by Jamie Mason | Published November 1, 2012 at 9:43 AM
NewPage Corp., the largest coated-paper manufacturer in North America, is looking for approval to secure $850 million in exit financing.
Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware in Wilmington will consider the request on Nov. 6. Goldman Sachs Lending Partners LLC, JPMorgan Chase Bank NA, Barclays PLC, Wells Fargo Bank NA, UBS Loan Finance LLC and J.P. Morgan Securities LLC are financing the exit loan.
The debtor's reorganization plan would be funded by $850 million in exit financing, comprising of a $500 million secured term loan facility and a $350 million asset-based revolving credit facility.
The term loan would mature six years from the closing of the loan and would be priced at a base rate plus 600 basis points or a Eurodollar rate plus 700 basis points. There is a 1.25% floor on the Eurodollar rate and a 2.25% floor on the base rate. If the company defaults, the interest rate would increase by 200 basis points.
Goldman Sachs Lending Partners, JPMorgan and Barclays are the lenders on the term loan.
The revolver, which is being provided by lenders led by J.P. Morgan Securities, Goldman Sachs Lending Partners, Wells Fargo Bank and Barclays, would mature in five years and be priced at an alternative base rate plus 75 to 125 basis points or LIBOR plus 175 to 225 basis points. If the company defaults, the interest rate would increase by 200 basis points. The revolver carries a 0.375% commitment fee and a 0.125% letter of credit fee.
The debtor is also looking to pay certain fees in connection with the exit loan. The fees were not disclosed in court filings.
NewPage, a portfolio company of Cerberus Capital Management LP, will look for approval of the disclosure statement for its amended reorganization plan on Nov. 6. NewPage amended plan after reaching an agreement with its creditors regarding the terms of its restructuring.
Under its amended plan, filed Oct. 5, NewPage's first-lien noteholders would receive 100% of the debtor's reorganized equity.
NewPage's second-lien noteholders and certain unsecured creditors would receive a pro rata share of $30 million in cash and the first $50 million in proceeds from a litigation trust. After the first $50 million, any additional proceeds from the litigation trust would be shared between the first-lien and second-lien noteholders and unsecured creditors.
Trade creditors are expected to recover 15% of their claims over a two-year period.
The Miamisburg, Ohio, debtor filed for Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware in Wilmington on Sept. 7, 2011, with 13 affiliates. The cases are jointly administered. Affiliate NewPage Port Hawkesbury Corp. also filed for bankruptcy protection under Canada's Companies' Creditors Arrangement Act in the Supreme Court of Nova Scotia in Halifax.
NewPage was forced to seek bankruptcy protection due to a significant decline in the North American demand for coated paper. "The current unrest in the global economy and the preceding 'great recession' have resulted in a general decrease in both advertising spending and magazine/catalog circulation, as well as an overall decline in the demand for coated paper," court papers said.
NewPage also was upended by the rising costs of raw materials. The company attempted to restructure its debt out of court but failed, so it filed bankruptcy petitions.
Cerberus Capital Management formed NewPage in 2005 to buy the coated-paper operations of MeadWestvaco Corp. for $2.3 billion. Cerberus paid $415 million in equity for about a 90% stake. It raised the rest of the cash through bank borrowings and junk bonds.
The company originally had five pulp and paper manufacturing mills in Kentucky, Maine, Maryland, Michigan and Ohio. In April 2006, it sold its carbonless operations in Ohio to paper maker P.H. Glatfelter Co. The debtor's coated paper is used for magazines, magazine covers and inserts, corporate annual reports and high-end advertising brochures, as well as other products. NewPage operates 16 paper-making machines at paper mills in Kentucky, Maine, Maryland, Michigan, Minnesota, Nova Scotia and Wisconsin, with distribution centers near Atlanta, Chicago, Minneapolis and New York, court papers said.
Martin J. Bienenstock, Judy G.Z. Liu and Philip M. Abelson at Proskauer Rose LLP and Laura Davis Jones, Michael R. Seidl and Timothy P. Cairns at Pachulski Stang Ziehl & Jones LLP are debtor counsel. Luc A. Despins, Leslie A. Plaskon and Robert F. Winter of Paul Hastings LLP and James L. Patton Jr. and M. Blake Cleary of Young Conaway Stargatt & Taylor LLP represent the official committee of unsecured creditors. Share: blog comments powered by Disqus