Update: It took less than a month for NewPage to go from mentioning Chapter 11 to actually filing for it. See NewPage Files Chapter 11, Seeks Buyer for Canadian Mill.
North America's largest manufacturer of coated paper acknowledged today that it may be forced to seek Chapter 11 bankruptcy reorganization because of its crushing debt load.
NewPage made was no reference to reorganization in the news release this morning announcing another quarter of losses. But the 10-Q quarterly financial report it filed with the U.S. Securities and Exchange Commission later in the day contained this statement:
"We have retained advisors to assist us in exploring various restructuring alternatives and are engaged in discussions with various stakeholders to address our ongoing capital needs. We cannot assure you that we will be able to refinance any of our indebtedness, or that we will be able to do so on commercially reasonable terms. If we are unable to refinance our debt or generate sufficient cash flow to service our obligations, we will be required to seek to restructure our existing debt or to voluntarily seek, or be forced to seek, protection under the Chapter 11 of the U.S. Bankruptcy Code and applicable Canadian laws."
The report noted that the company's current liabilities (payments due in the next 12 months) exceed current assets by $2.5 billion because of bonds that come due early next year.
Because of higher paper prices and a better mix of products, the news release said, NewPage's 2nd quarter of 2011 was better than last year. The quarterly loss decreased from $174 million to $132 million. But it also said that the information in the 10-Q would be "sufficient to answer questions, and no conference call is planned."
S&P lowered its credit ratings on NewPage and its debt issues today, citing the paper manufacturer's "constrained near-term liquidity after the company posted weaker-than-expected second-quarter results and decided to hold off on previously announced asset sales."