Catalyst Paper of Richmond, British Columbia, has entered into a commitment letter with a Canadian chartered bank for a $175 million syndicated asset-based loan (ABL) facility.
The ABL facility is a precondition for Catalyst to exit from creditor protection, providing for the refinancing of existing credit facilities to fund operations, as well as for general corporate purposes. The collateral for the ABL facility would primarily consist of all present and future working capital assets of the company.
Catalyst also entered into a commitment letter with respect to a secured exit notes facility of up to US$80 million. This Exit Facility, according to the company, provides it with backstop financing should additional funding be required to pay costs and expenses or manage other contingencies on exit from creditor protection.
“Having appropriate financing in place should enable a return to normal trade terms with our vendors as we exit from creditor protection and will, in turn, assure our customers of continued excellent service and product quality going forward,” said Catalyst President and CEO Kevin Clarke. “We kept high operating standards throughout this process and this gives us competitive momentum as we prepare to emerge successfully from CCAA in the near term.”
Catalyst filed for bankruptcy protection under the Companies’ Creditors Arrangement Act (CCAA), in the Supreme Court of British Columbia, back in January 2012. Then in March 2012, the company reached an agreement with 1,000 of its employees, who agreed to a 10 percent pay-cut and various adjustments to vacation, health and work rules to “provide Catalyst with a competitive labour cost structure.” Annual savings as a result of this new contractual agreement will be between $18 and $20 million.
Catalyst manufactures specialty printing papers, newsprint and pulp, with four mills located in British Columbia and Arizona. The company has a combined annual production capacity of 1.9-million tonnes.