can be found www.pwc.com/car-catalystpaper

SOURCE Catalyst Paper Corporation

[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/

[Enterprising Investor]

CTLFQ announces Amendments to Plan of Arrangement (5/15/12)

Tuesday, May 15, 2012

Richmond, BC – Catalyst Paper today announced that it has amended its proposed Plan of Arrangement (the Plan) under the Companies’ Creditors Arrangement Act. The Plan as so amended (the Amended Plan) will be considered by Catalyst Paper’s secured and unsecured creditors at the meetings scheduled for May 23, 2012 (the Meetings).

“We’re pleased that over the past weeks, the various stakeholders, advisors and the company have worked diligently to craft an agreement that sizably reduces the company’s debt level,” said Kevin J. Clarke, President and Chief Executive Officer. “This agreement, with the support of creditors at the meetings on May 23, 2012, will enable Catalyst to emerge from creditor protection with improved liquidity and the capacity to return and sustain normal trade terms for the foreseeable period.”

The court-appointed monitor (the Monitor) is recommending that creditors vote in favour of the Amended Plan at the Meetings. Catalyst Paper’s Board of Directors is unanimously recommending that all holders of First Lien Notes, Unsecured Notes and General Unsecured Claims vote in favour of the Amended Plan at the Meetings.

For more information please refer to Catalyst Paper’s information circular dated March 23, 2012 (the Circular) available on SEDAR (www.sedar.com), EDGAR (www.sec.gov) and Catalyst Paper’s web page (www.catalystpaper.com). Terms used in this news release that are defined in the Circular have corresponding meanings. In the event there is any inconsistency between the terms of the Amended Plan and the summary of the Amended Plan set forth below, the Amended Plan will govern.

The principal changes to the Plan include:

· A reduction of US$120 million in the amount of notes to be issued under the Amended Plan so that the total debt reduction under the Amended Plan will be US$435 million (rather than the US$315 million reduction under the Plan);

- the reduction of the principal amount of New First Lien Notes to be issued under the Plan from US$325 million to US$250 million; and

- the elimination of the New First Lien Coupon Notes to be issued under the Plan (approximately US$45 million);

· the distribution of 50% of the net proceeds (PREI Proceeds Pool) from the sale of Catalyst Paper’s interest in Powell River Energy Inc. and Powell River Energy Limited Partnership (PREI Interest) to Unsecured Creditors who do not receive a Convenience Cash Amount or elect to receive equity;

· 100% of the New Common Shares to be issued to holders of the First Lien Notes subject to the ability for Unsecured Creditors to elect (Equity Election) to acquire up to 600,000 New Common Shares (4%) rather than receive cash from the PREI Proceeds Pool or the Maximum Convenience Claims Pool; and

· the elimination of the issuance of the Warrants under the Plan.

There were no changes to the provisions of the Plan relating to the payment of Convenience Cash Amounts.

The Amended Plan
Specifically, the Amended Plan treats each of the creditor classes as follows:

11% Senior Secured Notes due 2016 (First Lien Notes)

· Pursuant to the Amended Plan, Catalyst Paper’s US$390.4 million aggregate principal amount of outstanding First Lien Notes will be exchanged for:

- US$250 million aggregate principal amount of 11% first lien notes due November 1, 2017 (New First Lien Notes) allocated as to US$182 million on account of the Class A Notes and US$68 million on account of the Class B Notes; and

- 14.4 million New Common Shares of Catalyst Paper (being 100% of the outstanding common shares of Catalyst Paper subject to dilution from the issuance of common shares to Unsecured Creditors who make the Equity Election described below and under any Management Incentive Plan), 10,502,352 New Common Shares on account of the Class A Notes and 3,897,648 New Common Shares on account of the Class B Notes.

Prior to this amendment, the Plan provided that the outstanding First Lien Notes would be exchanged for (a) US$325 million aggregate principal amount of New First Lien Notes (b) 80% of Catalyst Paper’s New Common Shares and (c) New First Lien Coupon Notes in a principal amount equal to accrued and unpaid interest on the New First Lien Notes as of the Effective Date.

7 3/8% Senior Notes Due 2014 (Unsecured Notes)

· Pursuant to the Amended Plan, Catalyst Paper’s US$250 million aggregate principal amount of outstanding Unsecured Notes will be exchanged as follows:

- unless the holder of Unsecured Notes has made an Equity Election, such holder will receive its pro rata share (calculated by reference to the aggregate amount of all claims of Unsecured Creditors allowed under the Plan) of the PREI Proceeds Pool; and

- each holder of Unsecured Notes may elect (the Equity Election) to receive its pro rata share (calculated by reference to the aggregate amount of all claims of Unsecured Creditors allowed under the Plan) of 600,000 New Common Shares of Catalyst Paper rather than participate in the PREI Proceeds Pool. An Equity Election Form and information on how to make such election will be provided to Unsecured Creditors following the Sanction Order.

General Unsecured Claims

· Pursuant to the Amended Plan, in exchange for all General Unsecured Claims, each holder of an allowed General Unsecured Claim shall receive:

- Unless the holder of such General Unsecured Claim has made an Equity Election or a Cash Election or is a Convenience Creditor, such holder will receive its pro rata share (calculated by reference to the aggregate amount of all claims of Unsecured Creditors allowed under the Plan) of the PREI Proceeds Pool;

- Each holder of an allowed General Unsecured Claim who has not made a Cash Election may elect by way of the Equity Election to receive its pro rata share (calculated by reference to the aggregate amount of all claims of Unsecured Creditors allowed under the Plan) of 600,000 New Common Shares of Catalyst Paper rather than receive such holder’s pro rata share of the PREI Proceeds Pool or Convenience Cash Amount. Holders of General Unsecured Claims who have filed a Cash Election under the prior Plan and who wish to file an Equity Election under the Amended Plan must revoke their prior Cash Election prior to the date of the meetings. See “Revoking a Cash Election” below; and

- Each holder of a General Unsecured Claim equal to or less than C$10,000 (unless such holder makes an Equity Election) and holders of General Unsecured Claims in an amount over C$10,000 who validly file a Cash Election (pursuant to which the allowed amount of such holder’s General Unsecured Claim will be reduced to C$10,000), will receive cash in an amount equal to 50% of such holder’s allowed General Unsecured Claim, provided that the aggregate amount of cash payable to all such holders shall not exceed C$2.5 million.

Prior to this amendment, the Plan provided that the outstanding Unsecured Notes and General Unsecured Claims would be exchanged for (a) 20% of Catalyst Paper’s New Common Shares (b) Warrants exercisable, on a cashless basis, to acquire up to 15% of the fully diluted New Common Shares of Catalyst Paper for up to four years from the effective date of the Plan and (c) in respect of holders of General Unsecured Claims in an amount equal to or less than C$10,000 (or who agreed to reduce their claim to such amount), cash in an amount equal to up to 50 percent of such holder’s General Unsecured Claims (unless they elected to receive the New Common Shares and Warrants referred to above), provided that the aggregate amount of cash payable to such holders would not exceed C$2.5 million.

PREI Proceeds Pool

Under the Amended Plan, Catalyst has agreed to use commercially reasonable efforts to sell all of its right, title and interest in Powell River Energy Inc. and the Powell River Energy Limited Partnership (PRELP) comprising 50,001 common shares in Powell River Energy Inc., long term subordinated debt of $20.8 million owed by Powell River Energy Inc. to Catalyst Paper Energy Holdings Inc. and a 49.95% limited partnership interest in PRELP. The PREI Proceeds Pool shall consist of an amount equal to 50% of the net proceeds received by Catalyst on account of the sale of the PREI Interest. The sale shall be conducted pursuant to an amended sale and investor solicitation process, which would likely not include a stalking horse bid, to be established and approved by the Supreme Court of British Columbia (Court) following obtainment of the Sanction Order for the Plan and is subject to the terms of a contractual right of first refusal in favour of Catalyst’s joint venture partner.

