Catalyst Paper has negotiated a deal with creditors to recapitalize, but the deal is contingent on ratifying new labour agreements with union locals at the company's Canadian mills by Jan. 31. Two of the mills have reached labour agreements, but Crofton has not.
The recapitalization transaction will result in a significantly reduced debt burden for Catalyst, and provide the company with more flexibility to adapt to the downturn in markets for paper, newsprint and pulp. The new capital structure will reduce debt by $315 million and reduce annual cash interest expense by $25.5 million.
A story in the Vancouver Sun on Jan. 17 explained that the deal gives bondholders 99.5% of the company's shares, and effective ownership of the company.
The proposed recapitalization has the support of the company's creditors and is expected to close by Mar. 31. Upon implementation, a new board of directors will be appointed.
Catalyst will continue to operate and meet its obligations to creditor, customers, and employees as the recapitalization is arranged.