On September 7, 2011, NewPage and some of its subsidiaries began voluntary proceedings under Chapter 11 of the United States Bankruptcy Code. Canadian subsidiary NewPage Port Hawkesbury Corp. has brought proceedings before the Supreme Court of Nova Scotia under the Companies’ Creditors Arrangement Act of Canada. So what does this really mean?
By voluntarily filing for Chapter 11, New Page is able to restructure its debt while continuing to operate business as usual, honoring their employee and customer obligations. NewPage has secured up to $600 million in debt financing commitments to ensure no disruptions throughout the process.
The restructuring was necessary due to the large debt the company incurred with the purchase of the North American division of Stora Enso in December 2007. Like many American companies, NewPage has not been immune to the effects of the Great Recession. Amid lower demand for coated paper and rising raw-materials costs, including increased prices for fuel and chemicals, NewPage was saddled with interest payments of $1MM per day. Due to this cash flow restraint, NewPage determined restructuring became the most effective means of strengthening its business.
Currently, NewPage is the largest coated paper manufacturer in North America, producing over 4 million tons of capacity annually. With $3.6 billion in net sales, it is currently one of the better performing mills in terms of EBITDA in the U.S. NewPage expects to complete its restructuring and emerge as a financially stronger company, better positioned for long-term success.
The company fully intends to make and deliver its products as usual at all of its U.S. locations. Couriers and third-party logistics partners were brought into the discussion prior to their filing Chapter 11. NewPage took steps to improve operations prior to filing, including the decision to exit the newsprint business and therefore put Port Hawkesbury up for sale.
NewPage, headquartered in Miamisburg, Ohio, traces its roots to two paper mills established in 1888 by William Luke along the Potomac River in Maryland, and will continue to be a long term key supplier on the future.
For more information on the restructuring plan for NewPage, visit www.newpagerestructuring.com