Power River Energy Inc. owns two hydroelectric dams near the Powell River mill, with a combined generating capacity of 83 megawatts. Pursuant to a power purchase agreement between Catalyst Paper and Power River Energy Inc., Power River Energy Inc. provides the power generated by its facilities to Catalyst Paper at a fixed rate approximating current British Columbia Hydro and Power Authority rates. Power River Energy Inc.’s hydroelectric facilities supply approximately 40% of the annual power needs of the Powell River mill, although this amount varies depending on hydrological conditions. The power purchase agreement will continue following the sale.

New First Lien Notes

· There are no material changes to the terms of the New Notes under the Amended Plan other than as described above and other than:

- the Priority Lien Debt Cap will be reduced from US$400 million to US$325 million;

- the definition of Threshold PIK Notes will be revised to refer to New Notes outstanding, if any, in excess of US$250 million (as opposed to US$325 million), excluding any New Notes issued after the issue date (other than any PIK notes); and

- the maturity date of the New Notes will be November 1, 2017 rather than October 30, 2017.

Required Approvals
Implementation of the Amended Plan will be subject to the requisite approval by Catalyst Paper’s secured and unsecured creditors at the Meetings to be held on May 23, 2012, the approval of the Court and, to the extent applicable, the approval of the United States Bankruptcy Court for the District of Delaware. In the event the Amended Plan is not approved at the Meetings, Catalyst Paper will commence a sale transaction in accordance with certain agreed and Court-approved sale and investor solicitation procedures.

Conditions and Timing of Distributions
Implementation of the Amended Plan remains subject to a number of other conditions including a condition that Catalyst shall have entered into agreements with respect to a new ABL Facility and, if necessary, Exit Facility, satisfactory to the Majority Initial Supporting Noteholders, in consultation with the Initial Supporting Unsecured Noteholders. The conditions are set out in the Amended Plan and in the Circular. Please see below for information as to how to obtain a copy of these documents. Under the Amended Plan, each of these conditions must be satisfied within 45 days of the date of the Sanction Order unless such condition is waived or the date for fulfillment is extended in accordance with the provisions of the Amended Plan.

The Amended Plan contemplates that distributions to the holders of the Unsecured Notes and General Unsecured Creditors (other than General Unsecured Creditors who are receiving the Convenience Cash Amount) will not be made until all claims of Unsecured Creditors being disputed have been allowed or determined by Final Order in accordance with the Claims Procedure Order.

Voting
Catalyst Paper’s Board of Directors is unanimously recommending that all holders of First Lien Notes, Unsecured Notes and General Unsecured Claims vote in favour of the Amended Plan at the Meetings. The Meetings to consider the Amended Plan will be held on May 23, 2012 at the Westin Wall Centre, Vancouver Airport, 3099 Corvette Way, Richmond, BC at 10:00 am for Unsecured Creditors (including holders of Unsecured Notes and General Unsecured Claims) and 11:00 am for First Lien Noteholders.

For instructions on how to vote at the Meetings, please refer to the Circular (available on SEDAR (www.sedar.com), EDGAR (www.sec.gov) and Catalyst Paper’s web page (www.catalystpaper.com)). Please contact the Monitor with any questions regarding voting.

Revoking a Proxy
· Individuals who have already submitted a proxy may revoke their proxy by delivering to the Monitor a document specifying that the proxy is revoked that is signed by the individual or the individual’s attorney duly authorized in writing.

· Creditors who are not individuals who have already submitted a proxy may revoke their proxy by delivering to the Monitor a document specifying that the proxy is revoked that is signed by a duly authorized officer or attorney thereof.

Such documents must be delivered to the Monitor at PricewaterhouseCoopers Inc., 250 Howe Street, Suite 700, Vancouver, British Columbia, V6C 3S7 (Attention: Patricia Marshall), phone: [phone] or email: [e-mail] prior to the commencement of the Meetings.

Holders of First Lien Notes and Unsecured Notes who wish to change voting instructions previously given should contact Globic Advisors, Inc. (Attention: Robert Stevens) at One Liberty Plaza, 23rd Floor, New York, NY 10006, phone: [phone], facsimile: 212-271-3252 or email: [e-mail] for additional information.

Revoking a Cash Election
Holders of General Unsecured Claims in excess of $10,000 who previously filed an election (Cash Election) to receive cash for their General Unsecured Claim may revoke their Cash Election by contacting the Monitor (please see the contact information below) and completing the form that will be provided by the Monitor. Any previously filed Cash Election must be revoked prior to the date of the Meetings in order to make an Equity Election.

Certain Canadian Federal Income Tax Considerations
The following discussion supplements the summary of certain Canadian federal income tax considerations of the Restructuring located under the heading “Certain Canadian Federal Income Tax Considerations” (the Canadian Tax Disclosure) in the Circular. The following summary is of a general nature only and is not intended to be, nor should be construed to be, legal or tax advice to any particular Affected Claimholder. This discussion is subject to the limitations, assumptions and caveats set out in the Canadian Tax Disclosure. Consequently, Affected Claimholders are urged to consult read carefully the following discussion, the Canadian Tax Disclosure and to consult their own tax advisors for advice as to the tax considerations in respect of the Restructuring having regard to their particular circumstances.

Residents of Canada

Pursuant to the Restructuring, Resident Affected Claimholders will dispose of their First Lien Notes and will receive consideration comprised of the New First Lien Notes and New Common Shares. Similarly, Resident Affected Claimholders will dispose of their Unsecured Notes or General Unsecured Claims, as applicable, and will receive consideration comprised of a pro rata share of the PREI Proceeds Pool, New Common Shares or cash, as applicable. In general, the transfer by a Resident Affected Claimholder of its First Lien Notes, Unsecured Notes or General Unsecured Claims for New Common Shares, New First Lien Notes, PREI Proceeds Pool or cash, as applicable, pursuant to the Restructuring will result in a gain or loss as described in the Tax Disclosure. Resident Affected Claimholders will be required to value their share of the PREI Proceeds Pool as of the Effective Date based on all available facts and circumstances at the time they file their tax returns. Because the amount of cash to be received under the PREI Proceeds Pool is uncertain, the fair market value of the PREI Proceeds Pool is not clear. A Resident Affected Claimholder’s adjusted cost base of its pro rata share of the PREI Proceeds Pool received pursuant to the Restructuring will be equal to the fair market value thereof on the Effective Date.

A Resident Affected Claimholder holding First Lien Notes or Unsecured Notes will generally be required to include in its income the amount of interest in respect of the First Lien Note or the Unsecured Notes as described in the Tax Disclosure in the context of the Unsecured Notes (under the heading “Disposition of Unsecured Notes, First Lien Notes and General Unsecured Claims”); however, where a Resident Affected Claimholder is required to include an amount in income on account of interest on the First Lien Notes or Unsecured Notes, as the case may be, that is not paid on the Restructuring, the Resident Affected Claimholders should be entitled to a deduction in computing income of an equivalent amount.

A Resident Affected Claimholder that holds its Unsecured Notes in a trust governed by a Deferred Plan should consult its tax advisors for purposes of determining whether the Restructuring, including the right to receive PREI Proceeds Pool, will give rise to any adverse tax consequences.

Non-Residents of Canada

No taxes will be payable under the ITA by a Non-Resident Affected Claimholder upon the disposition of the First Lien Notes, the Unsecured Notes or the General Unsecured Claims by the Non-Resident Affected Claimholder to the Corporation for New Common Shares, New First Lien Notes, PREI Proceeds or cash, as applicable, pursuant to the Restructuring.

To the extent that amounts received under the PREI Proceeds Pool by a Non-Resident Affected Claimholder constitutes “participating debt interest” for purposes of the ITA, such amount will be subject to Canadian withholding tax at the rate of 25%, subject to relief provided under an applicable income tax treaty or convention between Canada and the country in which the Non-Resident Affected Claimholder resides.

