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Catalyst Paper defers interest payment, works on debt restructuring

Catalyst Paper Corporation in mid-December deferred a US$21-million interest payment and announced it is reviewing alternatives to address its capital structure. Debt reduction has been identified as a priority and discussions are ongoing with…

Catalyst Paper Corporation in mid-December deferred a US$21-million interest payment and announced it is reviewing alternatives to address its capital structure. Debt reduction has been identified as a priority and discussions are ongoing with certain holders of its 2016 Notes and 2014 Notes.

The company has $840 million of debt. It has 30 days to pay the interest before triggering a default.

According to an article in the Globe and Mail on Dec. 15, failure to pay the interest amount would allow 2016 note holders to declare the $390-million (U.S.) principal amount and all accrued interest, due immediately.

One analyst quoted in the Globe story noted that the deferred payment is likely a tactic to pressure note holders to come to an agreement on restructuring outside of bankruptcy protection.

Catalyst Paper said operations are expected to continue as usual with obligations to customers, suppliers and employees being met in the ordinary course.

“We advised several months ago that we were actively pursuing a restructuring of our balance sheet. This is a very complex process and while we cannot prejudge outcomes, we are firmly committed to achieving a solution that puts Catalyst on stronger financial footing for the future,” said president and CEO Kevin J. Clarke.

Catalyst Paper manufactures diverse specialty printing papers, newsprint, and pulp. It has four mills located in British Columbia and Arizona.