Oct. 1 (Bloomberg) -- NewPage Corp., the largest U.S. coated-paper maker, settled with creditors over its plan to exit bankruptcy by agreeing to give first-lien noteholders all of the stock in the reorganized company.
Lower-ranking noteholders and some other unsecured creditors will split $30 million in cash and the first $50 million that might come from any lawsuits filed by a litigation trust, NewPage said today.
“This agreement should allow us to emerge from Chapter 11 in the near term,” Chief Executive Officer George F. Martin said in a statement.
NewPage, based in Miamisburg, Ohio, filed for bankruptcy in September 2011, listing $3.4 billion in assets and $4.2 billion in debt.
The company had fought with an official committee of unsecured creditors, arguing that since its $2.7 billion in secured debt exceeded the value of its assets, it could pay lower-ranking creditors nothing.
The committee began investigating whether a 2007 buyout that expanded the company and a 2009 refinancing could be challenged as so-called fraudulent transfers that harmed lower-ranking creditors, according to court records.
“The committee is supportive of the plan settlement,” Luc Despins, an attorney for creditors, said in an e-mail.
NewPage may sign a $900 million credit agreement that will allow it to exit bankruptcy, according to the statement. The proposed credit deal would include a $500 million term loan and a $400 million revolving credit agreement.
The case is In re NewPage Corp. 11-12804, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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