Wednesday January 21, 2009 03:16:26 EST
Judge sets auction date for Chesapeake
Jan 21, 2009 (Richmond Times-Dispatch - McClatchy-Tribune Information Services via COMTEX News Network) --
Richmond-based packaging company Chesapeake Corp. will close on a sale of its business units April 3, under a plan approved by a bankruptcy court judge yesterday.
The company, which filed for Chapter 11 bankruptcy protection Dec. 30, is planning to sell its subsidiaries as a going concern to an investment group if a higher bid does not come forward at a court-supervised auction.
Chesapeake had sought a bidding deadline of Feb. 20 for its assets and wanted to close on a sale in March, but the proposal ran into resistance from the company's unsecured creditors, who argued in court that the process was being rushed and that the company had not devoted enough time to finding potential buyers.
Under an agreement between the company and creditors approved by the court yesterday, the bidding deadline would be March 17, with an auction set for March 19, a sale hearing on March 23 and a closing date of April 3.
Chesapeake has headquarters in Richmond but operates mostly in Europe, where the company has subsidiaries that make packaging for products such as pharmaceuticals, beverages, confectionery and spirits.
In its bankruptcy filings, the company said it could no longer support about $521 million in borrowed debt because of the economic downturn and difficulty obtaining financing.
The company submitted a so-called "stalking horse" plan to sell its businesses as a going concern for $485 million to investment firms including New York-based Irving Place Capital Management LP and California-based Oaktree Capital Management LP.
The acquisition would help the company pay off debts, including about $246 million in asset-secured bank loans.
It also includes deductions such as about $181 million for foreign pension obligations.
------
Contact John Reid Blackwell at (804) 775-8123 or jblackwell@timesdispatch.com.
