Paper Manufacturer NewPage Files for Chapter 11
Company secures $600 million from J.P. Morgan to keep operating.
According to the filing, NewPage has obtained a commitment led by J.P. Morgan for up to $600 million in Debtor in Possession (DIP) financing to keep its U.S. business operating during the restructuring. NewPage carries approximately $4 billion in debt and other liabilities. The company generated net sales of $3.6 billion in 2010.
NewPage has also put its Port Hawkesbury, Nova Scotia mill on an indefinite shutdown, maintaining a "hot idle" to preserve its assets as it seeks a buyer for the Canadian mill.
"Foreign imports from Europe and Asia," "the rising cost of raw materials" and a "relatively high level of structured debt" are to blame for Newpage’s woes, according to Dead Tree Edition.
Earlier this year, NewPage was the subject of speculation about a merger with rival paper manufacturer Verso. NewPage also dropped a proposed $20-$50 per ton price hike scheduled for January when no other paper manufacturer joined its increase.
Last month, NewPage was named to the Inc. 5000 (#3062 overall with three-year growth of 66 percent), which recognizes the fastest growing companies in the U.S. However, while NewPage made the list for 66 percent revenue growth between 2007 and 2010, that growth was largely due to NewPage’s purchase of Stora Enso’s North American Assets in 2007, according to Dead Tree.