Certain U.S. Federal Income Tax Considerations
The following discussion supplements the summary of certain material U.S. federal income tax consequences of the Restructuring located under the heading “Certain U.S. Federal Income Tax Considerations” (the Tax Disclosure) in the Circular. This discussion does not purport to be a complete analysis of all of the potential U.S. federal income tax considerations that may be relevant to U.S. Holders in light of their particular circumstances, and U.S. Holders are urged to read carefully the Tax Disclosure and to consult their own tax advisors.

The exchange of First Lien Notes for New First Lien Notes and New Common Shares should constitute a recapitalization, as discussed in the Tax Disclosure, and a U.S. Holder that exchanges First Lien Notes generally will not recognize any gain or loss as a result of such exchange (except to the extent of any New First Lien Notes or New Common Shares allocable to accrued and unpaid interest) and will have a holding period for the New First Lien Notes and New Common Shares (except to the extent allocable to accrued and unpaid interest) that includes its holding period of the First Lien Notes.

The exchange of Unsecured Notes for a pro rata share of the PREI Proceeds Pool will be a taxable exchange, and a U.S. Holder of Unsecured Notes who does not make a valid Equity Election will recognize gain or loss equal to the difference between its basis in the Unsecured Notes and its share of the PREI Proceeds Pool received in exchange therefor (except to the extent attributable to accrued and unpaid interest, which a U.S. Holder will recognize as ordinary income to the extent it has not already). The Exchange of Unsecured Notes for New Common Shares should constitute a recapitalization, as discussed in the Tax Disclosure, and any U.S. Holders of Unsecured Notes who make a valid Equity Election generally will not recognize any gain or loss as a result of such exchange (except to the extent of any New Common Shares allocable to accrued and unpaid interest) and will have a holding period for the New Common Shares (except to the extent allocable to accrued and unpaid interest) that includes its holding period of the Unsecured Notes.

U.S. Holders of General Unsecured Claims will recognize gain or loss as described in the Tax Disclosure.

Further Information and Monitor Contact Information
A copy of the Amended Plan as well as additional information concerning the Amended Plan and the Meetings is contained on the Monitor’s website, which is available at http://www.pwc.com/ca/en/car/catalyst-paper-corporation/index.jhtml.

Creditors who have questions about the Amended Plan or the Meetings may contact the Monitor at PricewaterhouseCoopers Inc., 250 Howe Street, Suite 700, Vancouver, British Columbia, V6C 3S7 (Attention: Patricia Marshall), phone: [phone] or email: [e-mail].

General Information
This press release is not an offer to sell or the solicitation of an offer to buy the New First Lien Notes or the New Common Shares to be issued in connection with the Amended Plan. Such securities have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Catalyst Paper manufactures diverse specialty mechanical printing papers, newsprint and pulp. Its customers include retailers, publishers and commercial printers in North America, Latin America, the Pacific Rim and Europe. With four mills, located in British Columbia and Arizona, Catalyst has a combined annual production capacity of 1.8 million tonnes. The company is headquartered in Richmond, British Columbia, Canada and is ranked by Corporate Knights magazine as one of the 50 Best Corporate Citizens in Canada.

Forward-Looking Statements
Certain matters set forth in this news release, including statements with respect to implementation of the plan of arrangement and the benefits to the company of the plan of arrangement, are forward looking. These forward-looking statements reflect management’s current views and are based on certain assumptions including assumptions as to future operating conditions and courses of action, economic conditions and other factors management believes are appropriate. Such forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in these statements, including failure to obtain court approval, failure to obtain the requisite approvals of holders of the First Lien Notes and Unsecured Notes and other creditors, and those risks and uncertainties identified under the heading “Risk Factors” in the Circular and under the heading “Risks and Uncertainties” in Catalyst’s management’s discussion and analysis contained in Catalyst’s annual report for the year ended December 31, 2011 and report for the first quarter of 2012, all of which are available at www.sedar.com.

For information contact:

Investors:

Brian Baarda
Vice-President, Finance & CFO
604-247-4710

Alistair MacCallum
Vice-President, Treasurer & Corporate Controller
604-247-4037

Media:
Lyn Brown,
Vice-President, Marketing & Corporate Responsibility
604-247-4713

http://www.catalystpaper.com/media/news/community/catalyst-paper-announces-amendments-plan-arrangement

[Enterprising Investor]

CTLFQ poised to scrap Elk Falls mill, sell three others (3/28/12)

Richmond-based firm urges creditors to take restructuring plan seriously

By Gordon Hamilton, Vancouver Sun March 26, 2012

Catalyst Paper plans to seek court approval today to sell its pulp-and-paper mills to the highest bidder at a bargainbasement price, if its creditors do not approve a restructuring plan similar to one they have already rejected.

In an undated letter to creditors filed in B.C. Supreme Court, Catalyst president Kevin Clarke urges them "to give serious attention" to the restructuring plan. Secured and unsecured creditors are to vote on the plan April 23 in Richmond.

In the event the plan is not accepted, Catalyst has filed a petition seeking approval to enter into an agreement with a so-called "stalking horse bidder" to sell the entire company for a value up to $395 million, the amount of debt held by its secured noteholders. The intent in seeking a stalking horse bidder, not named in the court documents, is to initiate a competitive bidding process.

It has also filed documents in court seeking approval of a deal to sell its mothballed Elk Falls pulp mill at Campbell River. The mill closed in 2010. Catalyst has already negotiated a deal with scrap-metal contractor Schnitzer Steel, the documents state.

The drastic actions outlined in the court documents are the culmination of Catalyst's attempts to reach a deal with creditors to restructure its $810 million in debt.

The Richmond-based pulp and paper maker sought creditor protection Jan. 31 after its secured and unsecured noteholders rejected a plan that would have swapped $645 million of that debt for $325 in new bonds and equity in new shares.

Its secured bonds are now trading at 52 cents on the dollar and its unsecured bonds are trading at less than two cents. Catalyst shares have been de-listed.

In its most recent quarterly financial report, Catalyst wrote down the value of its three coastal pulp-and-paper mills and a recycled paper mill in Arizona to $385 million, mills that as recently as three years ago were valued at more than $2 billion.

The downfall of a business that was once the heart of the mighty coastal pulp-and-paper business was inevitable, said financial analyst Kevin Mason, of ERA Forest Products Research.

Most of North America's paper giants are either in some form of bankruptcy protection or emerging from it.

"It's plain and simple: Just take a look at demand for newsprint and paper in North America," Mason said.

"We are witnessing monster value destruction of a capitalintensive industry that carries a lot of debt."

Mason said the difficulty for bondholders is that there are wide differences of opinion as to what B.C.'s coastal pulp-and-paper industry is worth. The North American newsprint industry has already taken significant double-digit hits to demand. The telephone directory business dropped 20 per cent in 2011 alone. Pulp, which was selling for record prices last year, is now in a slump, adding further difficulty in setting a value for the mills.

Mason said selling the Elk Falls mill for scrap is its most likely fate because demand in North America for its paper machines is non-existent and Asian buyers are unlikely to be attracted.

Its product line doesn't fit the Asian demand profile, he said.

Karen Cooling, a spokeswoman for the Communications, Energy and Paperworkers Union of Canada, the largest of two unions at the remaining three B.C. mills, said the prospect of the Elk Falls mill being dismantled is troubling.

"It takes away some hope from Campbell River," she said, "and it raises the potential for all those mills being shut down and scrapped."

One piece of news that might improve chances of the company's creditors agreeing to swap debt for equity, Mason said, is that Catalyst recently reached labour agreements with unions representing workers at the company's remaining Crofton, Port Alberni and Powell River mills. The 1,080 workers have accepted a 10-per-cent reduction in hourly rates along with adjustments to vacation, health benefits and work rules.

Catalyst Paper estimates the labour agreements will save $18 million to $20 million a year.

Clarke said in a news release that the fact that the unions signed the agreements demonstrates that workers are "taking action to save jobs and ensure we have a viable and competitive business for the future."

Cooling said workers weighed what is "fair and reasonable" in deciding to sign concessionary contracts.

