NewPage Reaches Agreement with Creditors on Chapter 11 Plan: NewPage Corp. has reached an agreement in principle with all of its major creditor groups concerning the terms of its Chapter 11 plan. A brief summary of the agreement in principle has been posted to the KCC restructuring website.
From BloombergNewsweek:
The NewPage Corp. warring creditor factions came to agreement on a reorganization plan with help from a bankruptcy judge serving as mediator.
The plan will give all the stock to holders of first-lien notes. Second-lien noteholders and some unsecured creditors will split up $30 million in cash and the first $50 million collected by a litigation trust.
After the initial $50 million from the trust, additional distributions will be shared by the first- and second-lien noteholders and some unsecured creditors.
Trade suppliers who agree to provide credit in the future will receive 15 percent on their claims over two years, according to a company statement.
The company reported a $2.25 million net loss in August on net sales of $273.7 million. Reorganization expenses in the month were $3.9 million, according to the operating report filed with the bankruptcy court in Delaware.
Newpage filed a Chapter 11 plan in August that dissatisfied both secured and unsecured creditors. NewPage had been saying that unsecured creditors are “hopelessly out of the money” with no theory that would bring them a dividend under a Chapter 11 plan. For details on the August plan, click here for the Aug. 14 Bloomberg bankruptcy report.
Although the NewPage bankruptcy is pending in Delaware, the mediator was Bankruptcy Judge Robert Drain from New York.
Newpage will fund the litigation trust with $40 million cash and specified lawsuit recoveries. NewPage will also loan the trust $5 million to be used for administrative expenses. The official creditors’ committee supports the newly negotiated plan.
The official committee argued that that the lenders financed an acquisition in 2007 and a refinancing two years later that included fraudulent transfers. For details on the creditors’ claims, click here for the May 9 Bloomberg bankruptcy report.
Eighty percent owned by Cerberus Capital Management LP, NewPage listed assets of $3.4 billion and debt totaling $4.2 billion in the Chapter 11 reorganization begun in September 2011. Liabilities included $232 million on a revolving credit plus $1.77 billion on 11.375 percent senior secured first-lien notes.
Second-lien obligations include $802 million in 10 percent secured notes and $225 million in floating-rate notes. In addition to $200 million in 12 percent senior unsecured notes, $498 million is owing on two issues of floating-rate pay-in-kind notes.
NewPage, based in Miamisburg, Ohio, filed bankruptcy with 16 paper-making machines operating in seven plants in the U.S. and Nova Scotia. The Canadian affiliate filed for reorganization in Nova Scotia. The company reported a net loss of $229 million in the first half of 2011 on revenue of $1.79 billion, following a $674 million net loss in 2010 on revenue of $3.6 billion.
