NewPage Seeks to Restructure Debt, Files Chapter 11
Thursday, September 08, 2011
Press release from the issuing company
NewPage Corporation announced today that, to facilitate an orderly debt restructuring and position the overall business for long-term success, its corporate parent, NewPage Group Inc., and certain of its U.S. subsidiaries (collectively, "NewPage" or the "Company") have commenced voluntary cases under Chapter 11 of the United States Bankruptcy Code ("Chapter 11"). The cases are pending in the United States Bankruptcy Court for the District of Delaware. The company's Consolidated Water Power Company subsidiary is not part of the filing.
Separately, the company's Canadian subsidiary, NewPage Port Hawkesbury Corp., has brought proceedings before the Supreme Court of Nova Scotia under the Companies' Creditors Arrangement Act of Canada ("CCAA"). In order to maximize efficiency in both the U.S. and Canadian Court processes, NewPage Corporation and NewPage Port Hawkesbury Corp. have executed a Settlement and Transition Agreement, subject to approval by the Canadian Court.
Chapter 11 Restructuring for U.S. Entities
Through the Chapter 11 process, NewPage expects to work closely with its creditors and other stakeholders in the U.S. to formulate a Chapter 11 plan that details how it intends to satisfy its liabilities and restructure its balance sheet to emerge as a financially stronger company. The company expects to continue operating its U.S. businesses as usual throughout this process with an undiminished focus on providing customers with high-quality paper and employees with a stable and safe working environment. To help ensure it has adequate liquidity to achieve these objectives and continue to operate and compete successfully throughout the restructuring, NewPage has obtained a commitment led by J.P. Morgan for up to $600 million in Debtor in Possession (DIP) financing.
Additionally, NewPage has filed a series of customary First Day Motions in the United States Bankruptcy Court that, subject to court approval, would allow it to continue its U.S. employee wages and benefits programs, honor obligations for customers served by its U.S. businesses and provide additional protection to various other stakeholders. These motions are typical of the Chapter 11 process and are generally granted in the days immediately after a filing.
"We strongly believe that the court-supervised restructuring we began today is the most effective means of strengthening our financial position and enhancing our standing as the leading producer of printing and specialty paper in North America," said George F. Martin, president and chief executive officer for NewPage. "We expect to continue to provide our customers with the exceptional service and high-quality products they have come to expect. We recognize customers have choices, and NewPage needs to continue to earn their trust and loyalty every day. We expect to continue to run safe and efficient operations, be candid with all of our stakeholders and act as a responsible community member both during and after our financial restructuring."
Jay A. Epstein, senior vice president and chief financial officer for NewPage, added, "A successful restructuring will allow NewPage to emerge as a financially stronger company that is even better positioned to compete and succeed in this dynamic industry environment. To this end, we fully expect to work productively with our lenders and other creditors to develop our Chapter 11 plan as efficiently as possible. We are confident that the DIP financing we have secured will allow us to maintain continuity in our U.S. businesses as we complete this process."
Intention to Commence CCAA Proceedings for NewPage Port Hawkesbury Corp.
NewPage Port Hawkesbury Corp. has brought proceedings before the Supreme Court of Nova Scotia in Halifax, Nova Scotia. The Canadian entity is in discussions with potential buyers and hopes to complete a successful sale of the mill while under the anticipated court protection.
On August 22, NewPage announced that it would take downtime at NewPage Port Hawkesbury Corp. due to market and economic conditions that had prevented it from profitably operating the mill for more than a year. NewPage Port Hawkesbury Corp. plans to use funds arising from its Settlement and Transition Agreement to continue a "hot idle" at the mill and preserve the value of its assets while it continues discussions with potential buyers.
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