By: E&P Staff
North America’s two biggest newsprint suppliers both won recent court approvals in their Chapter 11 bankruptcies.
Montreal-based AbitibiBowater Inc. announced that in connection with its creditor protection proceedings and exit financing efforts it obtained approval of a backstop commitment agreement by the U.S. Bankruptcy Court for the District of Delaware.
Late last month the company said it secured a backstop commitment from certain unsecured noteholders for a rights offering of up to $500 million. In the offering, AbitibiBowater would offer new convertible notes with a seven-year maturity from the date of closing to eligible unsecured creditors. Upon the effective date of the plan, the notes would be obtained upon exercise of the rights and convertible into common stock of the emerged company.
AbitibiBowater CEO David J. Paterson called the approval “another important step forward” in looking to the company’s scheduled emergence from credit protection scheduled in early fall. “The company expects to emerge with a significantly improved financial position, resulting from its efforts to reduce costs, lower debt and mitigate the impact of ongoing market and currency fluctuations,” Paterson said in a statement.
The company first will need adequate exit financing and must resolve labor and pension issues. AbitibiBowater said it has “commenced a process to obtain an exit financing package that will provide sufficient capital for the emerged company to manage business operations and execute its plans.”
The planned reorganization requires creditor approval and court confirmation.
AbitibiBowater owns or operates 21 pulp and paper facilities and 24 wood products facilities in the United States, Canada and South Korea. Its shares trade over-the-counter on the Pink Sheets and on the OTC Bulletin Board.
Meanwhile, U.S. Bankruptcy Court in Richmond, Va., allowed number-two newsprint maker White Birch Paper Co., headquartered in Greenwich, Conn., to retain exclusive control of its Chapter 11 case through Oct. 1, extending by three months the deadline for filing a bankruptcy-exit plan – for which the judge gave the company until December to solicit creditor votes.
Owned by publisher Peter Brant, White Birch employs 1,300 people at three mills in Quebec and one in Virginia – the Bear Island Paper Co., which entered Chapter 11 protection in February.
With no extension, explained Dow Jones Daily Bankruptcy Review’s Eric Morath, “creditors or other parties could have offered competing plans as White Birch worked to complete its own.”
In seeking an extension, White Birch said it had not decided either to restructure by itself or sell the business, and that cross-border considerations had slowed planning for repayment of creditors.