Tag Archives: Catalyst Paper

Catalyst Paper has amended its proposed Plan of Arrangement under the Companies’ Creditors Arrangement Act. The Plan as so amended will be considered by Catalyst Paper’s secured and unsecured creditors at the meetings scheduled for May 23, 2012.

“We’re pleased that over the past weeks, the various stakeholders, advisors and the company have worked diligently to craft an agreement that sizably reduces the company’s debt level,” said Kevin J. Clarke, President and Chief Executive Officer. “This agreement, with the support of creditors at the meetings on May 23, 2012, will enable Catalyst to emerge from creditor protection with improved liquidity and the capacity to return and sustain normal trade terms for the foreseeable period.”

The court-appointed monitor is recommending that creditors vote in favour of the Amended Plan at the Meetings. Catalyst Paper’s Board of Directors is unanimously recommending that all holders of First Lien Notes, Unsecured Notes and General Unsecured Claims vote in favour of the Amended Plan at the Meetings.

The principal changes to the Plan include:

• A reduction of US$120 million in the amount of notes to be issued under the Amended Plan so that the total debt reduction under the Amended Plan will be US$435 million (rather than the US$315 million reduction under the Plan);
• the reduction of the principal amount of New First Lien Notes to be issued under the Plan from US$325 million to US$250 million; and
• the elimination of the New First Lien Coupon Notes to be issued under the Plan (approximately US$45 million);
• the distribution of 50% of the net proceeds (PREI Proceeds Pool) from the sale of Catalyst Paper’s interest in Powell River Energy Inc. and Powell River Energy Limited Partnership (PREI Interest) to Unsecured Creditors who do not receive a Convenience Cash Amount or elect to receive equity;
• 100% of the New Common Shares to be issued to holders of the First Lien Notes subject to the ability for Unsecured Creditors to elect (Equity Election) to acquire up to 600,000 New Common Shares (4%) rather than receive cash from the PREI Proceeds Pool or the Maximum Convenience Claims Pool; and
• the elimination of the issuance of the Warrants under the Plan.

There were no changes to the provisions of the Plan relating to the payment of Convenience Cash Amounts.

The Amended Plan

Specifically, the Amended Plan treats each of the creditor classes as follows:

11% Senior Secured Notes due 2016 (First Lien Notes)

• Pursuant to the Amended Plan, Catalyst Paper’s US$390.4 million aggregate principal amount of outstanding First Lien Notes will be exchanged for:
• US$250 million aggregate principal amount of 11% first lien notes due November 1, 2017 (New First Lien Notes) allocated as to US$182 million on account of the Class A Notes and US$68 million on account of the Class B Notes; and
• 14.4 million New Common Shares of Catalyst Paper (being 100% of the outstanding common shares of Catalyst Paper subject to dilution from the issuance of common shares to Unsecured Creditors who make the Equity Election described below and under any Management Incentive Plan), 10,502,352 New Common Shares on account of the Class A Notes and 3,897,648 New Common Shares on account of the Class B Notes.

Prior to this amendment, the Plan provided that the outstanding First Lien Notes would be exchanged for (a) US$325 million aggregate principal amount of New First Lien Notes (b) 80% of Catalyst Paper’s New Common Shares and (c) New First Lien Coupon Notes in a principal amount equal to accrued and unpaid interest on the New First Lien Notes as of the Effective Date.

7 3/8% Senior Notes Due 2014 (Unsecured Notes)

• Pursuant to the Amended Plan, Catalyst Paper’s US$250 million aggregate principal amount of outstanding Unsecured Notes will be exchanged as follows:
• unless the holder of Unsecured Notes has made an Equity Election, such holder will receive its pro rata share (calculated by reference to the aggregate amount of all claims of Unsecured Creditors allowed under the Plan) of the PREI Proceeds Pool; and
• each holder of Unsecured Notes may elect (the Equity Election) to receive its pro rata share (calculated by reference to the aggregate amount of all claims of Unsecured Creditors allowed under the Plan) of 600,000 New Common Shares of Catalyst Paper rather than participate in the PREI Proceeds Pool. An Equity Election Form and information on how to make such election will be provided to Unsecured Creditors following the Sanction Order.

