Smurfit tells lenders bankruptcy is possible- WSJ

Jan 15 (Reuters) - Smurfit-Stone Container Corp SSCC.O, a major corrugated packaging maker, has told lenders it could file for bankruptcy amid weakening sales and a cash crunch, the Wall Street Journal said, citing people familiar with the matter.

The company has hired bankruptcy counsel and financial advisers in an effort to line up about $750 million in debtor-in-possession (DIP) financing, the paper said citing the people.

Companies use DIP financing to help them fund operations while they restructure debt.

A Chapter 11 filing for protection from creditors could come within two weeks, once the company secures the financing, the paper said.

A company spokeswoman declined to comment to the Journal about a potential bankruptcy filing. Smurfit-Stone could not be immediately reached for comment by Reuters.

The company has a $7.3 million interest payment due later this week, but it was unclear it was going to make the payment, the people told the paper.

The company has about $3.5 billion in outstanding debt and roughly $7.5 billion in annual sales, according to the paper.

It has about $316 million in debt payments due this year and also also needs to refinance a $800 million revolving credit line due in November, the Journal said. (Reporting by Ajay Kamalakaran in Bangalore; Editing by Lincoln Feast)