Toronto, Ontario, Canada, 13 May 2010 – Fraser Papers Inc. today reported financial results for the year ended 31 December 2009.
As a result of the sale of the company’s specialty papers assets to Twin Rivers Paper Company Inc. on 28 April 2010, the company has classified its specialty papers business as “held for sale” as at 31 December 2009. The operating results of the specialty papers business has been disclosed as “discontinued operations” in the statements of operations.
The company generated an EBITDA loss of CAD 19.7 million in 2009 compared to an EBITDA loss of CAD 12.8 million in 2008. Net loss for 2009 amounted to CAD 231.8 million or CAD 4.62 per share compared to a loss of CAD 71.9 million or CAD 1.48 per share in 2008. During the fourth quarter of 2009, Fraser Papers recorded a loss on write down of CAD 105 million of assets held for sale and an impairment charge of CAD 13.1 million related to its preferred share interest in the Katahdin Paper Company in Millinocket, Maine, USA. During the third quarter of 2009 the company recorded an impairment charge of CAD 42.0 million related to its pulp mill in Thurso, Québec, which was closed indefinitely on 05 June 2009.
Fraser Papers has filed its 2009 annual financial statements, including the related management discussion and analysis, on SEDAR at www.sedar.com. As a result, the company is now in compliance with its continuous disclosure obligations.
On 18 June 2009, citing continued operating losses, the weak markets for pulp and lumber, impending debt repayments, and significant pension funding obligations, the company and its subsidiaries filed for creditor protection under the Companies’ Creditors Arrangement Act (CCAA) in Canada and Chapter 15 of the U.S. Bankruptcy Code.
In December 2009, Fraser Papers submitted a restructuring proposal to the courts that has provided for an early exit from creditor protection for its core specialty papers business and should provide for the maximum recovery of value for creditors. The proposal involved a two-stage process that created a stand-alone business out of the company’s specialty papers assets to be followed by the subsequent divestiture of the remaining assets by way of separate transactions.
The proceeds from the sale of the specialty papers assets to Twin Rivers, plus additional proceeds from the sale of the remaining assets in Fraser Papers, will be used to settle the remaining secured claims against the company, before distributing any remaining proceeds to its unsecured creditors. The remaining assets include a paper mill in Gorham, New Hampshire, USA, and three lumbermills in northern Maine. The company completed the sale to Twin Rivers on 28 April, and the sale of the pulp mill in Thurso, Québec, on 30 April 2010. A sale process is underway for the Gorham paper mill in New Hampshire and is due for completion shortly.
The ultimate recovery for the creditors of Fraser Papers, if any, will not be determined until a final determination of all the claims against the company and a distribution of the net proceeds.