Catalyst Paper Clarifies Media Reports on Nature of Recapitalization Process
The following is the Catalyst’s original recapitalization announcement:
Jan. 14, 2012—Catalyst Paper announced today that the company has entered into an agreement (the Agreement) for a recapitalization transaction that will result in a significantly reduced debt burden.
Catalyst Paper’s management team and Board of Directors believe that the proposed recapitalization offers substantial benefits to Catalyst Paper, including:
- enhanced flexibility to respond to the downturn in the market for paper, newsprint and pulp;
- improved capital structure: $315.4 million reduction in debt; and
- reduced cash interest expense: up to $25.5 million reduction in annual cash interest expense ($37.0 million if paid in kind to the maximum extent possible).
Catalyst Paper’s management team and board of directors believe that, in view of the challenges and risks to the company’s ongoing viability created by the current paper, newsprint and pulp markets and the company’s existing capital structure, the recapitalization is the best alternative available to the company and its noteholders, shareholders and other stakeholders. The new capital structure will provide a stronger financial base for the execution of the company’s operating strategy and enhance the long-term value of the company.
