Caraustar Gets Court OK to Use DIP Funds
June 26, 2009 (Press Release) - Caraustar Industries, Inc. announced that the Bankruptcy Court for the Northern District of Georgia (the "Court') granted final authorization for the company to borrow all amounts available under its $75 million debtor-in-possession credit facility (the "DIP Facility") from General Electric Capital Corporation, pursuant to the terms and conditions of the DIP Facility Agreement, and to use the amounts borrowed under the DIP Facility to fund working capital and other general corporate needs.
"The Court approval gives Caraustar and its stakeholders additional financial flexibility to continue to do what we do best, run safe manufacturing operations and service customers. The approval of the DIP Facility also supports our efforts to emerge as a financially stronger company. We are committed to the long-term profitability of the company and remain steadfast in providing our customers with innovative products and excellent service," stated Michael J. Keough, president and chief executive officer of Caraustar.
The Court had previously authorized: the immediate use of up to $25 million of the $75 million senior secured DIP Facility, the use of the company's existing cash management systems and substantially all of its existing bank accounts, and the payment of pre- and post-petition invoices to trade creditors (general unsecured claims) in the ordinary course of business.
As previously announced, Caraustar reached agreement with holders of approximately 83 percent of its 7 3/8% Senior Notes maturing June 1, 2009 and 91 percent of its 7 1/4% Senior Notes maturing May 1, 2010 on the terms of a cooperative financial restructuring that would reduce the company's debt obligations by approximately $135 million.
The company and its domestic subsidiaries filed voluntary Chapter 11 petitions along with a pre-negotiated Plan of Reorganization in the United States Bankruptcy Court for the Northern District of Georgia on May 31, 2009. The cases will be jointly administered and the main case has been assigned case number 09-73830.
SOURCE: Caraustar Industries, Inc.
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