Bear Island Paper defaults on loan; continued operation viewed as going concern

By Sara Rosenberg

New York, May 14 - Bear Island Paper Co. LLC, due to recurring losses, defaulted on its bank credit agreement by not complying with certain financial covenants. Despite management's belief that the debt covenant situation will be remedied, the current problems raise doubts about the company's ability to continue as a going concern, according to a filing with the Securities and Exchange Commission.

Net losses for the quarter to March 31 were $5.445 million and net losses for the year ended Dec. 31, 2001 were $5.722 million. The Ashland, Va. newsprint company had an accumulated deficit of $29.449 million at March 31. Additionally, according to the filing, a loss is anticipated for the year ending Dec. 31, 2002.

Bear Island's existing credit facility consists of a $70 million eight-year senior secured term and a $50 million six-year senior secured revolver. At March 31, the company had $20 million outstanding under the revolver and $17.4 million under the term. There are no additional borrowings available under the revolver due to the non-compliance with financial covenants.

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