Daily News: May 25, 2012

Catalyst Paper Restructuring Plan Shot Down by Creditors

Catalyst Paper Corporation announced that the company did not receive the necessary creditor approval for its amended plan of arrangement under the Companies’ Creditors Arrangement Act. Approval of not less than 66 2/3% of the principal amount of each creditor class voting on the plan is required. Although 99.5% of the principal amount of the secured creditor class voted in favor of the plan, only 64% of the principal amount of the unsecured creditor class voted in favor of the plan at meetings held today in Richmond, BC.

Since the amended plan of arrangement was not approved at the meetings, Catalyst Paper is required to commence a sale transaction in accordance with certain court-approved sale and investor solicitation procedures (SISP) as described in the Management Proxy Circular delivered to Catalyst Paper’s creditors in advance of the meetings.

“Today’s creditors’ vote makes it clear for stakeholders that our path to emerge from protection will be through a sales process initiated by a stalking horse bid from secured noteholders. Our objective remains unchanged and that’s to put our company on better financial footing to enable us to compete vigorously and to adapt as necessary to the continuing changes in the markets for our products,” said president and CEO Kevin J. Clarke. “Stakeholders can be assured that as milestones in the sales process are met, issues resolved and decisions reached, we will continue to provide timely updates on developments and progress.”

The company’s debtor-in possession (DIP) financing continues to be available to the company and, combined with the company’s operating revenue, is expected to continue to provide sufficient liquidity to meet ongoing obligations to employees and suppliers and ensure that normal operations continue during the sale process.

The SISP outlines the procedures and timelines for soliciting bids to purchase all or substantially all of the assets of Catalyst Paper or to make an investment in the business and operations of Catalyst Paper. The SISP also contemplates that Catalyst Paper will enter into a stalking-horse purchase agreement with holders of Catalyst Paper’s First Lien Notes for the purchase of all or substantially all of the company’s assets on a going concern basis.

Catalyst Paper manufactures diverse specialty mechanical printing papers, newsprint and pulp.

Previously on abfjournal.com:

Catalyst Paper Obtains Extension to CCAA Protection, Friday, April 20, 2012

Catalyst Paper Receives Approval for $175 Million in DIP Financing, Thursday, February 09, 2012