Norske Skog Bondholders Said to Offer Rival Restructuring Plans

  • Senior creditor group said to propose debt-for-equity swap
  • Junior noteholders said to seek maturity extension beyond 2019

Norske Skogindustrier ASA’s senior and junior bondholders have presented competing plans to restructure the Norwegian papermaker’s $1 billion of debt, according to people familiar with the matter.

Rothschild and Akin Gump Strauss Hauer & Feld, which are advising a group holding Norske Skog’s 290 million euros ($329 million) of senior bonds due 2019, met with the company to discuss a possible debt-for-equity swap, said two people, who asked not to be identified because negotiations are private. The group includes BlueCrest Capital Management, Marathon Asset Management and Sampo Oyj, they said.

Blackstone Group LP’s GSO Capital Partners, the largest owner of Norske Skog’s 218 million euros of junior bonds due 2017, approached management with an alternative plan that included extending their claims until after 2019, said one of same the people and another person familiar with the matter. Norske Skog is working with financial adviser Houlihan Lokey Inc. to review its debt structure amid concerns it may be unable to meet all its obligations.

“Once the junior bonds due in 2016 are paid, there will be very little cash to redeem other maturities,” said Priya Viswanathan, a credit analyst at Societe Generale in Bangaluru. “If I was a secured bondholder I would push for a restructuring sooner rather than later, although they have until early next year.”

Shrinking Demand

A spokeswoman at Rothschild in London confirmed the company is representing a creditor group holding more than half of Norske Skog’s senior secured notes and declined to comment on the discussions.

Officials at Akin Gump, Houlihan Lokey, BlueCrest, Sampo and Blackstone declined to comment on the restructuring proposals. A spokeswoman for Marathon didn’t immediately comment.

Europe’s third-largest publication papermaker, which had 896 million kroner ($111 million) in cash and equivalents at the end of June, is struggling to maintain sales amid weak newspaper and magazine demand as readers switch to electronic reading platforms and producers compete for market share. Newsprint prices in Europe fell to the lowest in almost five years this week, according to data provided by Foex Indexes.

“We have regular contacts with our investors and we will hold a roadshow with shareholders and bondholders after reporting our third quarter financial statement on Oct. 22, as we always do after publishing our results,” said Carsten Dybevig, a spokesman for the firm in Lysaker, Norway. He declined to comment on restructuring proposals.

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