Marathon Pulp Files for Bankruptcy
Feb. 16, 2009 (Press Release) - Marathon Pulp Inc. on Friday (Feb. 13) said that it has filed a notice of intention to make a proposal under the Bankruptcy and Insolvency Act (Canada).
The filing by Marathon results primarily from the significant recent weakness in global pulp markets which has negatively impacted Marathon's cash flow to the point where it could no longer meet its ongoing financial obligations.
The effect of the filing will be to establish a period of creditor protection for Marathon. Marathon has also provided its lenders with a waiver that will allow them to enforce their security should they see fit.
Current plans call for existing raw material inventories to be drawn down and converted into market pulp. It is expected that this will require the mill to operate until approximately February 28, following which the mill is expected to be idled indefinitely.
Employees have been notified of the plan for an orderly idling of the operation.
PricewaterhouseCoopers Inc. will be acting as trustee.
Marathon Pulp, a northern bleached kraft pulp mill, is a joint venture equally owned by Tembec and Kruger. The mill is located on the northern shore of Lake Superior in the Town of Marathon, Ontario, Canada and employs about 230 people.
SOURCE: Marathon Pulp Inc.