Fraser Papers Files Amended Restructuring Plan

Jan. 28, 2011 (Press Release) - Fraser Papers Inc. and its subsidiaries ("Fraser Papers" or the "Company") announced today that it has filed an amended consolidated plan of compromise and arrangement (the "Amended Plan") with the Ontario Court overseeing its restructuring proceedings under the Companies' Creditors Arrangement Act ("CCAA"). These materials will also be filed with the U.S. Court in Delaware, which oversees the Company's ancillary proceeding under Chapter 15 of the U.S. Bankruptcy Code.

On February 1, 2011, Fraser Papers will seek an order (the "Amended Meeting Order") authorizing it to hold a meeting of creditors on February 8, 2010, at which time the creditors of the Company will vote on the Amended Plan. If the Amended Plan is approved by creditors, the Company intends to appear before the Ontario Court on February 10, 2011 and the U.S. Court on February 11, 2010 to seek the necessary court approvals to implement the Amended Plan.

On January 10, 2011, the Company's creditors rejected a plan of arrangement that had been proposed by the Company (the "Original Plan"), despite 98.4% of all creditors voting in support of the Original Plan. After the meeting on January 10, 2011, the Company commenced discussions with various stakeholders in an effort to obtain support for an Amended Plan.

The Amended Plan includes a commitment from Brookfield Asset Management Inc. to serve as sponsor of the Amended Plan (the "Plan Sponsor") by purchasing the Company's remaining operating assets (consisting of two lumber mills in Northern Maine) through the acquisition of Fraser Papers' U.S. subsidiaries (the "U.S. Companies") for cash proceeds of approximately $12.4 million (the "Transaction"), subject to an adjustment for closing working capital.

Based on the Plan Sponsor's support, the Amended Plan contemplates the following benefits for the Company's creditors:

  • the repayment of all secured claims against the Company;
  • continuing employment for substantially all active employees of the Company's remaining operations;
  • the pro-rata distribution of all proceeds from the sale of the Company's assets (including the sale of the U.S. Companies) to trusts established for the benefit of unsecured creditors, in satisfaction of all outstanding unsecured creditor claims;
  • the U.S. Companies of Fraser Papers will continue to be responsible for certain specified liabilities.

All unsecured liabilities or claims that existed at the time the Company filed for protection under the CCAA ("Pre-filing Claims") will be compromised under the Amended Plan.

Subject to completion of the Transaction and sufficient cash being available to make such payment, the Amended Plan provides for a cash distribution for each unsecured claim that has been accepted by the court-appointed Monitor, up to the lesser of: a) the amount of each unsecured claim, and b) $500.00.

The Amended Plan contemplates the distribution of all proceeds of the Transaction and all prior sale transactions to four trusts that will be established for the benefit of unsecured creditors with Pre-filing Claims, once all secured claims are paid in full. The proceeds include:

  • a 49% interest in the common equity of Twin Rivers Papers Company Inc. ("Twin Rivers"), the company that purchased the specialty papers business of Fraser Papers;
  • unsecured promissory notes issued by Twin Rivers with a face amount of approximately $44 million; and
  • any cash available after paying secured creditors in full and the costs of the CCAA proceedings.

SOURCE: Fraser Papers Inc.