Richmond, British Columbia, Canada, 25 January 2010 – Catalyst Paper Corporation (TSX:CTL) today announced that it has amended the terms of its private exchange offer and consent solicitation for its outstanding 8 5/8% senior notes due 15 June 2011 (the old notes).
As a result of this amendment, an amended and restated offering memorandum, reflecting the terms of the amended exchange offer, will be made available to eligible holders (as defined below) as soon as possible.
The terms of the amended exchange offer include the following:
- Holders who validly tender and do not validly withdraw their old notes will receive, for each USD 1000 principal amount of old notes accepted for exchange, (i) USD 830 in principal amount of senior secured notes of Catalyst due 15 December 2016 (the new notes), plus (ii) USD 50 in principal amount of the new notes as an early tender premium to holders who validly tender and do not validly withdraw their old notes before a date to be specified in the amended offering memorandum.
- The new notes will pay interest of 11% per annum.
- The new notes will be secured on a first priority basis by all of Catalyst’s assets, subject to certain exceptions, and subject to the senior security interest in the property and assets which secure obligations under Catalyst’s existing CAD 330 million asset-based revolving credit facility (the ABL facility) and the obligations under any derivatives transactions from time to time entered into by Catalyst (such property and assets subject to senior security interests of the ABL facility, which primarily consists of working capital and the plant, property and equipment of Catalyst’s Snowflake mill, the “ABL priority lien.
- The new notes will also be secured by a junior security interest in the ABL priority lien.
- The new notes will be guaranteed on a senior basis, jointly and severally, by each of Catalyst’s restricted subsidiaries, subject to certain exceptions.
Catalyst has executed a support agreement with an ad hoc group of holders of the old notes holding USD 101,334,000 or 28.6% of the outstanding old notes. The members of the ad hoc committee have agreed to tender their old notes into the amended exchange offer, subject to the terms of the support agreement.
Catalyst has been advised by the exchange agent for the exchange offer that, as of the close of business on 22 January 2010, the aggregate principal amount of old notes that had been validly tendered (and not validly withdrawn) and for which related consents had been validly delivered (and not validly revoked) was approximately USD 29.35 million or 8.3% of the outstanding old notes.
The amended exchange offer will be subject to certain conditions, including the receipt of tenders and consents in respect of at least 95% of the outstanding aggregate principal amount of the old notes and the negotiation and execution of inter-creditor and other related agreements with the lenders under the ABL facility arising from the issuance of the new notes.
The consent solicitation set forth in the existing exchange offer will remain the same in the amended exchange offer.
At 31 December 2009, the company had liquidity of CAD 157.4 million, comprised of CAD 83.1 million of cash, and availability of CAD 74.3 million under the ABL facility, after taking into account a covenant that requires Catalyst to maintain CAD 35.0 million in availability under the ABL facility. Total debt outstanding as at 31 December 2009, was CAD 775.6 million, including CAD 11.2 million of capital lease obligations and CAD 112.9 million of non-recourse debt owed by a joint venture in which Catalyst has a 50.001% interest.
The amended exchange offer will be made, and the New Notes will be offered and issued, in transactions exempt from the registration requirements of the U.S. Securities Act of 1933, as amended. Accordingly, the exchange offer will only be made to holders of old notes (i) that are both “qualified institutional buyers,” as that term is defined in Rule 144A under the Securities Act, and “accredited investors,” as that term is defined in Rule 501(a) under the Securities Act, or (ii) outside the United States, that are persons other than “U.S. persons,” as that term is defined in Rule 902 under the Securities Act, in offshore transactions in reliance upon Regulation S under the Securities Act (collectively, the eligible holders). In Canada, the amended exchange offer will be made pursuant to the exemption from the prospectus and registration requirement found in S.2.14 of National Instrument 45-106 Prospectus and Registration Exemptions (“NI 45-106”).
The information agent in connection with the exchange offer, MacKenzie Partners, Inc. can be contacted by the eligible holders to request the amended offering memorandum at (212) 929-5500 or toll free at (800) 322-2885. The amended offering memorandum will be provided only to persons who can certify that they are eligible holders or that they are representatives acting on behalf of eligible holders. Genuity Capital Markets is acting as financial adviser to Catalyst.