Catalyst Paper Corporation has proposed a restructuring agreement with major bondholders that it describes as “the best alternative available to the company and its noteholders, shareholders and other stakeholders.”
Catalyst has been under Companies’ Creditors Arrangement Act (CCAA) creditor protection since late January.
In a statement, the company said the agreement will address its current debt level, preserve jobs and preserve its business as a going concern for the benefit of all stakeholders and the communities in which it operates.
“The proposed plan of arrangement provides the opportunity to reposition Catalyst Paper for the future at this very challenging time for the entire paper and pulp industry,” Kevin Clarke, president and CEO, said in the statement. “There are many interested parties involved and we are continuing to work hard to address the requirements that will enable us to finalize this transaction in a timely and effective manner.”
Under the terms of the proposed deal, Catalyst’s $390.4 million in outstanding senior secured notes will be exchanged for $325 million in new notes, 80 per cent of the company’s common shares and new coupon notes.
At the same time, Catalyst wants to exchange $250 million of its senior notes for 20 per cent of the company’s common shares and warrants to acquire up to 15 per cent of common shares on a cashless basis up to an aggregate equity value of $111.7 million.
Catalyst’s board, supported by a recommendation of an independent committee, is unanimously recommending that all noteholders and other creditors support the plan of arrangement.
Meanwhile, Catalyst has negotiated new collective agreements with union locals. Mike Verdiel, president of Local 76 of the CEP (Communications, Energy and Paperworkers’ Union) in Powell River said members of the local will be voting on the new agreement on Wednesday, March 14.
Each local has its own collective agreement, Verdiel said, and the votes are separate.
Last time union members voted on new collective agreements, the company said “it was all or nothing.” Of the six union locals, only the Pulp, Paper and Woodworkers Union of Canada local at Crofton voted down the agreement in January.
CEP Local 1 in Powell River and locals in Port Alberni and Crofton are also voting this week, Verdiel said. “We were told when we went into the bargaining that each local was on its own,” he said. “As you know, we went into CCAA and it’s a lot worse. We had to make further concessions in this agreement than we made the last time.”
If the restructuring agreement doesn’t work, then the collective agreements are null and void, Verdiel said.
