Toronto, Ontario, Canada, 18 June 2009 – Fraser Papers Inc. (TSX:FPS) announced today that it, together with its subsidiaries, has initiated a court-supervised restructuring under the Companies’ Creditors Arrangement Act (Canada) (the CCAA) in the Ontario Superior Court of Justice and that they will be seeking similar relief later today pursuant to Chapter 15 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. Pursuant to CCAA Proceeding commenced today, PricewaterhouseCoopers Inc. was appointed by the court as monitor to assist the company through its restructuring process. The company remains in control of its assets and business operations.
“The filing will provide Fraser Papers with a defined process and the necessary time to restructure its affairs in order to emerge with a sustainable and profitable specialty paper business,” said Peter Gordon, chief executive officer.
Fraser Papers has been working with employees, suppliers, customers, and governments over many months in an effort to reduce costs, improve fiber access, and optimize operations in a challenging environment. The company has determined that continued operating losses, weak demand and selling prices for pulp and lumber, impending debt repayments, and significant pension funding obligations require Fraser Papers to seek this protection from creditors while it continues to pursue alternatives to restructure its operations.
“Unlike many restructurings, the court filing was not the result of excessive leverage,” Gordon said. “Our paper business remains profitable, particularly the specialty packaging and printing segments where there are opportunities to grow in a number of key segments. However, weak pulp and lumber markets have drained our limited resources, more than offsetting the progress in our paper business.”
In support of this process, CIT Business Credit Canada has agreed to continue to revolve the existing working capital facility and, in addition, Brookfield Asset Management has agreed to provide debtor in possession financing. Together these two facilities will provide up to CAD 20 million to fund operations during the restructuring process.
The company’s operating plans are unaffected by today’s announcement. The two paper mills in Madawaska, Maine, and Gorham, New Hampshire, will continue to operate without disruption, manufacturing specialty paper products for existing customers. The company will proceed with developing a framework for a restructuring plan with the goal of making Fraser Papers more competitive and profitable.
Fraser Papers is an integrated specialty paper company that produces a broad range of specialty packaging and printing papers. The company has operations in Maine and New Hampshire in the United States, and in New Brunswick and Québec in Canada. Fraser Papers is listed on the Toronto Stock Exchange under the symbol: FPS. For more information, visit www.fraserpapers.com.