"Our members in those locals do acknowledge all the challenges that Catalyst is facing and that the industry is facing," she said.

"They did it for themselves, for their communities, and so there can continue to be a pulp and paper industry in this province."

Mason said a savings of $20 million a year can add significantly to the value of the company as it will boost cash flow projections and be included in the numbers analysts use in valuing the ongoing businesses.

[e-mail]

Blog: vancouversun.com/resources

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Read more: http://www.vancouversun.com/business/Catalyst+poised+scrap+Falls+mill+sell+three+others/6335184/story.html#ixzz1qSNPzmnJ

[Enterprising Investor]

CTLFQ enters into Restructuring and Support Agreement (3/12/12)

RICHMOND, BC, March 12, 2012 /PRNewswire/ - Catalyst Paper Corporation announced today that the company has entered into an agreement (the Agreement) with certain holders of its 11% senior secured notes due 2016 (Senior Secured Notes) and 7 3/8% senior notes due 2014 (Senior Notes) with respect to a plan of arrangement under the Companies' Creditors Arrangement Act (CCAA). The company filed for protection under the CCAA on January 31, 2012.

Catalyst Paper and its Board of Directors believe that entering into the Agreement and the restructuring transactions set out in the Agreement that will form the basis of Catalyst's plan of arrangement are the best alternative available to the company and its noteholders, shareholders and other stakeholders. The proposed plan of arrangement will address Catalyst's current debt level, preserve jobs and preserve Catalyst's business as a going concern for the benefit of all stakeholders and the communities in which Catalyst operates.

"The proposed plan of arrangement provides the opportunity to reposition Catalyst Paper for the future at this very challenging time for the entire paper and pulp industry," said Kevin J. Clarke, President and Chief Executive Officer. "There are many interested parties involved and we are continuing to work hard to address the requirements that will enable us to finalize this transaction in a timely and effective manner."

The Agreement, which requires its signatories to support the restructuring transactions described therein by, among other things, agreeing to vote in favour of the proposed plan of arrangement, has been signed by (a) holders of Senior Secured Notes holding approximately US$164 million aggregate principal amount of outstanding Senior Secured Notes and (b) holders of Senior Notes holding approximately US$34.5 million aggregate principal amount of outstanding Senior Notes. The company expects additional holders of Senior Secured Notes and Senior Notes to sign the Agreement and agree to vote in favour of and support the plan of arrangement.

Implementation of the plan of arrangement will be subject to requisite approval by holders of the Senior Secured Notes and holders of the Senior Notes and other creditors at meetings to be held to consider the arrangement, the approval of the Supreme Court of British Columbia and receipt of all necessary regulatory approvals. The Agreement provides that in the event a plan of arrangement is not approved by the requisite voting threshold, the company will commence a sale transaction in accordance with certain agreed sale and investor solicitation procedures. The Agreement is subject to termination in certain circumstances, including if a new labour agreement with all union locals at the company's Canadian mills has not been ratified.

The specific terms of the Agreement include:

- Catalyst Paper's US$390.4 million aggregate principal amount of outstanding Senior Secured Notes will be exchanged for:

* US$325 million aggregate principal amount of new 11% first lien notes (the New Notes), the terms of which are described below;


* 80% of the company's common shares (subject to dilution from common shares issued to holders of warrants, as described below); and

* new first lien coupon notes (the Coupon Notes) in a principal amount equal to accrued and unpaid interest under the Senior Secured Notes to the effective date of the arrangement, the terms of which are described below.

- Catalyst Paper's US$250 million aggregate principal amount of Senior Notes and all existing unsecured non-priority claims against the company that have not been otherwise satisfied (General Claims) will be exchanged for:

* 20% of the company's common shares (subject to dilution from common shares issued to holders of warrants); and

* warrants which will be exercisable, on a cashless basis, to acquire up to 15% of the fully diluted common shares of the company as of the effective date of the plan of arrangement at an exercise price aggregate equity value of $111.7 million, for up to four years from the effective date of the plan of arrangement;

* holders of General Claims in an amount under a dollar threshold to be specified (or who agree to reduce their claim to such threshold amount) will receive cash up to a certain percentage of such holder's General Claim unless they elect to receive the common shares and warrants described above, provided that the aggregate amount of cash payable to such holders shall not exceed $2.5 million.

- All existing common shares, as well as options, warrants, rights or similar instruments, will be cancelled and extinguished for no consideration.

- A new Board of Directors will be appointed as part of the transaction.

The New Notes will have substantially the same terms and conditions as the company's existing Senior Secured Notes with certain exceptions including:

- the maturity date of the New Notes will be the earlier of (i) six months after the end date of the new labour agreements and (ii) December 16, 2017, provided that the maturity date will never be earlier than December 16, 2016;

- interest on the New Notes will be payable semi-annually in cash at an annual interest rate of 11% or, at the option of company, interest may be partially paid in kind, but if that option is taken for any semi-annual interest payment, interest for that payment will be calculated at an annual rate of 13% with 7.5% being paid in cash and 5.5% being paid in kind through the issuance of additional New Notes;

- security will be all collateral securing the Senior Secured Notes, plus certain Excluded Assets (as defined in the indentures governing the Senior Secured Notes) where the consent of a third party is not required to charge such Excluded Assets;

- the New Notes will have an annual cash flow sweep, subject to a minimum liquidity threshold. Any amounts paid to holders of the New Notes from the cash flow sweep will be used to pay down the principal amount of the New Notes at par value;

- the company will be able to issue up to an additional US$75 million in principal amount of New Notes, subject to the consent of holders of 75% in principal amount of New Notes if the company's secured debt to EBITDA ratio, pro forma for the issuance of the additional New Notes, exceeds 3.0 times; and

- the company will be able to repurchase the New Notes for 103% of their principal amount until December 15, 2013 and 100% thereafter.

The Coupon Notes will have the same terms as the New Notes except:

- no interest will be payable on the Coupon Notes; and

- the Coupon Notes will have a quarterly cash flow sweep, subject to a minimum liquidity threshold. Any amounts paid to holders of the Coupon Notes from the cash flow sweep will be used to pay down the principal amount of the Coupon Notes at par value.
The company's Board of Directors, supported by a recommendation of an independent committee of the Board, is unanimously recommending that all holders of Senior Secured Notes and Senior Notes and other creditors support the plan of arrangement.

Blake, Cassels & Graydon LLP and Skadden, Arps, Slate, Meagher & Flom LLP are acting as the company's legal counsel and Perella Weinberg Partners is acting as the company's financial advisor with respect to the recapitalization. Akin Gump Strauss Hauer & Feld LLP and Fraser Milner Casgrain LLP are acting as counsel to certain of the holders of Senior Secured Notes and Moelis & Company is acting as financial advisor to such noteholders with respect to the recapitalization. Goodmans LLP and Kramer Levin LLP are acting as counsel to certain of the holders of Senior Secured Notes and Senior Notes and Houlihan Lokey Capital, Inc. is acting as financial advisor to such noteholders with respect to the recapitalization.

Details of the plan of arrangement will be provided in an information circular expected to be distributed to holders of the Senior Secured Notes and Senior Notes and to other creditors in April, 2012.

Further information is contained in the Agreement, a copy of which will be available on SEDAR (www.sedar.com), EDGAR (www.sec.gov) and the company's web page (www.catalystpaper.com). Investors who have questions about the plan of arrangement may contact Nancy Turner of Perella Weinberg Partners, the financial advisor for Catalyst Paper, at 415-671-4550.

This press release is not an offer to sell or the solicitation of an offer to buy the New Notes, the Coupon Notes or the new common shares and warrants to be issued in connection with the plan of arrangement. Such securities have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Catalyst Paper manufactures diverse specialty mechanical printing papers, newsprint and pulp. Its customers include retailers, publishers and commercial printers in North America, Latin America, the Pacific Rim and Europe. With four mills, located in British Columbia and Arizona, Catalyst has a combined annual production capacity of 1.8 million tonnes. The company is headquartered in Richmond, British Columbia, Canada and is ranked by Corporate Knights magazine as one of the 50 Best Corporate Citizens in Canada.

