Catalyst Paper Defers Interest Payment


Richmond, British Columbia, Canada, 03 January 2012 -- Catalyst Paper Corporation in mid-December deferred a USD 21 million interest payment and announced it is reviewing alternatives to address its capital structure. Debt reduction has been identified as a priority and discussions are ongoing with certain holders of its 2016 notes and 2014 notes.

The company has $840 million of debt. It has 30 days to pay the interest before triggering a default.

According to an article in the Globe and Mail on 15 December, failure to pay the interest amount would allow 2016 note holders to declare the USD 390 million principal amount and all accrued interest, due immediately.

One analyst noted that the deferred payment is likely a tactic to pressure note holders to come to an agreement on restructuring outside of bankruptcy protection.

Catalyst Paper said operations are expected to continue as usual with obligations to customers, suppliers, and employees being met in the ordinary course.

"We advised several months ago that we were actively pursuing a restructuring of our balance sheet. This is a very complex process and while we cannot prejudge outcomes, we are firmly committed to achieving a solution that puts Catalyst on stronger financial footing for the future," said Kevin J. Clarke, president and CEO.

Catalyst Paper manufactures diverse specialty printing papers, newsprint, and pulp. It has four mills located in British Columbia and in Arizona in the United States.