NewPage Needs Loan Tomorrow to Keep Operating, Lawyer Says
September 08, 2011, 12:51 PM EDTBy Steven Church
(Updates with creditor negotiations in sixth paragraph.)
Sept. 8 (Bloomberg) -- NewPage Corp., the largest maker of coated papers in North America, must have access to a court- approved bankruptcy loan by tomorrow or it may be forced to close factories, the company’s lead bankruptcy attorney said.
NewPage will focus on saving the jobs of the company’s 6,000 workers while it tries to restructures its debt, said attorney Martin J. Bienenstock, with the law firm of Dewey & LeBoeuf LLP.
“Their communities rely on them and the earnings they receive from NewPage,” Bienenstock told U.S. Bankruptcy Judge Kevin Gross today in Wilmington, Delaware.
“That’s a lot of people depending on us today,” Gross said as the hearing began. NewPage operates mills in Kentucky, Maine, Maryland, Michigan, Minnesota, Wisconsin and Nova Scotia, Canada, that churn out 4.1 million tons of paper a year.
NewPage, based in Miamisburg, Ohio, filed the biggest bankruptcy of 2011 yesterday, listing $3.4 billion in assets and $4.2 billion in debt as of June 30. The company is seeking interim approval from Gross to borrow as much as $600 million.
The company took a break from the hearing this morning to talk with two groups of bondholders and other creditors about proposed bankruptcy financing, known as a debtor-in-possession loan. The differences appear to minor and may be resolved by this afternoon, Bienenstock told Gross.
Peace on Earth
“It appears there will be peace on earth, at least for today and hopefully that will be a harbinger for the rest of the case,” Bienenstock said.
JPMorgan Chase & Co., which is arranging the DIP loan, will meet with lenders tomorrow to discuss the proposal, a person with knowledge of the matter said.
CreditSights Inc. said NewPage’s bankruptcy could provoke a “power struggle” among four of the biggest debt investment firms as they fight for a controlling stake in the company.
Cerberus Capital Management LP, which purchased NewPage in 2005, and Oaktree Capital Management LP, which bought some of the company’s most-senior bonds, are poised to jockey for controlling positions in the restructured company, CreditSights analyst Rahul Gandhi wrote in a report yesterday. That would reduce the stakes of Apollo Global Management LLC and Avenue Capital Group, which own the company’s second-lien notes, he said.
The proposed DIP loan would include a $250 million term loan and a $350 million revolving loan. The term loan would pay interest based on the London interbank offered rate, or a similar interest-rate benchmark, plus 7.5 percent. The revolving loan would pay a rate based on a benchmark plus as much as 3.25 percent, according to court papers NewPage filed yesterday.
The case is In re NewPage Corp. 11-12804, U.S. Bankruptcy Court, District of Delaware (Wilmington).
--With assistance from Tiffany Kary, Lisa Abramowicz and Krista Giovacco in New York. Editors: Andrew Dunn, John Pickering
To contact the reporter on this story: Steven Church in Wilmington, Delaware, at schurch3@bloomberg.net
To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net
