Creditors reject Catalyst debt plan, company up for sale
Creditors of Catalyst Paper have rejected a plan of arrangement to restructure the company’s finances, President and CEO Kevin Clarke confirmed Wednesday.
Clarke explained that the company’s three mills on Vancouver Island will operate as usual while Catalyst enters a court-approved process of selling its assets.
“It means that the solicitation process goes forward,” he said. “I'm really not that concerned about that.”
The First Lien 2016 bondholders, which have the right to most of the assets, will now enter into a stalking horse bid and endeavour to “buy the company, they want the asset,” he explained.
That means they’ll exchange a minimum of $275 million worth of their debt for ownership of the company and assets they’ve declared. Others will be allowed to make offers and then the 2016 bondholders can counter those bids.
“That basically says the company is not going to be liquidated, it’s not going to be broken up, it’s not going to disappear.”
Clarke also confirmed the 2016 bondholders voted almost 100 per cent in favour of the debt restructuring plan May 23, but the unsecured noteholders voted it down by about 36 per cent.
Clarke said he would be in meetings all day to explain the situation to customers and employees.
“I hope to be in all the mills next week.”
Catalyst employs some 1,700 people at mills in Port Alberni, Powell River and Crofton.
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