General Unsecured Claims

• Pursuant to the Amended Plan, in exchange for all General Unsecured Claims, each holder of an allowed General Unsecured Claim shall receive:
• Unless the holder of such General Unsecured Claim has made an Equity Election or a Cash Election or is a Convenience Creditor, such holder will receive its pro rata share (calculated by reference to the aggregate amount of all claims of Unsecured Creditors allowed under the Plan) of the PREI Proceeds Pool;
• Each holder of an allowed General Unsecured Claim who has not made a Cash Election may elect by way of the Equity Election to receive its pro rata share (calculated by reference to the aggregate amount of all claims of Unsecured Creditors allowed under the Plan) of 600,000 New Common Shares of Catalyst Paper rather than receive such holder’s pro rata share of the PREI Proceeds Pool or Convenience Cash Amount. Holders of General Unsecured Claims who have filed a Cash Election under the prior Plan and who wish to file an Equity Election under the Amended Plan must revoke their prior Cash Election prior to the date of the meetings. See “Revoking a Cash Election” below; and
• Each holder of a General Unsecured Claim equal to or less than C$10,000 (unless such holder makes an Equity Election) and holders of General Unsecured Claims in an amount over C$10,000 who validly file a Cash Election (pursuant to which the allowed amount of such holder’s General Unsecured Claim will be reduced to C$10,000), will receive cash in an amount equal to 50% of such holder’s allowed General Unsecured Claim, provided that the aggregate amount of cash payable to all such holders shall not exceed C$2.5 million.

Prior to this amendment, the Plan provided that the outstanding Unsecured Notes and General Unsecured Claims would be exchanged for (a) 20% of Catalyst Paper’s New Common Shares (b) Warrants exercisable, on a cashless basis, to acquire up to 15% of the fully diluted New Common Shares of Catalyst Paper for up to four years from the effective date of the Plan and (c) in respect of holders of General Unsecured Claims in an amount equal to or less than C$10,000 (or who agreed to reduce their claim to such amount), cash in an amount equal to up to 50 percent of such holder’s General Unsecured Claims (unless they elected to receive the New Common Shares and Warrants referred to above), provided that the aggregate amount of cash payable to such holders would not exceed C$2.5 million.

PREI Proceeds Pool

Under the Amended Plan, Catalyst has agreed to use commercially reasonable efforts to sell all of its right, title and interest in Powell River Energy Inc. and the Powell River Energy Limited Partnership (PRELP) comprising 50,001 common shares in Powell River Energy Inc., long term subordinated debt of $20.8 million owed by Powell River Energy Inc. to Catalyst Paper Energy Holdings Inc. and a 49.95% limited partnership interest in PRELP. The PREI Proceeds Pool shall consist of an amount equal to 50% of the net proceeds received by Catalyst on account of the sale of the PREI Interest. The sale shall be conducted pursuant to an amended sale and investor solicitation process, which would likely not include a stalking horse bid, to be established and approved by the Supreme Court of British Columbia (Court) following obtainment of the Sanction Order for the Plan and is subject to the terms of a contractual right of first refusal in favour of Catalyst’s joint venture partner.

Power River Energy Inc. owns two hydroelectric dams near the Powell River mill, with a combined generating capacity of 83 megawatts. Pursuant to a power purchase agreement between Catalyst Paper and Power River Energy Inc., Power River Energy Inc. provides the power generated by its facilities to Catalyst Paper at a fixed rate approximating current British Columbia Hydro and Power Authority rates. Power River Energy Inc.’s hydroelectric facilities supply approximately 40% of the annual power needs of the Powell River mill, although this amount varies depending on hydrological conditions. The power purchase agreement will continue following the sale.

New First Lien Notes

• There are no material changes to the terms of the New Notes under the Amended Plan other than as described above and other than:
• the Priority Lien Debt Cap will be reduced from US$400 million to US$325 million;
• the definition of Threshold PIK Notes will be revised to refer to New Notes outstanding, if any, in excess of US$250 million (as opposed to US$325 million), excluding any New Notes issued after the issue date (other than any PIK notes); and
• the maturity date of the New Notes will be November 1, 2017 rather than October 30, 2017.

Required Approvals

Implementation of the Amended Plan will be subject to the requisite approval by Catalyst Paper’s secured and unsecured creditors at the Meetings to be held on May 23, 2012, the approval of the Court and, to the extent applicable, the approval of the United States Bankruptcy Court for the District of Delaware. In the event the Amended Plan is not approved at the Meetings, Catalyst Paper will commence a sale transaction in accordance with certain agreed and Court-approved sale and investor solicitation procedures.

Read full release from Catalyst Paper

Catalyst Paper has pushed the meetings of its secured and unsecured creditors back another 5 days to May 23.

The creditors are to meet to discuss the plan of arrangement under the Companies’ Creditors Arrangement Act.

