BREAKING – Catalyst Paper Corporation announced this afternoon (June 18) that it has received approval from the court for a second vote on an amended restructuring plan.
The court approved meetings with the company's secured and unsecured creditors, schedule for June 25 in Richmond, BC.
City of Powell River Mayor Dave Formosa was in court today for the hearing and testified to the vote's importance. "I was told it would go either really bad or really good," Formosa said. "I wanted an opportunity to tell the judge this was a big deal for us."
Formosa asked the judge if he could speak and the judge agreed. Formosa had a prepared statement, which he read after all the lawyers spoke. "At the end of it, I said, 'Your Honour, all we can do is out best and that's all we can do. If we don't take this opportunity now, we'll never get it again.'"
Formosa admitted he was a bit nervous. The judge took 45 minutes to make his decision. "At the end of the day, he said this was not just about [legal arguments], it was about community," Formosa said. "It's a very public issue and a lot of other folks are affected. We have the issues of communities, pensioners, workers, families and little cities, as has been 'eloquently pointed out by the mayor of Powell River here today.' Then he ruled that we would get a second vote."
Creditors voted down a first plan by a narrow margin on May 23. Since then, Catalyst has been in a court-approved sale and investor solicitation procedure. It has received a number of expressions of interest as part of that process.
The principal change in the new, amended plan is the compromise of certain extended health benefits plans for former salaried employees on pensions. Pensioners will have a vote along with all other unsecured claims on the amended plan. They did not have a vote on the first plan.
Catalyst said in a statement that it has been advised there is substantial support for the amended plan by pensioners and by certain unsecured creditors who voted against the first plan or did not vote.
As well, the company has proposed changes to its salaried pension plan that provide more time for it to restore the deficiency in the pension fund, estimated to be $115 million, and that would allow pensioners to cash out their benefits. Catalyst said the changes would save about $7 million a year.
The changes require provincial government approval. The minister of finance has confirmed that he is prepared to submit the proposal to cabinet for its consideration, with a recommendation to support it.
While the amended plan is being considered, Catalyst will continue to go through the sales process. It will suspend that process only if its creditors approve the amended plan and subsequently the court.
Catalyst’s board of directors is unanimously recommending that all its creditors vote in favour of the amended plan.