Eastern Pulp & Paper Submits Financial Reorganization Plan
Press release from the issuing company
AMHERST, Mass.--July 17, 2003-- Eastern Pulp & Paper Corporation on Wednesday filed a Plan of Reorganization with the U.S. Bankruptcy Court in Portland, Maine, and said it would obtain new long-term financing to support its operations as well as its financial obligations under the plan.
The reorganization plan is expected to be approved in the fourth quarter of 2003 by the Hon. James B. Haines, Jr., the federal bankruptcy judge overseeing the case. The new funds are expected this Fall and will add to the existing financing arrangements approved by the court last week.
The financial plan calls for fair and equitable treatment of all creditors of Eastern Pulp & Paper and its wholly-owned subsidiaries, Eastern Fine Paper, Inc., and Lincoln Pulp & Paper Co., Inc. The plan outlines the payoff of all bona fide debts to secured lenders and creditors and a 10% payment to the holders of unsecured obligations. Eastern said it is committed to continuing its business relationships with these firms.
The plan further calls for the conversion to equity of $4.4 million in subordinated debt now held by shareholders of Eastern Pulp & Paper.
"All of the developments announced today are major steps forward for customers, employees, suppliers, the State of Maine and the towns we operate in," said Eastern CEO and Chairman Joseph H. Torras, Sr.
"They are the most important events to date toward emerging from Chapter 11 protection," he added. "We are confident in our business plan and are sharply focused on bringing cost-effective, highly differentiated products to our customers across North America."
Eastern Paper has continued operations since filing for Chapter 11 creditor protection in September of 2000. To reduce costs and improve long-term financial health, it has reduced its workforce by about 25% and idled a portion of its papermaking capacity at its Brewer, Maine, manufacturing center. Wages also have been reduced for all executive, administrative and unionized employees.
The company's two Maine manufacturing facilities in Lincoln and Brewer produce pulp, fine printing and writing papers, specialty tissue and coated technical papers for consumer and industrial uses. Eastern employs more than 700 people in Maine and at its Amherst, Mass. headquarters.
As for the view ahead, Torras said the company's $100 million investment over the past decade puts it in compliance with U.S. Environmental Protection Agency regulations--and makes it one of the most environmentally sound pulp mills in North America.
The U.S. Government has certified Eastern's unique pulpmaking process, which uses fine waste sawdust in lieu of virgin softwood, as meeting EPA standards for 30% post-consumer waste. The company has U.S. patents and patents pending on its digital printing papers, its specialty tissue and on its high-pressure, two-stage oxygen bleaching process.
Torras said his company is continuing its aggressive R&D programs in pulpmaking and for printing papers used in new-generation digital printing presses.
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