Forward-Looking Statements

Certain matters set forth in this news release, including statements with respect to implementation of the plan of arrangement and the benefits to the company of the plan of arrangement, are forward looking. These forward-looking statements reflect management's current views and are based on certain assumptions including assumptions as to future operating conditions and courses of action, economic conditions and other factors management believes are appropriate. Such forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in these statements, including failure to obtain court approval, failure to obtain the requisite approvals of holders of the Senior Secured Notes and Senior Notes and other creditors, failure by any union locals at Catalyst's Canadian mills to ratify the new labour agreement and those risks and uncertainties identified under the heading "Risks and Uncertainties" in Catalyst's management's discussion and analysis contained in Catalyst's annual report for the year ended December 31, 2011, available at www.sedar.com.

SOURCE Catalyst Paper Corporation

http://www.prnewswire.com/news-releases/catalyst-enters-into-restructuring-and-support-agreement-142302265.html

[56Chevy]

Asset impairments drive 2011 loss, negative outlook leads to CCAA filing

RICHMOND, BC, Feb. 29, 2012 /PRNewswire/ - Catalyst Paper (TSX:CTL) posted a net loss of $974.0 million ($2.55 per common share) in 2011 due in large part to asset impairments on Canadian and Arizona-based operations. Other factors contributing to the loss were capital restructuring costs, a foreign exchange loss on the translation of U.S. dollar denominated debt and fire-related outages at the Snowflake and Powell River mills. The company's net loss in 2010 was $396.9 million ($1.04 per common share).

"We faced formidable economic and currency headwinds through 2011 made worse by the fourth-quarter drop-off in pulp prices and a weaker five-year paper and pulp industry forecast released in February 2012. These combined factors triggered the requirement to take a $660.2 million impairment charge on Canadian operations," said Catalyst President & CEO Kevin J. Clarke.

Sales in 2011 of $1,261.5 million were up over sales of $1,228.6 million in 2010 as pricing momentum helped mitigate the effect of the strong Canadian dollar. The company's net loss before specific items of $126.3 million ($0.33 per common share) widened in 2011 compared with a 2010 net loss before specific items of $87.0 million ($0.23 per common share).

more.....

http://www.ulitzer.com/node/2186417

[Enterprising Investor]

CTLFQ 2011 Annual Report (3/01/12)

http://www.catalystpaper.com/sites/default/files/q4-2011-annual-financials-final.pdf

[Enterprising Investor]

CTLFQ records near $1-billion loss after writedown of mill values (3/01/12)

Catalyst Paper has written down the value of its four pulp and paper mills from over $1.2 billion in 2010 to $386 million, an $824 million drop that pushed its 2011 loss to almost $1 billion, the Richmond-based papermaker stated in its 2011 financial report.

The $824 million writedown is the main factor in Catalysts 2011 loss of $974 million.

Catalyst has been under court-ordered creditor protection since Jan. 31 and in its financial report, released earlier this week, company president Kevin Clarke laid out a grim list of troubles Catalyst was facing going into 2012 that led to the writedown and ultimately to the decision to seek protection under the federal Companies' Creditors Arrangement Act.

"We faced formidable economic and currency headwinds through 2011, made worse by the fourth-quarter drop-off in pulp prices and a weaker five-year paper and pulp industry forecast released in February 2012," Clarke said.

"We expect little if any improvement over the short-term in what are persistently difficult markets. With a challenging debt load, cash constraints and difficult trade credit terms to contend with, filing for creditor protection became inevitable when a consensual recapitalization agreement with noteholders could not reached by January 31, 2012."

The 2011 writedown is the latest but most severe of writedowns and accelerated depreciation on its assets the company has been undertaking for several years. The company lists the cost of its mills at Crofton, Port Alberni, Powell River and Snowflake, Arizona, at $4.2 billion.

In contrast to the current value of its mills, Catalyst's long-term debt totals $811 million, according to documents filed in B.C. Supreme Court. Senior noteholders account for $686 million of that debt.

The 2011 loss of $974 million is in contrast to a 2010 loss of $397 million. That loss included almost $300 million in writedowns and closure costs.

Catalyst's net loss in 2011, before unusual items was $126.3 million, compared to $87 million the year before.

The company cites an orderly exit from creditor protection as its main priority for 2012.

"In keeping with this financial goal, operations are keeping a tight rein on costs," the financial report states.

Catalyst employs 2,123 people, most of them, 1,300, at its mills on Vancouver Island and at Powell River.

[e-mail]

Read more: http://www.vancouversun.com/business/Catalyst+Paper+records+near+billion+loss+after+writedown+mill+values/6237171/story.html#ixzz1nwK7UdeE

[56Chevy]

Third Avenue Management Completes the Sale of All of Its Shares of Catalyst Paper Corporation

NEW YORK, Feb. 16, 2012 /PRNewswire/ -- Third Avenue Management LLC ("TAM") today announced that on behalf of Third Avenue International Value Fund, other affiliated funds, and separately managed client accounts (collectively, the "Client Accounts"), it has completed the sale of 105,105,509, or 27.52%, of the outstanding common shares ("Shares") of Catalyst Paper Corporation ("Catalyst").

The sale transaction enabled TAM to dispose of its entire investment made in Shares on behalf of Client Accounts. TAM and its Client Accounts no longer have control or direction over or beneficial ownership of any Shares of Catalyst and TAM no longer has any intention to acquire ownership of, or control over, additional securities of Catalyst for its own account or on behalf of Client Accounts. The sale of Shares occurred in a US over-the-counter transaction on the NASDAQ Global Select Market.

http://finance.yahoo.com/news/Third-Avenue-Management-prnews-3291830655.html

[56Chevy]

It was a close call but no cigar. Once again an unreasonable majority in the Union proved how short-sighted they can be.


Message to Union - Bad breath is better than no breath.

[Enterprising Investor]

Catalyst Paper to seek court-ordered creditor protection (1/31/12)

By GORDON HAMILTON, VANCOUVER SUN January 31, 2012 2:06 PM

Catalyst Paper said it is seeking court-ordered creditor protection Tuesday after workers at its Crofton pulp and paper mill rejected a new labour contract that was key to a voluntary restructuring plan.

Catalyst, the largest pulp and paper company on the Coast, is seeking an order through the B.C. Supreme Court to commence proceedings under the Companies’ Creditors Arrangement Act. By pursuing restructuring under the CCAA, Catalyst is putting all its obligations, from debts to labour contracts and pension arrangements, into a restructuring process with an uncertain outcome, analyst Kevin Mason, of ERA Forest Products Research said in an interview.

“At the end of the day, in most cases that we see, it is the workers who take a pretty good haircut,” Mason said. “You have definitely opened yourself up to a lot more risks. The hope is you can get this thing done quickly and get it over with, but this could drag on for several years. It is not pleasant for anyone.”

Mason said he expects the company that emerges from creditor protection will be leaner and have less debt than it was proposing under its voluntary plan.

Catalyst has 1,549 employees in B.C. and operates mills at Crofton, Port Alberni and Powell River. It also operates a recycled newsprint mill at Snowflake, Arizona. Five of the six union locals at the Canadian mills had voted to accept the contract, which contained concessions. The 380 members of the Crofton local of the Pulp, Paper and Woodworkers of Canada voted it down by 58 per cent.

Catalyst said that it intends to continue operations as usual and that it will meet obligations to its employees and suppliers during the CCAA process. By seeking creditor protection, Catalyst expects the court will order all proceedings on the part of creditors to be stayed. The company had defaulted on a $21 million bond interest payment Dec. 15.

The company’s total debt load is $810 million but the value of Catalyst is “substantially less than $810 million, if half that amount,” according to an affidavit filed in court by chief financial officer Brian Baarda.

Catalyst’s move brought a swift response from the rival Communications, Energy and Paperworkers Union, whose members had supported the new contract.

