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