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."
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5 comments:
Well, like any 12 step program, Step 1 is admitting you have a problem . . .
newpage will declare very soon , and probablt get DIP financing, continue running with most machines, probably close Port hawkesbury. Like Abibow the will emerge without the burdern of debts and can control the domestic market.
But what about the second level debtthat's been bought up by the apollo and others?? Verso and Abitibi both have a stake in this bankruptcy and one has to wonder what they will demand for these bonds????
Maybe deal by NP to dump Port Hawkesbury to Abitibi, Luke and Wickliffe to Verso, and keep their midwest base (sorry rumford, you don't make the cut...)??
Whatever happens, rest assurred Cerebus comes out unscathed, the so-called "leaders" of new page will come out smelling like roses (expensive ones at that), and the communities aligned with the mills will suffer as always.
It sounds like this guy has done his homework! I agree with you 100%.I do wonder if NP would continue to make pulp in rumford though?
Pulp in Rumford is an option, though wood basket in maine is not as plentiful as many would imagine. Plus recent reductions in pulp pricing make the timing poor for that transition. Keeping their cogen plant as part of the mill could make it more feasible and keep the Rumford assets at least somewhat buyable. Gee, too bad the creditors didn't allow the cerberus gang to get away with that one...
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