Fraser Files Restructuring Plan, Prepares to Emerge from Bankruptcy
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Fraser Papers Inc., Toronto, Ont., Canada, earlier this week announced that it has filed a consolidated plan of compromise or arrangement with the Ontario Court overseeing its restructuring proceedings under the CCAA. These materials will also be filed with the U.S. Court in Delaware, which oversees the company's ancillary proceeding under Chapter 15 of the U.S. Bankruptcy Code.
On December 3, 2010, Fraser Papers will seek an order authorizing it to hold a meeting of creditors on December 20, at which time the creditors will vote on the plan. If the plan is approved by creditors, the company intends to appear before the Ontario Court on December 22 and the U.S. Court on December 23 to seek the necessary court approvals to implement the plan.
A key component of the plan is a commitment from the company's largest shareholder, Brookfield Asset Management Inc., to serve as sponsor of the plan by purchasing the company's remaining operating assets through the acquisition of its U.S. subsidiaries and by continuing to provide debtor-in-possession financing to the company during plan implementation.
The plan sponsor has agreed to acquire the Fraser Papers companies through which the company carries on its U.S. operations for cash proceeds of $15.0 million. In addition, the U.S. companies of Fraser Papers that are being sold to the plan sponsor will continue to be responsible for certain specified liabilities. All unsecured liabilities or claims that existed at the time the Company filed for protection under the CCAA (pre-filing claims) will be compromised against all of the Fraser Papers companies under the Plan.
The Company's U.S. operations consist of two lumber mills in northern Maine (one of which is currently not operating) and a paper mill in northern New Hampshire (the Gorham Mill) which has been closed indefinitely. The company has entered into a separate agreement with a third party to sell the Gorham Mill (see news item above). If that separate transaction or any other sale of the Gorham Mill is completed prior to the time of the closing of the transaction, the cash proceeds payable on closing will be reduced by the proceeds received on the sale of the Gorham Mill, up to a maximum of $2.65 million. If the Gorham Mill is not sold to another party prior to the closing of the Transaction, it will be purchased by the plan sponsor as part of the Transaction.
The full text of the plan documents and all related documents are located on the on the monitor's website.
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