Update
Catalyst Paper Corporation has filed for creditor protection in the United States. As well, it has received an initial court order under the Canada Business Corporations Act (CBCA) to begin a planned restructuring.
The company is seeking protection under Chapter 15 of the United States’ bankruptcy code, used by foreign companies to protect their assets from creditors and shield them from lawsuits.
Catalyst reached an agreement with bondholders, which is being implemented under the CBCA, that will cut its debt by $315.4 million and reduce annual cash interest payments by $25.5 million. The plan would see bondholders take control of the company.
In a statement issued on Wednesday, January 18, Catalyst emphasized the Canadian court order 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 release stated. “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.”
Catalyst shares fell 50 per cent, from two cents to a penny Wednesday on the Toronto Stock Exchange.
The company’s recapitalization plan would create a new board of directors and give voting control to its bondholders, which would own 99.5 per cent of the common shares. The remaining 0.5 per cent would be held by holders of Catalyst’s existing common shares.
The plan is subject to new labour agreements with unions at its Canadian mills being ratified by the end of January.