“Our discussions are continuing towards the possibility of amending the current plan of arrangement which would better enable Catalyst to emerge from creditor protection on a stronger financial footing, said Kevin J. Clarke, President and Chief Executive Officer. “The additional time is intended to permit these discussions to be successfully completed.”

The rescheduled meetings will be held at a new location, the Westin Wall Centre, Vancouver Airport, 3099 Corvette Way, Richmond, BC at 10:00 am for unsecured creditors and 11:00 am for the First Lien Noteholders.

It is anticipated that the court date to sanction and approve the plan of arrangement will be rescheduled to May 25, 2012.

Source: Catalyst Paper

Catalyst Paper is blaming their negative first quarter on the impact of restructuring and reorganization expenses.

Net loss for the first quarter of 2012 is $25.6 million.

“Our first quarter was dominated by restructuring and we focused relentlessly on liquidity and cash flow management,” said Catalyst President & CEO Kevin J. Clarke. “We are continuing to work hard with stakeholders to put the necessary fundamentals in place to enable Catalyst to emerge from creditor protection as a stronger and more viable enterprise. At the same time, we are keeping our operations running smoothly. In the first quarter, we achieved production gains and an improved safety record across all mills, maintained a strong order book and reached a new competitive five-year labour agreement at our BC mills which took effect on May 1, 2012.”

The company filed for creditor protection on January 31, 2012 and on March 9, 2012 entered into a restructuring and support agreement (RSA) to proceed with a proposed recapitalization transaction and plan of arrangement under theCompanies’ Creditors Arrangement Act (CCAA). Meetings with the company’s secured and unsecured creditors to consider the plan of arrangement are scheduled for May 18, 2012. If the plan of arrangement is not approved by our creditors, the company will enter into the sale and investor solicitation procedures (SISP) in accordance with the RSA.

Performance Overview

Sales volumes in the first quarter were up over the prior quarter due in large part to pulp sales. Sales revenues, however, were down slightly compared with fourth quarter due to lower transaction prices in pulp and coated grades, the stronger Canadian dollar and lower sales volumes for higher value coated and uncoated specialty grades. Sales revenues improved from a year earlier driven by higher paper and pulp volumes along with marginally higher paper prices. Substantially lower pulp prices offset much of these gains.

Operating rates for directory remained strong in the quarter as capacity reductions kept pace with declining demand while newsprint operating rates were similar to the previous year. Mill and machine closures and curtailments helped offset the significant decline in Q1 demand for coated and uncoated specialty grades.

Operating costs for the quarter were reduced by the deferral of certain maintenance projects, including a maintenance outage on our pulp assets originally scheduled for March that was moved to April.

Catalyst Paper’a reduced liquidity in the first quarter resulted primarily from compressed vendor credit terms, and restructuring and reorganization costs. The delay in collection of Catalyst Paper’s HST refund claims due to a federal tax audit put further strain on the company’s cash on hand and liquidity. Total liquidity decreased by $99.5 million from the same quarter in the prior year.

The outcome of the May 18, 2012 meetings with the creditors of Catalyst Paper will determine whether the proposed plan of arrangement outlined in the RSA will be implemented or whether a sales process will be followed. Either of these avenues may have far reaching implications on the creditor protection process, Catalyst Paper’s capital structure and the carrying values of the company’s debt and other obligations.

Read full release from Catalyst Paper

Catalyst Paper has announced a three-day extension for the meetings of its secured and unsecured creditors to consider the plan of arrangement under the Companies’ Creditors Arrangement Act. The meetings, previously scheduled for May 15, 2012, will now be held on May 18, 2012.

Catalyst Paper has announced that the date for the meetings of its secured and unsecured creditors to consider the plan of arrangement under the Companies’ Creditors Arrangement Act has been changed from May 2, 2012 to May 15, 2012.

The new date was set to allow additional time for Catalyst to consider feedback from its trade and other creditors and to advance discussions in order to gain further support for the restructuring.

“We are taking the additional time to work through a very complicated process and to ensure the many interests involved are fully considered. We are continuing our efforts to bring a consensual deal to a satisfactory conclusion,” said Kevin J. Clarke, President and Chief Executive Officer.

The rescheduled meetings will be held at the same location (Delta Vancouver Airport Hotel, 3500 Cessna Drive, Richmond, BC) at 10:00 am for unsecured creditors and 11:00 am for the First Lien Noteholders.

The court date to sanction and approve the plan of arrangement has also been rescheduled from May 7, 2012 to May 18, 2012.

Source: Catalyst Paper

The Supreme Court of British Columbia has extended Catalyst Paper‘s protection under the Companies’ Creditors Arrangement Act to June 30, 2012.