“We are extremely disappointed that after weeks of working toward a solution, it has come to this,” CEP western region vice-president Jim Britton said in a news release. “This is a potentially enormous blow to workers and communities on Vancouver Island and the Sunshine Coast which rely on the Catalyst mills for employment, business, and tax revenue.”

The CEP is calling for a national assistance program for the forest sector. Catalyst is the latest of a number of papermakers to go into bankruptcy or creditor protection. At issue for the union is the absence of sufficient legislated protection for workers once companies seek CCAA.

“Speaking from experience with the CCAA, the future doesn’t look good because we know exactly what’s next: Workers’ money will be used to pay off creditors,” CEP national president Dave Coles, a former worker at the Crofton mill, said in a news release. “This country’s bankruptcy act forces workers to the back of the line when it comes to collecting what is owed.”

A new contract with workers at its three coastal British Columbia pulp and paper mills was one of two conditions the company had to meet by Jan. 31 in order to proceed with a debt-for-equity restructuring that would have trimmed $315.4 million off its $810 million debt. The second condition, approval of the deal by a two-thirds majority of bondholders also appeared to be failing. Secured bondholders had accepted the deal but only 55 per cent of unsecured bondholders had agreed to the arrangement by Jan. 31.

When the papermaker announced its voluntary restructuring plan Jan. 14, it stated that if it was unable to gain the necessary support, it would proceed under CCAA.

“Our debt restructuring objective remains clear and unchanged though our path forward was altered by recent setbacks,” Catalyst president Kevin Clarke said in a news release. “Without the new labour agreement, and without two-thirds support of 2014 noteholders, the economics of the previously announced consensual restructuring transaction were undermined.

“The board, management and our advisers believe this approach will best facilitate the completion of a recapitalization transaction that delivers the improvements to our liquidity and capital structure which are necessary to put our company on firm financial and competitive footing in the current business and economic environment.”

[e-mail]

© Copyright (c) The Vancouver Sun

Read more: l5bzAIFBhttp://www.vancouversun.com/business/Catalyst+Paper+seek+court+ordered+creditor+protection/6080008/story.html#ixzz1

[Enterprising Investor]

Catalyst Paper to file for creditor protection (1/31/12)

RICHMOND, BC, Jan. 31, 2012 /PRNewswire/ - Catalyst Paper Corporation (TSX:CTL) announced today that to facilitate an orderly restructuring of its business and operations, the board of directors of the company has approved a filing for an Initial Order from the Supreme Court of British Columbia to commence proceedings under the Companies' Creditors Arrangement Act (CCAA). The terms and conditions of the restructuring plan have not yet been determined by the company.

The operations of Catalyst and its subsidiaries are intended to continue as usual and obligations to employees and suppliers during the restructuring process are expected to be met in the ordinary course. Catalyst management will remain responsible for the day-to-day operations of the company. The company expects that the Interim Order will provide that while the company and its subsidiaries are under CCAA protection, all proceedings on the part of their creditors will be stayed.

The company previously announced a consensual recapitalization transaction under the Canada Business Corporations Act (CBCA) that had the support of certain of the holders of the company's 11% senior secured notes due 2016 and 7 3/8% senior notes due 2014 who were parties to a Restructuring and Support Agreement (Agreement). The Agreement provided that, among other conditions, the recapitalization transaction was subject to the following two conditions being met by January 31, 2012: (a) a new labour agreement ratified by all six union locals at the company's BC mills and (b) two-thirds support of all 2014 and 2016 noteholders. Since these conditions will not be met, the company will not be proceeding with a recapitalization under the CBCA.

"Our debt restructuring objective remains clear and unchanged though our path forward was altered by recent setbacks," said Catalyst President and Chief Executive Officer, Kevin J. Clarke. "Without the new labour agreement, and without two-thirds support of 2014 noteholders, the economics of the previously announced consensual restructuring transaction was undermined. After reviewing this matter carefully with our Board of Directors and advisors, we have elected to begin the CCAA proceeding," he said. "The Board, management and our advisors believe this approach will best facilitate the completion of a recapitalization transaction that delivers the improvements to our liquidity and capital structure which are necessary to put our company on firm financial and competitive footing in the current business and economic environment."

Catalyst manufactures diverse specialty printing papers, newsprint and pulp. Its customers include retailers, publishers and commercial printers in North America, Latin America, the Pacific Rim and Europe. With four mills located in British Columbia and Arizona, Catalyst has a combined annual production capacity of 1.9 million tonnes. The company is headquartered in Richmond, British Columbia, Canada and its common shares trade on the Toronto Stock Exchange under the symbol CTL. Catalyst is listed on the Jantzi Social Index® and is also ranked by Corporate Knights as one of the 50 Best Corporate Citizens in Canada.

Forward-Looking Statements

Certain matters set forth in this news release, including statements with respect to the CCAA proceedings, the operations of the company, liquidity and the ability of the company to meet its obligations are forward looking. These forward-looking statements reflect management's current views and are based on certain assumptions including assumptions as to future operating conditions and courses of action, economic conditions and other factors management believes are appropriate. Such forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in these statements, including those risks and uncertainties identified under the heading "Risks and Uncertainties" in Catalyst's management's discussion and analysis contained in Catalyst's annual report for the year ended December 31, 2010, and our third quarter interim report available at www.sedar.com.

SOURCE Catalyst Paper Corporation

http://www.prnewswire.com/news-releases/catalyst-paper-to-file-for-creditor-protection-138387634.html

[Enterprising Investor]

Catalyst Paper files for Chapter 15 protection (1/18/12)

(Reuters) - Canada's Catalyst Paper Corp (CTL.TO) filed for Chapter 15 protection in a U.S. court on Tuesday as the specialty paper and newsprint producer grappled with rising costs of raw materials and lower demand.

Catalyst is the latest in line of paper producers that have succumbed to higher costs, increased competition from Asia and Europe, and falling demand as more advertisers and readers move online.

Under U.S. bankruptcy laws, Chapter 15 grants a foreign company protection from creditors looking to seize its assets in the country.

Last week, Catalyst had said it had entered into a restructuring agreement, which will see its bondholders taking control of the company and includes an exchange of debt for equity.

The agreement said it would slash the company's debt by C$315.4 million ($311 million) and reduce its cash interest expenses.

Catalyst said it will continue to "operate and satisfy" its obligations to customers, trade creditors, employees and retirees in the ordinary course of business during the restructuring process.

The company listed both assets and liabilities of more than $1 billion in the court filing.

After the restructuring announcement, Moody's Investors Service downgraded the company's rating to "Ca" from "Caa3."

The Richmond, British Columbia-based company, which has posted losses for nearly two years, had deferred interest payments of $21 million in December and said it is reviewing alternatives to address its capital structure.

Last year, Cerberus Capital-backed NewPage Corp filed for bankruptcy protection, followed by SP Newsprint Co, owned by newsprint magnate and fine art collector Peter Brant.

In December, Wausau Paper (WPP.N) said it will close its Brokaw mill in Wisconsin, cut 450 jobs and exit its print and color business.

Catalyst, which calls itself the largest producer of mechanical printing paper in western North America, has three manufacturing facilities in British Columbia and one in Arizona, United States.

Shares of the company, which have lost more than 85 percent of their value over the past year, touched their lifetime low of 1 Canadian cent on Wednesday on the Toronto Stock Exchange.

The case is In re: Catalyst Paper Holdings Inc, U.S. Bankruptcy Court District of Delaware, No. 12-10219.

(This story's headline was corrected to clarify the company filed for Chapter 15 protection, not Chapter 15 bankruptcy)

($1 = 1.0142 Canadian dollars)

http://www.reuters.com/article/2012/01/18/us-catalystpaper-idUSTRE80H2BT20120118

[Enterprising Investor]

Catalyst Paper clarifies media reports concerning recapitalization process (1/18/12)

Richmond, BC – Catalyst Paper Corporation (TSX:CTL) announced today that it has applied for and received an initial court order under the Canada Business Corporations Act (CBCA) to commence the consensual restructuring process with its noteholders announced on January 14, 2012. Contrary to certain media reports this is not a bankruptcy proceeding. The company is also seeking recognition of these proceedings with the US Court in order for the Canadian order under the CBCA to be recognized in the United States.

