Smurfit-Stone Container Corp and its US and Canadian subsidiaries have filed voluntary petitions for reorganisation under Chapter 11 in the US Bankruptcy Court in Wilmington, Delaware. The Canadian subsidiaries will also file to reorganise under the Companies' Creditors Arrangement Act (CCAA) in the Ontario Superior Court of Justice, in Canada.
The company says it plans to use this process to restructure its debt, resulting in a capital structure more suited to support its long term growth and profitability. Normal day-to-day operations will continue without interruption. None of the subsidiaries or operations outside of the US and Canada have commenced Chapter 11, CCAA or similar proceedings.
The company has also announced that, pending court approval, it has received commitments for up to $750mn in debtor-in-possession (DIP) financing to fund continuing operations. Of this total, $350mn consists of new incremental funding; and some $400mn represents replacement of existing Accounts Receivable Securitization facilities both in the US and Canada.
The DIP financing will enable the company to continue to satisfy customary obligations associated with ongoing operations of its business, including payment of employee wages and benefits, and payment of post-petition obligations to vendors under existing terms.
Chairman and CEO Patrick J Moore says: “Over the past decade, we built one of North America’s premier containerboard and packaging companies. Yet, the acceleration of the unprecedented global economic recession has weakened demand for packaging, and the frozen credit markets have prevented an out-of-court refinancing of our capital structure. While this is not the outcome we anticipated, we are taking this action to become a more financially healthy company.”
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