This extension will provide Catalyst Paper with additional time to pursue restructuring alternatives including the previously announced plan of compromise and arrangement which is to be considered at creditors’ meetings to be held on May 2, 2012.

“We have been working with all parties to complete our exit from CCAA in the most effective manner and continue to make progress,” said Kevin J. Clarke, President and Chief Executive Officer. “In the meantime, our production, sales and service team is fully focused on maintaining operational commitments with the same care and attention as always.”

Catalyst Paper’s debtor-in possession (DIP) financing continues to be available to the company and, combined with the company’s operating revenue, is expected to continue to provide sufficient liquidity to meeting ongoing obligations to employees and suppliers and ensure that normal operations continue during the restructuring process.

Source: Catalyst Paper

Catalyst Paper has announced that meetings of its secured and unsecured creditors to consider the plan of arrangement under the Companies’ Creditors Arrangement Act have been changed from April 23, 2012 to May 2, 2012.

The rescheduled meetings will be held at the same location (Delta Vancouver Airport Hotel, 3500 Cessna Drive, Richmond, BC) at 10:00 am for unsecured creditors and 11:00 am for the First Lien Noteholders.

The court date to sanction and approve the plan of arrangement has also been rescheduled from April 25, 2012 to May 7, 2012.

The new dates were set to accommodate court scheduling issues with the original dates. The revised schedule will also provide court Monitor, PricewaterhouseCoopers Inc. and Catalyst additional time to complete the accounting review and verification requirements associated with the creditor claims process. Claims must still be filed with the Monitor by 5 p.m. April 18, 2012.

Source: Catalyst Paper

Catalyst Paper has a $73.5 million shortfall in its pension plan.

If the company’s restructuring plan fails, Catalyst Paper’s 1,200 pensioners and employees will lose about 30% of their pensions.

Currently, the principal creditors of Catalyst Paper have until April 23 to agree on a restructuring plan. If they can not agree to a restructuring plan, Catalyst Paper will accept an already-negotiated “stalking horse bid” from its secured bondholders to buy the company.

The stalking horse bid specifically excludes the pension plan. That means the pension plan would have to be wound up and liquidated. If the pension plan continues as a going concern, and continues to be funded by the company, then maintaining the pension payouts should not be a problem.

Read more from The Vancouver Sun – Pensions for up to 1,200 at risk if Catalyst restructuring bid derails

If the creditors of Catalyst Paper don’t approve a restructuring plan this Friday, a plan that is similar to the one they have already rejected, then Catalyst Paper wants to sell its pulp and paper mills.

Catalyst Paper has filed a petition seeking approval to sell the entire company to a stalking horse bidder for up to $395 million. Just 3 years ago, the value of Catalyst Paper’s three coastal pulp and paper mills and their recycled paper mill in Arizona was estimated to be more than $2 billion.

Also, Catalyst Paper has asked the court for approval to sell the closed Elk Falls pulp mill in Campbell River, British Columbia to a scrap metal contractor.

Catalyst Paper needs to restructure its debt load of $810 million.

Source:
Catalyst poised to scrap Elk Falls mill, sell three others Richmond-based firm urges creditors to take restructuring plan seriously (Vancouver Sun)

Catalyst Paper now has new labour agreements with the unions representing than 1,000 paper and pulp workers at the company’s Crofton, Port Alberni, and Powell River mills.

The new contracts will go into effect at the expiry of the current contract on April 30, 2012.

“Approval of the new labour agreements lets everyone know that the people who make up Catalyst are taking the actions necessary to save jobs and ensure we have a viable and competitive business for the future,” said Kevin J. Clarke, President and Chief Executive Officer. “We appreciate there is still an enormous amount of work to do to complete the restructuring plan that will enable the company to exit creditor protection on solid footing going forward.”

The agreements which will be effective from May 1, 2012 to April 30, 2017 include a 10% reduction in hourly rates along with various adjustments to vacation, health benefits and work rules necessary to provide Catalyst with a competitive labour cost structure. The agreements also maintain hourly retiree health benefits. Annual savings in the range of $18 to $20 million are expected.

Many workers feel the steep concessions are unacceptable, but have chosen the concessions as the lesser of two evils when the alternative could be the closure or sale of their mill.

The Communications, Energy and Paperworkers Union of Canada (CEP) locals 1, 76, 592, 686 and 1132 represent 700 employees at the three mills.

The Pulp, Paper and Woodworkers Union of Canada (PPWC) local 2 represents approximately 380 employees at the Crofton pulp mill.