Atlanta, Georgia, USA, 03 June 2009 -- /PRNewswire/ -- Caraustar Industries, Inc. (Nasdaq: CSAR) announced that the Bankruptcy Court for the Northern District of Georgia approved the company's first day motions to, among other things, pay prepetition general unsecured claims in the ordinary course of business, in connection with its voluntary restructuring under Chapter 11.
As previously announced, Caraustar reached agreement with holders of approximately 83% of its 7-3/8% Senior Notes maturing 01 June 2009, and 91% of its 7-1/4% Senior Notes maturing 01 May 2010, on the terms of a cooperative financial restructuring that would reduce the company's debt obligations by approximately USD 135 million.
The court also granted permission for the company to pay prepetition employee wages and salaries, to make contributions to the 401(k) and other employee benefit plans, and to reimburse employees for their prepetition business expenses.
"Having received approval of our first-day motions so quickly sets Caraustar on strong footing as we move towards completing our recapitalization," stated Michael J. Keough, Caraustar's president and chief executive officer
. "This action by the court will be well received by our employees, customers, and suppliers."
In addition, the court approved use of the company's existing cash management system and substantially all of its existing bank accounts. The court also authorized the immediate use of up to USD 25 million of the USD 75 million senior secured debtor-in-possession revolving credit facility from General Electric Capital Corporation (the DIP facility), which will allow the company the support required to fund operations, pay employees' wages and benefits, and purchase goods and services during the restructuring period.
"The approval of our DIP financing and the court's permission to pay prepetition general unsecured claims in the ordinary course of business means that our trade creditors will continue to be paid, and as a result, we expect to assure continuity of supply to our customers," Keough said.
The company also announced it received a "staff determination" notification from Nasdaq that its equity securities will be delisted from The Nasdaq Stock Market. The decision was based upon Nasdaq's Marketplace Rules 5100, 5110(b) and IM-5100-1, and was made after reviewing the company's press release that it had filed for protection under Chapter 11 of the U.S. Bankruptcy Code and other publicly available information. Trading of the company's common stock on the Nasdaq Stock Market will be suspended at the opening of business on 11 June 2009. Nasdaq will file a Form 25-NSE with the Securities and Exchange Commission, which will remove the securities from listing and registration. The company does not plan to appeal the staff determination. These securities will not be immediately eligible to trade on the OTC Bulletin Board or in the "Pink Sheets," but might become eligible if a market maker makes application to register in and quote the securities in accordance with Securities and Exchange Commission Rule 15c2-11, and such application is cleared.
The company and its domestic subsidiaries filed voluntary Chapter 11 petitions along with a prenegotiated Plan of Reorganization in the United States Bankruptcy Court for the Northern District of Georgia on 31 May 2009. The cases will be jointly administered and the main case has been assigned case number 09-73830. Additional information about Caraustar's restructuring is available at the company's Web site http://www.caraustar.com/restructure.html or via the company's restructuring information line, 1-800-251-2580.
Caraustar Industries, Inc. is one of North America's largest integrated manufacturers of 100% recycled paperboard and converted paperboard products. The company is a socially responsible corporation, is committed to environmentally sound practices, and is dedicated to providing customers with outstanding value through innovative products and services. Caraustar serves the four principal recycled boxboard product end-use markets: tubes and cores, folding cartons, gypsum facing paper, and specialty paperboard products. For additional information on Caraustar, visit the company's Web site at www.caraustar.com.