Fraser Papers files restructuring proposal

Fraser Papers Inc. announced that it has filed a proposal with the Ontario Court overseeing its restructuring proceeding under the Companies' Creditors Arrangement Act ("CCAA") for a hearing on December 10, 2009. The Company will be filing similar materials with the U.S. Court in Delaware, which oversees the Company's ancillary proceeding under Chapter 15 of the U.S. Bankruptcy Code.

Fraser Papers is seeking Court approval of a firm, binding offer to purchase its core specialty papers business as a going concern, thereby preserving employment for employees at those facilities. The transaction will result in all debt owing to the Company's three secured lenders being repaid or otherwise satisfied.

The new company ("Newco") will assume certain payables and long-term liabilities associated with this business, and will pay non-cash consideration of approximately $65 million which will be used by the Company to partly satisfy the claims of unsecured creditors, including the pension plans. Further, the transaction will provide the Company with the basis upon which its specialty papers business can exit from creditor protection with advantages in energy and fibre, a lower fixed cost structure, a conservative balance sheet and adequate liquidity.

"The new paper company will be significantly smaller but will be viable and more competitive in fewer market segments," said Peter Gordon, CEO of Fraser Papers. "Importantly, the business will have much less risk, with lower exposure to foreign exchange as well as lumber, market pulp and oil prices."

"We are pleased to have been able to put together such a comprehensive transaction for the benefit of Fraser Papers' creditors, employees, suppliers and customers," said Mr. Gordon. "While there are outstanding conditions that must be met, we are confident that with the continuing support of our key stakeholders, those hurdles can be overcome."

SOURCE: Fraser Papers