Catalyst Paper completes CCAA reorganization under second amended plan

By Caroline Salls

Pittsburgh, Sept. 13 - Catalyst Paper Corp. has completed its Companies' Creditors Arrangement Act reorganization under its second amended and restated plan of compromise, according to a company news release.

As a result of the reorganization and related transactions, Catalyst said it reduced its debt by C$390 million, eliminated C$80 million of accrued interest and reduced annual interest expense and other cash costs by roughly C$70 million.

"We entered the reorganization process with a clear objective to put Catalyst on stronger financial footing and we have done so," president and chief executive officer Kevin J. Clarke said in the release.

"Many parties worked long and hard to resolve balance sheet and cashflow issues constructively and quickly throughout the process.

"Sales kept our order book strong, operations ran well and, going forward, we intend to capitalize on the momentum generated to compete even more vigorously in the markets for our products."

Plan terms

Under the amended plan:

• Holders of first-lien notes received $250 million principal amount of secured notes due 2017, which bear interest, at the company's option, at a rate of 11% in cash or 13% payable 7.5% in cash and 5.5% in kind, as well as 14.4 million new common shares, representing about 100% of the company's issued and outstanding common shares;

• Holders of unsecured notes will receive a share of 50% of the net proceeds following the sale of Catalyst's interest in Powell River Energy Inc. and Power River Energy LP or, if an equity election was made, their share of 600,000 new common shares;

• Holders of general unsecured claims will receive a share of the Powell River proceeds pool, their share of the unsecured creditor share pool if an equity election was made or, if their claim was less than C$10,000 in cash, 50% of their allowed claim in cash; and

• All common shares of the company outstanding before the reorganization have been cancelled for no consideration, and holders of those shares will not receive any distribution under the amended plan.

As part of the reorganization, the company said it has also entered into a new asset-backed loan facility and exit financing facility. Roughly $35 million was drawn under the exit facility upon the implementation of the amended plan.

New board

Catalyst said its new board of directors is comprised of Clarke, John Brecker, Giorgio Caputo, John Charles, Todd Dillabough, Walter Jones and Leslie Lederer.

As previously reported, the amended plan was overwhelmingly approved at meetings of the company's secured and unsecured creditors on June 25 and was approved by the Supreme Court of British Columbia on June 28.

Catalyst is a Vancouver, B.C.-based paper and pulp company. The company filed for bankruptcy on Jan. 17, 2012 in the U.S. Bankruptcy Court for the District of Delaware to gain recognition of its Canadian proceedings. Its Chapter 15 case number is 12-10221.

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