Newark Group Secures Restructuring Financing

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The Newark Group, Cranford, N.J., USA, has arranged a $110 million credit facility for financial support through its bankruptcy process. The restructuring financing is being provided by a group of five lenders led by ORIX Finance Corp, Dallas, Texas. With the support of all relevant stakeholders, Newark filed for Chapter 11 bankruptcy protection on June 9, and now expects to exit bankruptcy in August with financing in place.

Newark notes that although its business was operationally sound, it needed to restructure debt following the severe industry-wide decline in sales due to the general slowdown of the U.S. economy in 2008-09. Prior to filing, Newark reached an agreement for a consensual restructuring with the holders of its Senior Subordinated Notes.

To facilitate Newark’s restructuring process, ORIX worked with other lenders and stakeholders to provide the financing solution needed for a speedy reorganization process. ORIX led and arranged the $110 million debtor-in-possession (DIP) and exit term loan facility. The DIP term loan repaid Newark’s pre-petition term loan and provided additional cash to increase Newark’s liquidity. The Exit Term Loan will provide term financing to support the company’s operations as it comes out of reorganization.

"When Newark needed help, our team was able to build consensus among a group of diverse creditors and assemble a financing package to help the company restructure its balance sheet," said Chris Smith, senior managing director of ORIX Finance. "The financing also provides capital to continue to grow the business and support all of its stakeholders, including customers, vendors and more than 2,500 employees."

Founded in 1912, Newark is a vertically-integrated, global producer of 100% recycled paperboard and paperboard, including core board, folding carton, and industrial converting grades of paperboard.