Smurfit-Stone Reorg Plan Aims at Early Spring Emergence from Chapter 11
Smurfit-Stone Container Corp., Chicago, Ill., USA, this week announced that it and each of its subsidiaries and affiliates in Chapter 11 bankruptcy, as well as Canadian subsidiaries and parties in the Canadian Creditors Arrangement Act (CCAA) proceeding, have filed a Joint Plan of Reorganization (POR) and Plan of Compromise and Arrangement and Disclosure Statement with the U.S. Bankruptcy Court for the District of Delaware. With this filing, the company is aiming to emerge from Chapter 11 protection in early Spring 2010.
The company also announced that it has prepaid all of the approximately $43 million remaining outstanding of the U.S. term loan under its Debtor in Possession credit facility (DIP), and expects to prepay the approximately $7 million remaining outstanding of the Canadian term loan under the DIP by the end of December. The company expects to emerge from its financial restructuring with a significantly improved balance sheet and with substantially less debt. Under the proposed POR, substantially all of the unsecured debt of Smurfit-Stone Container Enterprises will be converted to equity, resulting in a significant reduction of total long-term debt.
Patrick Moore, chairman and CEO, said that "the filing of our Plan of Reorganization and Disclosure Statement is an important step toward Smurfit-Stone's successful emergence from the reorganization process. Our employees, customers, suppliers and other supporters have been instrumental in our ability to reach this important milestone. We will remain focused on tackling the many challenges that remain ahead."
Key elements of the proposed POR are:
- The company and its subsidiary, Smurfit-Stone Container Enterprises, would merge and become the reorganized company that would be governed by a board of directors that will include Moore, Steven Klinger, the company's current president and COO, and a number of independent directors to be selected by the official committee of unsecured creditors in consultation with the debtors.
- All of the existing secured debt of the debtors would be fully repaid with cash or new debt instruments or a combination thereof.
- Substantially all of the existing unsecured debt and claims against Smurfit-Stone Container Enterprises, including all of the outstanding unsecured senior notes and bonds, would be exchanged for common stock of the reorganized Smurfit-Stone, which would be traded on either the New York Stock Exchange or the NASDAQ market, with holders of unsecured claims against Smurfit-Stone Container Enterprises of less than or equal to $10,000 entitled to receive payment of 100% of such claims in cash.
- All of the existing equity securities of Smurfit-Stone would be cancelled and existing shareholders of Smurfit-Stone common and preferred stock would receive no distribution on account of their shares.
- Assets of the Canadian Debtors would be sold to a newly-formed Canadian subsidiary of Smurfit-Stone free and clear of existing claims, liens, and interests in exchange for the repayment of the secured debt obligations of the Canadian debtors, cash or common stock of the reorganized company for distribution to the Canadian debtors' unsecured creditors (if they vote to accept the POR and the assumption of certain liabilities and obligations of the Canadian debtors).
- Reorganized Smurfit-Stone and its newly-formed Canadian subsidiary would assume all of the existing obligations under the qualified defined benefit pension plans in the U.S. and Canada sponsored by the debtors, as well as all of the collective bargaining agreements in the U.S. and Canada between the debtors and their labor unions.
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