The company will continue to operate and satisfy its obligations to trade creditors, customers, employees and retirees in the ordinary course of business during this restructuring process.

Further information concerning the recapitalization is contained in the Agreement, a copy of which is available on SEDAR (www.sedar.com), EDGAR (www.sec.gov) and the company’s web page (www.catalystpaper.com). Investors who have questions about the recapitalization may contact Nancy Turner of Perella Weinberg Partners, the financial advisor for Catalyst Paper, at 415-671-4550.

Catalyst Paper manufactures diverse specialty mechanical printing papers, newsprint and pulp. Its customers include retailers, publishers and commercial printers in North America, Latin America, the Pacific Rim and Europe. With four mills, located in British Columbia and Arizona, Catalyst has a combined annual production capacity of 1.9 million tonnes. The company is headquartered in Richmond, British Columbia, Canada and its common shares trade on the Toronto Stock Exchange under the symbol CTL. Catalyst is listed on the Jantzi Social Index® and is ranked by Corporate Knights magazine as one of the 50 Best Corporate Citizens in Canada.

For information contact:

Investors:
Brian Baarda
Vice-President, Finance & CFO
604-247-4710

Alistair MacCallum
Vice-President, Treasurer & Corporate Controller
604-247-4037

Media:
Lyn Brown
Vice-President, Marketing & Corporate Responsibility
604-247-4713

http://www.catalystpaper.com/media/news/community/catalyst-paper-clarifies-media-reports-concerning-recapitalization-process

[56Chevy]

For general reading re: Canadian BK vs US

Difference in Canadian law compared with U.S.

Jim Middlemiss, Financial Post · Apr. 10, 2009

As Barack Obama, the U.S. President, eyes a "quick and surgical" bankruptcy solution for ailing automakers, don’t expect the wound in Canada to be as clean or neat should car companies here seek creditor protection under the Companies’ Creditors Arrangement Act (CCAA).

That’s because of a difference in Canadian labour and insolvency law. In the United States, insolvencies can be used to end high-cost union contracts if certain procedures are followed. In Canada, however, such contracts survive insolvency and extend to successor employers who emerge from the ashes of a defunct company. A union collective bargaining agreement can also apply to an unsuspecting company that simply buys equipment, even if it’s moved to a different location and possibly even if it’s used for different purposes.

So, in the United States, you can impose a "cram down" and use the threat of bankruptcy to force unions to accept a deal. Here, that’s a tactic that doesn’t fly and the presence of a collective bargaining agreement (CBA) makes it more complex when restructuring a company.

"What it does is it skews the negotiating process among the various stakeholders and more heavily favours the employees," said Rick Orzy, an insolvency lawyer at Bennett Jones in Toronto. "It makes it harder to get a deal. The odds of a complete breakdown and liquidation get stronger."

more...

http://www.financialpost.com/news-sectors/story.html?id=1485748

As far as CPC's US operations go local BK laws apply.

[56Chevy]

FWIW- I agree with EI...time to consider getting in would be after the recapitalization. 1) dilution will most likely cause price decay and 2) you'll know by then that the Unions have signed off on the plan.

[Enterprising Investor]

Defer common purchases until after recapitization is completed.

[whitesnow]

worth buying at 0.02?
any potential ?

[56Chevy]

"...the Agreement is subject to termination if a new labour agreement with all union locals at the company’s Canadian mills has not been ratified by January 31, 2012".

Union agreement could be a problem and maybe not but other than this Catalyst Paper Corp Debt has nice possibilities.

[Enterprising Investor]

Last Trade Data:

Bond: CTLU.GC Senior Secured Notes
Coupon Rate: 11.000
Maturity Date: 12/15/2016
Price 58 (1/11/12)

Bond: NSG.GG Senior Notes
Coupon Rate: 7.375
Maturity Date: 03/01/2014
Price: 9.60 (1/10/12)

Common Stock: CTLUF
$ 0.025 0.00 (0.00%)
Volume: 2,250

[Enterprising Investor]

Catalyst board of directors recommends support for recapitalization transaction (1/14/12)

Richmond, BC – Catalyst Paper Corporation (TSX:CTL) announced today that the company has entered into an agreement (the Agreement) for a recapitalization transaction that will result in a significantly reduced debt burden.

Catalyst Paper’s management team and Board of Directors believe that the proposed recapitalization offers substantial benefits to Catalyst Paper, 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: up to $25.5 million reduction in annual cash interest expense ($37.0 million if paid in kind to the maximum extent possible).

Catalyst Paper’s management team and Board of Directors believe that, in view of the challenges and risks to the company’s ongoing viability created by the current paper, newsprint and pulp markets and the company’s existing capital structure, the recapitalization is the best alternative available to the company and its noteholders, shareholders and other stakeholders. The new capital structure will provide a stronger financial base for the execution of the company’s operating strategy and enhance the long-term value of the company.

“This transaction addresses the company’s capital structure and interest payment obligations, extending its operating horizon,” said Dallas Ross, director and chair of the Board’s independent committee overseeing the noteholder 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 noteholders support this transaction.”

The proposed recapitalization has the support of the company’s creditors who have been subject to confidentiality agreements. More specifically (a) holders of its 11% senior secured notes due 2016 (the Senior Secured Notes) holding approximately US$208.1 million aggregate principal amount of outstanding Senior Secured Notes (representing more than 53.2% of the total outstanding Senior Secured Notes) and (b) holders of its 7 3/8% senior notes due 2014 (Senior Notes) holding approximately US$54.5 million aggregate principal amount of outstanding Senior Notes (representing more than 21.7% of the total outstanding Senior Notes), have signed the Agreement and agreed to vote in favour of and support the recapitalization. The company expects further support of the recapitalization from additional holders of Senior Secured Notes and Senior Notes.

The company intends to implement the recapitalization through a plan of arrangement under the Canada Business Corporations Act (CBCA). Implementation of the plan of arrangement under the CBCA will be subject to approval by not less than 66?% of the votes cast by holders of each of the Senior Secured Notes and the Senior Notes at meetings to be held to consider the arrangement, the approval of the Supreme Court of British Columbia and receipt of all necessary regulatory and stock exchange approvals. In addition, the Agreement is subject to termination if a new labour agreement with all union locals at the company’s Canadian mills has not been ratified by January 31, 2012.

The company will continue to operate and satisfy its obligations to trade creditors, customers and employees in the ordinary course of business during the arrangement process.

The specific terms of the recapitalization include:

• Catalyst Paper’s US$390.4 million aggregate principal amount of outstanding Senior Secured Notes will be exchanged for:

- US$325 million aggregate principal amount of new 11% first lien notes (the New Notes) the terms of which are described below; and

- 80% of the company’s common shares (subject to dilution from common shares issued to holders of warrants, as described below).

• Catalyst Paper’s US$250 million aggregate principal amount of Senior Notes will be exchanged for:

- 15% of the company’s common shares (subject to dilution from common shares issued to holders of warrants);

- warrants which will be exercisable to acquire up to 15% of the fully diluted common shares of the company as of the effective date of the recapitalization at an exercise price aggregate equity value of $111.7 million, for up to four years from the effective date of the recapitalization; and

- an additional 4.5% of the company’s common shares (subject to dilution from common shares issued to holders of warrants), provided that only holders of Senior Notes that agree to support this recapitalization by the early consent date, which is currently fixed at January 27, 2012, will be entitled to receive such additional common shares

• In total, additional common shares will be issued such that 99.5% of the common shares are held by the current holders of the existing Senior Secured Notes and Senior Notes as described above. The remaining 0.5% of the company’s common shares (subject to dilution from common shares issued to holders of warrants) will be held by holders of the existing common shares, provided that the recapitalization is implemented under the CBCA.

