NewPage announced today it has filed for Chapter 11 bankruptcy protection, will keep its U.S. mills operating, and is seeking a buyer for its Canadian mill.
North America's largest maker of magazine-quality paper says it has $600 million from J.P. Morgan in "debtor in possession" financing that will enable it to continue operating while it tries to restructure its approximately $4 billion in debt and other liabilities.
The company was already in the process of putting its Port Hawkesbury, Nova Scotia mill on indefinite shutdown. Today's announcement says the company will "continue a 'hot idle' at the mill and preserve the value of its assets while it continues discussions with potential buyers."
The company's bankruptcy court filing today blames NewPage's problems on declining demand for paper in North America, "foreign imports from Europe and Asia," "the rising cost of raw materials", and the company's "relatively high level of structured debt". The filing notes that NewPage has been able to generate positive EBITDA (operating cash flow), but that money is insufficient to repay its huge debt load.
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13 comments:
If u read the Q&A section of the b.k filing N.P says most employees in the U.S will not be affected by the B.K.I understand that means that some employees are loosing their jobs.Which mill do u think will get the axe? Rumford?
Rumford is probably the oldest and least efficent so that would be a very good canidate.
But he highest fiber costs are located at their mills in Wisconsin and Michigan. easily higher by a third. Fiber costs are the largest factor in deciding a mills competiveness.
Apollo may have an interest in that mill since it has operations in bucksport and jay Maine.
Well Newpage's arrogance and Cerebus ineptitude catches up with them.
Did Cerebus take so much cash out like with Chrysler that they had to tank it?
Kind of like the banks, too big to fail except they did. Lots of good people and mills came under the name. They should have stayed independent.
However, yes Chinese paper coming into the USA does not help. Newpage screwing over Xpedx on distribution did not help.
the rumford mill is the highest money maker of all of newpage mills
While I am not privy to the numbers, i can't imagine that Rumford is the biggest money-maker in New Page. If so, then it's no wonder the company has gone under. Relatively low tonnage, above average fiber prices, and old equipment - how Rapids, Escanba, and Luke can't out do Rumford would only be explained by mismanagment.
With that said, New Page's "reasons" for banruptcy are the same issues that all paper companies are dealing with, only other companies are handling them better. One big difference is the decision-makers in each company and what happens to the cash that is generated over the years. Lack of capital, minimal money for equipment upkeep, and the loss of significant talent have had their effect on all of the New Page mills over the past 5 years.
While the major concern is for the workers and communities affected by this debacle, the other issue is the amount of money owed to numerous suppliers, tranport companies, vendors, and banks - how that will affect the rest of the industry remains to be seen...
Biron , Wi and Wickeckiffe , Ky are 2 that will be closed, Rumsford maybe the 3rd. Escanaba and Duluth are definately safe from the axman.
Biron is the highest cost NewPage coated groundwood mill - about equal to Verso Sartell. Escanaba and Rumford are both lower on the coated groundwood cost curve. Rumford is above average cost on coated free sheet - has high energy costs. Wickliffe is on the low end of the coated free sheet cost curve - benefits from low wood and energy costs. Luke has smaller machines but lower wood and energy costs than Escanaba.
I don't understand how $600 million dollars in additional loans helps you pay off the hundreds of millions you already owe while struggling to break even prior to announcing your bankrupt??? And what about all the vendors and suppliers you ow big dollars to? Do they get paid first, soon, or ever? The more I read about companies digging our out of bankruptcy, the more disgusted I am with the mishandling of this group. Will there ever be any consequences for the upper management of NP and/or shareholders of Cerberus for creating this mess??
If newpage want's to make a go for the future the ugly reality is old slow and narrow web machines need to be taken off line,major capital needs to be injected in the 230+ deckle machines.I cant imagine they would have any chance in competing otherwise.I believe all non intergrated mills have been shut????I feel bad for anyone in the biron and rumford mills.
Stevens point is still making C1S and specialty while being non-integrated - bbviously the pay out by Stora last week covered some of their financial liabiities, but they're still in trouble, along with Rumford and Biron. Wickliffe has never made money consistently and Luke has been struggling as of late. Will be scary for a lot of folks at all those locations over the next few months....
I would love to hear an expert prediction of post B.K newpage. Will Apollo settle with luke and wickliffe? Will there be mill closures? I would guess this is N.P opportunity to clean house.What about Avenue? Port hawksbury a possibility for them folks? How about apollo picking up rumford and shutting Bucksport? Verso Sartell mill is a big looser for that operation and would benefit from a N.P midwest mill.
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