NewPage Says It's Business as Usual Despite Bankruptcy Filing
Paper manufacturer NewPage Corp. seeks to continue operations and provide wages and benefits to its 6000 employees as part of a Chapter 11 bankruptcy filing made yesterday in Delaware.
In the filing, NewPage lists $3.4 billion in assets and $4.2 billion in debt as of June 30. "We strongly believe that the court-supervised restructuring we began today is the most effective means of strengthening our financial position and enhancing our standing as the leading producer of printing and specialty paper in North America," President and CEO George F. Martin said in a press release.
The company's plans for uninterrupted operation rest on a Debtor in Possession (DIP) loan from J.P. Morgan for up to $600 million. Bloomberg reports J.P. Morgan plans to meet with lenders tomorrow to discuss the proposal, which involves a $250 million term loan and a $350 million revolving loan.
NewPage also revealed yesterday its intention to continue a "hot idle" shutdown at its Port Hawkesbury pulp and paper mill in Canada while it seeks a buyer for the facility. The company hopes to sell the mill by November.
According to paper industry blog Dead Tree Edition, in addition to its debt, the company blames declining North American demand, competition from Asia and rising raw materials costs for its seeking bankruptcy protection.
NewPage's debt has been an ongoing concern for investors. In June, bond prices hit a two-year low over concerns that that the company, owned by Cerberus Capital Management LP, would not be able to service its debts.
The company's website seeks to reassure clients and investors that the company is in a stable position despite its voluntary Chapter 11 filing. "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," a statement reads.
The company says restructuring was needed to put it on better footing in light of changes in the paper market, while continuing to develop new technologies, quality products and ethical business practices.
"The company's current capital structure was put in place during a different time with different assumptions," the website reads. "Industry trends and the broader economic environment have left NewPage burdened by its current debt levels. The company's restructuring is expected to result in an overhaul of its balance sheet that will better align its capital structure with its operations—leaving NewPage in a better position for long-term success."