Fraser Papers files for creditor protection
June 23, 2009 By Pulp & Paper Canada
Fraser Papers Inc., together with its subsidiaries, has initiated a court-supervised restructuring under the Compan…
Fraser Papers Inc., together with its subsidiaries, has initiated a court-supervised restructuring under the Companies’ Creditors Arrangement Act in the Ontario Superior Court of Justice and will be seeking similar relief in U.S. bankruptcy court.
“The filing will provide Fraser Papers with a defined process and the necessary time to restructure its affairs in order to emerge with a sustainable and profitable specialty paper business,” said Peter Gordon, CEO.
Fraser Papers has been working with employees, suppliers, customers, and governments over many months in an effort to reduce costs, improve fibre access, and optimize operations in a challenging environment. In a press release, the company states that continued operating losses, weak demand and selling prices for pulp and lumber, impending debt repayments, and significant pension funding obligations require Fraser Papers to seek this protection from creditors while it continues to pursue alternatives to restructure its operations.
“Unlike many restructurings, the court filing was not the result of excessive leverage,” said Mr. Gordon. “Our paper business remains profitable, particularly the specialty packaging and printing segments where there are opportunities to grow in a number of key segments. However, weak pulp and lumber markets have drained our limited resources, more than offsetting the progress in our paper business.”
In support of this process, CIT Business Credit Canada has agreed to continue to revolve the existing working capital facility and, in addition, Brookfield Asset Management has agreed to provide debtor in possession financing. Together these two facilities will provide up to $20 million to fund operations during the restructuring process.
Fraser Papers has operations in New Brunswick, Maine, New Hampshire and Quebec. PricewaterhouseCoopers Inc. was appointed by the court as monitor to assist the company through its restructuring process.
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