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Rubber and Wood January 20, 2017 01:30:13 PM

Catalyst Paper’s revitalization plan receives final nod from Supreme Court

Carolina Curiel
ScrapMonster Author
The Supreme Court of B.C had given an interim order December 12th, 2016, approving the company’s recapitalization and privatization transaction.

Catalyst Paper’s revitalization plan receives final nod from Supreme Court

VANCOUVER (Scrap Monster):  The Supreme Court of British Columbia has given final nod to Catalyst Paper’s revitalization plan. The completion of the plan, which is subject to customary closing conditions, would help the company to reduce its debt and increase the liquidity. Further, it is expected to bring in big relief for the company, which has been struggling to keep pace with the fast changing market scenario. The recapitalization process had begun during the month of October last year.

The Supreme Court of B.C had given an interim order December 12th, 2016, approving the company’s recapitalization and privatization transaction. The recapitalization plan proposes to exchange the Notes and all accrued and unpaid interest in respect of the Notes up to November 1, 2016 for a new secured five-year term loan in the principal amount of US$135 million plus accrued and unpaid interest on the Notes. After giving effect to the recapitalization, common shares of the company will also be exchanged.

Further, Catalyst Paper noted that the the minority shareholders of the company will vote on a transaction pursuant to which all existing outstanding common shares other than common shares held by parties to the Recapitalization Support Agreement would be repurchased for cancellation by Catalyst for cash consideration equal to C$0.50 per Common Share. The company expects the payable amount in connection with the privatization transaction to total around CAD$ 2.2 million in the aggregate.

The plan also includes a support agreement between Catalyst Paper and certain funds and entities controlled by Oaktree Capital Management, L.P., Mudrick Capital Management, L.P. and Cyrus Capital Partners, L.P. As per the agreement, the parties undertook to vote Common Shares representing approximately 70% of the issued and outstanding Common Shares and Notes in favor of the Recapitalization and the Privatization Transaction. In addition, the entities controlled by Stonehill Capital Management, LLC too agreed to vote Common Shares representing approximately 9.98% of the issued and outstanding Common Shares in favor of the plan.

Earlier on January 17th, Catalyst shareholders and noteholders had approved the plan by more than 90%. The special meeting of shareholders had authorized the revitalization plan resolution by 99.1% of the votes cast by Shareholders present in person or represented by proxy. The resolution authorizing the Privatization Transaction was approved by 98.6% of the votes cast by Shareholders present in person or represented by proxy. In addition the Noteholders had authorized the revitalization plan resolution by 100% votes cast by Noteholders.

The recapitalization process began after the deal to sell Catalyst Paper to India-based Kejriwal Group International (KGI) fell through. In July last year, KGI had entered into a support agreement with four principal securityholders- Mudrick Capital Management, L.P., Cyrus Capital Partners, LP, Oaktree Capital Management, LP and Stonehill Capital Management LLC who owns nearly 79% of the outstanding shares of the company. However, the transaction was not completed.

The successful completion of the plan would lead to delisting of the company’s common shares from the Toronto Stock Exchange. The final closing of the deal is expected by end-January this year.

About Catalyst Paper

Catalyst Paper Corporation is a pulp and paper company based in the Canadian city of Richmond, British Columbia. It operates five pulp mills and paper mills, producing a combined 1.8 tonnes of paper and 500,000 tonnes of market pulp annually. Catalyst Paper manufactures diverse printing papers such as coated freesheet, C1S, coated and uncoated groundwood, newsprint, directory, as well as market pulp. Customers include retailers, publishers and commercial printers in North America, Latin America, the Pacific Rim and Europe. The company is also ranked by Corporate Knights magazine as one among the 50 Best Corporate Citizens in Canada.

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