Catalyst extends exchange offer, consent solicitation for 8 5/8% notes

By Devika Patel

Knoxville, Tenn., Feb. 8 - Catalyst Paper Corp. said it delayed the deadline again in the private exchange offer and consent solicitation for its 8 5/8% senior notes due June 15, 2011.

The offer began on Nov. 23 and will now expire at 5 p.m. ET on Feb. 12, extended most recently from Feb. 5. The expiration date has been extended multiple times from its original deadline of Dec. 24.

The company previously changed the payout on offer and increased the interest rate of the new notes to 11% from 10%.

Holders will receive $830 principal amount of new senior secured notes due Dec. 15, 2016 for each $1,000 principal amount of notes exchanged.

They will also receive $50.00 principal amount of new notes as an early tender premium for each note tendered by a date to be specified in the amended offering memorandum.

Before the change, the company was offering $700 principal amount of new notes and 269 shares of common stock for each $1,000 principal amount of notes tendered plus an early tender premium of $25.00 per note tendered by 5 p.m. ET on Dec. 9.

In addition, the company already amended the offer so that the new notes will be secured on a first-priority basis by all of its assets - subject to certain exceptions and subject to the senior security interest in the property and assets that secure its C$330 million asset-based revolving credit facility and the obligations under any derivatives transactions entered into by Catalyst - and by a junior security interest in the asset-based revolving priority lien. They will be guaranteed on a senior basis by each of Catalyst's restricted subsidiaries, subject to certain exceptions.

Catalyst previously said the members of an ad hoc committee of noteholders have agreed to tender their notes into the amended exchange offer. They hold $101,334,000 principal amount, or 28.6%, of the outstanding notes.

The company will not extend the expiration date of the exchange offer beyond Feb. 26 without the consent of the ad hoc committee.

As of the close of business on Feb. 5, $79.2 million, or about 22.36%, of the notes had been tendered.

Catalyst is also soliciting consents to eliminate substantially all of the negative covenants and events of default contained in the indenture as well as modify the definition of credit facilities.

Holders who tender their notes must consent, and consents are needed from holders of a majority of the notes.

The exchange offer is subject to the receipt of tenders and consents for at least 95% of the outstanding notes and the negotiation and execution of inter-creditor and other related agreements with the lenders under the asset-based revolver arising from the issuance of the new notes.

The exchange offer is only being made to noteholders who are both "qualified institutional buyers" and "accredited investors" or, outside the United States, who are persons other than "U.S. persons," each as defined under the Securities Act.

The company previously said that if the exchange offer is completed, it intends to conduct a rights offering to purchase up to C$100 million of common shares.

Catalyst's largest shareholder, Third Avenue International Value Fund, has agreed to participate in the offering and to oversubscribe in an amount to be determined, according to an earlier news release.

The company said there can be no assurance that the rights offering will be completed.

MacKenzie Partners, Inc. (800 322-2885 or 212 929-5500) is the information agent for the exchange offer.

Catalyst is a Richmond, B.C.-based producer of specialty printing papers and newsprint.

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