Smurfit Unveils Emergence Plans

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Smurfit Stone Container Corp., Chicago, Ill., USA, in a regulatory filing this past week, reported that it plans to raise $1.85 billion of debt financing to pay off creditors and support its business when it exits bankruptcy, Reuters reported. The company plans to borrow $1.2 billion under a six-year loan and have $650 million available under an asset-backed revolving loan. The company expects to exit bankruptcy in April.

According to the filing, Smurfit plans to emerge with $1.1 billion of net debt, down $2.9 billion entering bankruptcy, and expects to eliminate another 599 jobs in 2010 (in addition to the 2,185 in 2009), reducing its total personnel to some 19,000. The company reduced its payroll by 2,185 last year. The company anticipates reducing it debt ratio to 2.5 times its EBITDA, or earnings before interest, taxes, depreciation and amortization. The debt ratio was 8 times in 2009. It also forecasts an increase in EBITDA of more than 40% by 2014, which would reduce its EBITDA ratio to 1.7 times by 2014.

The company expects to get court approval to begin asking creditors to vote on its plan of reorganization later this month, according to Reuters.