Catalyst creditors get second vote on restructuring
June 22, 2012 By Pulp & Paper Canada
Catalyst Paper has been granted permission by the courts for a vote June 25 on a new restructuring plan, which could potentially avoid the sale of its three mills in British Columbia. In a previous vote on May 23, not enough creditors supported…
Catalyst Paper has been granted permission by the courts for a vote June 25 on a new restructuring plan, which could potentially avoid the sale of its three mills in British Columbia. In a previous vote on May 23, not enough creditors supported the restructuring plan, and the papermaker was forced to begin a sales process.
Salaried pensioners of Catalyst Paper will be allowed to vote this time, since the failure of the previous restructuring plan and the sales process changes their status to that of unsecured creditors.
According to the Vancouver Sun on June 20, the unusual decision to allow a second vote is the result of a grassroots campaign led by the company’s salaried pensioners.
If the company were to be sold, the pension plan would be wrapped up, and because it is underfunded by about $115 million right now, pensioners stand to lose a significant amount of their pension income.
Gary McCaig, one of the organizers of the campaign, told the Sun the pensioners agreed to give up their extended medical benefits, which would save Catalyst about $7 million a year. They also agreed to allow the company a longer term to pay off the pension deficit, a move which is supported by the provincial government.
In a news release, Catalyst said there is substantial support for the amended restructuring plan among pensioners, and that certain holders of unsecured notes who previously voted against or did not vote on the plan of arrangement have indicated that they will support the amended plan.
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