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NewPage seeks path to restructure
REGION -- NewPage Corp., the largest North American maker of coated papers, has filed for bankruptcy six years after being bought by Cerberus Capital Management LP.
Competition from Europe and Asia and rising costs for pulp, energy and chemicals have hurt their business, as well as falling demand as advertisers and readers move online.
Jay A. Epstein, senior vice president and chief financial officer for NewPage, said, "A successful restructuring will allow NewPage to emerge as a financially stronger company that is even better positioned to compete and succeed in this dynamic industry environment. To this end, we fully expect to work productively with our lenders and other creditors to develop our Chapter 11 plan as efficiently as possible. We are confident that the DIP financing we have secured will allow us to maintain continuity in our U.S. businesses as we complete this process."
George F. Martin, president and chief executive officer for NewPage, said, "I firmly believe we are on the right path to enhance our standing as the leading producer of printing and specialty papers in North America and position us to compete and succeed in a dynamic industry environment."
Chapter 11 allows a business to continue operating as usual while working with creditors to develop a plan that explains how they will satisfy their obligations and restructure their debt.
Rumford Town Manager Carlo Puiia said "I believe it's to the company's advantage to restructure and come back as a stronger paper mill that can create jobs."
He said he has been in contact with Janet Hall, the mill's communications director, the state's senior economic advisor, and placed calls with the state's congressional delegation to keep informed on the situation.
The Ohio-based company was bought by New York-based Cerberus for $2.3 billion in January 2005, and issued $900 million in junk bonds to fund the purchase. It has been unprofitable since 2006.
Net sales of $3.6 billion in 2010 made NewPage the largest producer of paper for newspapers, commercial printing, magazines and coupons in North America, the company said in its quarterly report. Mills in Kentucky, Maine, Maryland, Michigan, Minnesota, Wisconsin and Nova Scotia, Canada, churn out 4.1 million tons of paper a year.
Higher prices for wood, chemicals and pulp, combined with reduced demand for its products, hurt results in the most recent quarter, the company said in a statement Aug. 15. Losses were $132 million for the three months ended June 30 because of higher commodity costs and lower demand from North American catalog manufacturers and magazine publishers, NewPage said.