Richmond-based Catalyst Paper Corp. (TSX:CTL) announced that it will defer approximately $21 million in interest payments on secured notes, pending finalization of a strategy to deal with its debt.
“We advised several months ago that we were pursuing a restructuring of our balance sheet,” Kevin Clarke, Catalyst president and CEO, said in a statement.
“This is a very complex process, and while we cannot prejudge outcomes, we are firmly committed to achieving a solution that puts Catalyst on stronger financial footing for the future.”
Catalyst announced in June that it had begun a capital restructuring review.
Catalyst announced this morning, that, in light of that process, the company had determined to defer interest payment, due today, on outstanding 11% senior secured notes due 2016 and Class B 11% senior secured notes due 2016.
The company has 30 days to pay the interest on the notes before triggering a default. Failure to pay the interest in time would allow note holders to declare US$390 million of principal and interest on the notes payable immediately.
In August, Clarke told Business in Vancouver that the “headwinds” his company has been facing, including the high Canadian dollar and the costs associated with fires at Catalyst’s Arizona and Powell River mills, were manageable. (See “Catalyst paper battered but not broken” – BIV Business Today, August 19.)
Jenny Wagler
@JennyWagler_BIV