• Upon the implementation of the recapitalization, a new Board of Directors will be appointed as part of the transaction.

The New Notes will have substantially the same terms and conditions as the company’s existing Senior Secured Notes with certain exceptions including:

• the maturity date of the New Notes will be the earlier of (i) six months after the end date of the new labour agreements and (ii) December 16, 2017, provided that the maturity date will never be earlier than December 16, 2016.

• interest on the New Notes will be payable semi-annually in cash at an annual interest rate of 11% or, at the option of company, interest may be partially paid in kind, but if that option is taken for any semi-annual interest payment, interest for that payment will be calculated at an annual rate of 13% with 7.5% being paid in cash and 5.5% being paid in kind through the issuance of additional New Notes;

• the company will be able to issue up to an additional US$75 million in principal amount of New Notes, subject to the consent of holders of 75% in principal amount of New Notes if the company’s secured debt to EBITDA ratio, pro forma for the issuance of the additional New Notes, exceeds 3.0x; and

• the company will be able to repurchase the New Notes for 103% of their principal amount until December 15, 2013 and 100% thereafter.

The holders of the Senior Secured Notes and the Senior Notes who have signed the Agreement have agreed not to take any action to enforce their rights under the Senior Secured Notes and the Senior Notes, including by accelerating the notes as a result of the company’s current non-payment of interest on the Senior Secured Notes. The Agreement is subject to termination in certain circumstances, including: (i) by the holders of the Senior Secured Notes and Senior Notes in the event that the company does not pay the overdue interest on the Senior Secured Notes on or before January 31, 2012; (ii) by the company if by January 31, 2012 holders of at least 66?% of the outstanding principal amount of the Senior Secured Notes and Senior Notes have not signed the Agreement or a joinder to the Agreement; and (iii) by the company if by January 31, 2012 a new labour agreement with all union locals at the company’s Canadian mills has not been ratified. The current labour contracts expire April 30, 2012.

The recapitalization under the CBCA will require approval by the holders of the Senior Secured Notes, the holders of the Senior Notes and such other securityholders of Catalyst Paper as the court and the TSX may require. In the event that the votes or approvals required to complete the recapitalization under the CBCA are not obtained, the company has agreed to implement the recapitalization pursuant to the Companies’ Creditors Arrangement Act. The Agreement provides that in such case the shareholders of the company would not receive anything in exchange for their common shares.

The company’s Board of Directors, supported by a recommendation of an independent committee of the Board, is unanimously recommending that all shareholders and noteholders support the recapitalization.

Blake, Cassels & Graydon LLP and Skadden, Arps, Slate, Meagher & Flom LLP are acting as the company’s legal counsel and Perella Weinberg Partners is acting as the company’s financial advisor with respect to the recapitalization. Akin Gump Strauss Hauer & Feld LLP and Fraser Milner Casgrain LLP are acting as counsel to certain of the holders of Senior Secured Notes and Moelis & Company is acting as financial advisor to such noteholders with respect to the recapitalization. Goodmans LLP and Kramer Levin LLP are acting as counsel to certain of the holders of Senior Notes and Houlihan Lokey Capital, Inc. is acting as financial advisor to such noteholders with respect to the recapitalization.

Details of the recapitalization will be provided in an information circular expected to be distributed to shareholders and holders of the Senior Secured Notes and Senior Notes in February, 2012. The recapitalization is expected to close by March 31, 2012.

Further information concerning the recapitalization is contained in the Agreement, a copy of which will be available on SEDAR (www.sedar.com), EDGAR (www.sec.gov) and the company’s web page (www.catalystpaper.com). Investors who have questions about the recapitalization may contact Nancy Turner of Perella Weinberg Partners, the financial advisor for Catalyst Paper, at 415-671-4550.

This press release is not an offer to sell or the solicitation of an offer to buy the New Notes or the new common shares and warrants to be issued in connection with the recapitalization. Such securities have not been and will not be registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

Catalyst Paper manufactures diverse specialty mechanical printing papers, newsprint and pulp. Its customers include retailers, publishers and commercial printers in North America, Latin America, the Pacific Rim and Europe. With four mills, located in British Columbia and Arizona, Catalyst has a combined annual production capacity of 1.9 million tonnes. The company is headquartered in Richmond, British Columbia, Canada and its common shares trade on the Toronto Stock Exchange under the symbol CTL. Catalyst is listed on the Jantzi Social Index® and is ranked by Corporate Knights magazine as one of the 50 Best Corporate Citizens in Canada.

http://www.catalystpaper.com/media/news/community/catalyst-board-directors-recommends-support-recapitalization-transaction

[Enterprising Investor]

Third Avenue Management LLC filed first Schedule 13D (7/28/06)

Controlled 19.8 percent at the time.

http://sec.gov/Archives/edgar/data/1099281/000095012306009579/y23628sc13d.htm

[Enterprising Investor]

Third Avenue Management LLC owns 111,946,903 shares (12/01/11)

Controls 29.3 percent.

http://sec.gov/Archives/edgar/data/1099281/000093041311007681/c67751_sc13da.htm

[Enterprising Investor]

Catalyst Paper continues discussions on debt restructuring (12/15/11)

RICHMOND, BC, Dec. 15, 2011 /CNW/ - Catalyst Paper Corporation (TSX:CTL) today announced that, together with its financial advisor Perella Weinberg Partners, the company is continuing to review alternatives to address its capital structure. Debt reduction has been identified as a priority given current business and economic conditions and discussions are ongoing with certain holders of its 2016 Notes and 2014 Notes, as described below, and their representatives and advisors. Catalyst announced, in June, that it had begun the capital restructuring review.

In light of these ongoing discussions and pending finalization of a strategy to deal with its debt structure, Catalyst determined that it would be appropriate to defer the approximate US$21 million interest payment on its outstanding 11.00% Senior Secured Notes due 2016 and Class B 11.00% Senior Secured Notes due 2016 (collectively, the 2016 Notes) due on December 15, 2011.

Operations of Catalyst and its subsidiaries are expected to continue as usual with obligations to customers, suppliers and employees being met in the ordinary course.

"We advised several months ago that we were actively pursuing a restructuring of our balance sheet. This is a very complex process and while we cannot prejudge outcomes, we are firmly committed to achieving a solution that puts Catalyst on stronger financial footing for the future," said President and CEO Kevin J. Clarke.

The company has 30 days within which to pay the interest under the 2016 Note indentures before triggering an event of default. Failure to pay the interest within this time period would allow 2016 Note holders to declare the US$390 million principal amount and all accrued interest on the 2016 Notes immediately due and payable and to begin proceedings to realize upon the security held in connection with the 2016 Notes.

If the principal and accrued interest under the 2016 Notes were to be declared due and payable, failure to pay the amount due under the 2016 Notes within 30 days would be an event of default under the indenture relating to Catalyst's US$250 million outstanding 7.375% Senior Notes due 2014 (the 2014 Notes). Failure to pay the interest on the 2016 Notes within the 30 day grace period would also be an event of default under Catalyst's ABL facility with JP Morgan. At November 30, 2011, the company owed the principal amount of $16 million under the ABL facility. In each case, such event of default could result in the principal amount of such indebtedness and all accrued interest becoming immediately due and payable.

Catalyst manufactures diverse specialty printing papers, newsprint and pulp. Its customers include retailers, publishers and commercial printers in North America, Latin America, the Pacific Rim and Europe. With four mills located in British Columbia and Arizona, Catalyst has a combined annual production capacity of 1.9 million tonnes. The company is headquartered in Richmond, British Columbia, Canada and its common shares trade on the Toronto Stock Exchange under the symbol CTL. Catalyst is listed on the Jantzi Social Index® and is also ranked by Corporate Knights as one of the 50 Best Corporate Citizens in Canada.

http://sec.gov/Archives/edgar/data/1144906/000127956911001411/ex991.htm