Howe Sound Pulp and Paper restructuring
February 4, 2008 By Pulp & Paper Canada
Port Mellon, BC – Howe Sound Pulp and Paper Limited Partnership has reached agreement with its lead lenders and the…
Port Mellon, BC – Howe Sound Pulp and Paper Limited Partnership has reached agreement with its lead lenders and the majority of its participating lenders with respect to a restructuring of Howe Sounds long-term debt. These five institutions hold approximately 88% of the long-term debt.
One minority lender has not agreed to sign the debt restructuring agreements. As a result, Howe Sound today filed a proceeding under the Companies Creditors Arrangement Act (CCAA) to have the restructuring, which has already been approved by five of the six lenders, apply to the sixth lender as well.
The plan of arrangement that has been filed with the Court seeks only to reorganize the long term debt and in no way seeks to compromise the claims of other creditors. Creditors are stayed, but only to protect payment of their accounts in the normal course of business and to ensure that all creditors are treated fairly. All supplier accounts will be paid in full, dollar for dollar, in the normal course of business.
All six lenders, including the dissenting lender, have consented to an expedited process which is expected to be concluded on Friday, February 1. Completion of the restructuring plan will be on February 5, 2008.
Howe Sound is and will be conducting business as usual with no interruption of any kind. This proceeding will have no effect whatsoever on the employees or their on-going employment. Production, shipment and maintenance schedules will continue as normal. All customers can expect full and normal deliveries and service. All trade suppliers will be paid in full as their standard invoice terms come due for invoices issued prior to, during and following the period of the CCAA proceeding. Howe Sound has positive cash flow, and interest and trade accounts payable are current.
Reuters reporter Allan Dowd quotes Canfor company spokesman Lee Coonfer as saying that this filing will have no material affect on parent company Canfor Corp. The court filing this week was a procedural move needed to win approval to extend the terms of a loan as part of Howe Sound’s latest financial restructuring effort, according to Coonfer. Canfor co-owns the Howe Sound unit along with Japan’s Oji Paper Co Ltd, but wrote off its investment in the unit in 1998. The filing will not change the ownership structure, Coonfer said.
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